Burger King Stakes its Claim in Fast Food’s Value Wars
February 12, 2018–(QSRMagazine)
In fast food’s accelerating value wars, Burger King remains an industry frontrunner. The chain reported impressive comparable same-store sales growth of 4.6 percent in the fourth quarter. Restaurant Brands International CEO Daniel Schwartz credited much of the success to Burger King’s performance in the competitive arena.
“We believe that maintaining this balanced menu offering to provide our guests with products they love at great prices will continue to drive further sales growth over the long run,” Schwartz said in a conference call Monday morning.
Schwartz added that Burger King’s Bacon King and Crispy Chicken Sandwich performed “particularly well” in 2017 and the chain rolled out several successful value promotions during the quarter that lifted the brand’s results.
Burger King’s stellar performance carried RBI to a Wall Street-busting quarter. The Canada-based company, which also operates Tim Hortons and Popeyes Louisiana Kitchen, saw its total revenue climb 11 percent to $1.23 billion, year-over-year. Excluding one-time items, RBI earned 66 cents per share, beating analysts’ average estimate of 57 cents, according to Thomson Reuters. RBI’s fourth-quarter net income came in at $215.2 million.
Burger King’s financials popped across the board. Systemwide sales growth was 12.3 percent in the three months ended December 31. A year ago, it was 8.5 percent. Comps, again, were 4.6 percent. They were 2.8 percent in the prior-year period. And Burger King is growing as well, reporting 6.5 percent net restaurant growth compared to 4.9 percent in the year-ago period. There were 7,226 Burger Kings in the U.S. as of December 31 after the company added a net of 70 new restaurants. And speaking of the U.S., Burger King’s comparable sales stateside were up 5.1 percent in the fourth quarter compared to just 1.8 percent in 2016.
Josh Kobza, RBI’s chief financial officer for the past five years, who recently transitioned into a new role as chief technology and development officer, broke down Burger King’s growth potential in the call.
“Our accelerated development was a product of achieving incremental unit growth in many countries around the world,” he said. “But it was primarily led by some of our higher growth markets, including China, Russia, France, and Brazil.”
Burger King ended 2017 with more than 875 restaurants in China, up from about 650 at the end of 2016. The company opened its 500th restaurant in Russia this past year and closed 2017 with more than 520 units—growth of about 100 restaurants. France grew its footprint over 200 locations. Brazil ended 2017 with nearly 700 locations compared to about 600 the prior year.
“The pace at which partners like these are opening around the world highlights the strength and scale potential of our master franchise development model,” he said. “To further accelerate that growth all around the world we set up a number of new partnerships for Burger King in 2017.” This includes Africa, Japan, Taiwan, the United Kingdom, and the Netherlands.
“We believe that accelerated growth in the U.S. is a testament to the meaningfully improved franchisee economics resulting from years of increased average revenues per store,” Kozba added. “We hope to further accelerate our U.S. development heading into 2018 and beyond.”
For fiscal 2017, Burger King saw its comps rise 3.1 percent.
RBI’s other brands didn’t report quite as bullish results. Tim Hortons posted comparable same-store sales growth of 0.1 percent and Popeyes slid to a 1.3 percent decline, although improvements are showing for the company’s most recent acquisition.
Tim Hortons’ comps fell 0.1 percent in fiscal 2017. Schwartz said RBI made progress, especially in regards to technology, with the concept. Tim Hortons launched its mobile app in 2017 as well as an espresso-based beverage platform in Canada and the U.S. The chain also opened its first restaurants in Asia, Europe, and Latin America.
Schwartz said some of the chain’s success with breakfast, both with sandwiches (steak and simply sausage offers were hits) and new coffee products, was offset by soft lunch results.
“We’re happy with the amount of feedback from guests who did sample these products, many of whom now enjoy our espresso-based beverages on a daily basis,” he said. “However, there are many guests who have yet to try these products and we believe this represents a big opportunity for our business in the long run.”
As for Popeyes, like in recent quarters, Schwartz said the integration was a work in progress. Popeyes reported 1.5 percent comparable same-store sales declines for the year. Systemwide sales were up 5.1 percent driven by net restaurant growth of 6.1 percent, offset by the comp drops. The chain struggled in the U.S. as well, posting negative 2.2 percent comps.
RBI purchased Popeyes for $1.8 billion last winter. “In the U.S., heightened competitive activity, with a particular focus on value discounting, continued into the fourth quarter. Although we still have work to do, U.S. comparable sales have improved sequentially in the fourth quarter and we have been testing a number of marketing initiatives in recent months we believe will help us build momentum for improved results this year.”
There were 2,212 Popeyes in the U.S. as of December 21.
Yum! Brands Reports Fouth-Quarter GAAP Operating Profit Growth of 134%; Fouth-Quarter Core Operating Profit Decline of (6)%; On Track with Strategic Transformation to Accelerate Growth
February 8, 2018–LOUISVILLE, KY–(BUSINESS WIRE)
Yum! Brands, Inc. (NYSE: YUM) today reported results for the fourth quarter ended December 31, 2017. Fourth-quarter GAAP EPS was $1.26, an increase of 53%. Full-year GAAP EPS was $3.77, an increase of 48%. Fourth-quarter EPS excluding Special Items was $0.96, an increase of 20%. Full-year EPS excluding Special Items was $2.96, an increase of 20%.
GREG CREED & DAVID GIBBS COMMENTS
Greg Creed, CEO, said “As we close the first full year of our transformation, I am very proud of the progress we are making towards becoming a more focused, more franchised and more efficient company that generates more growth. During 2017, system sales grew a healthy 5% excluding the impact of lapping the 53rd week in 2016, with same-store sales growth of 2% and net new unit growth of 3%. As we move forward into 2018, we are particularly excited about our investment in ‘Easy’ with our new partnership with Grubhub. We are confident that the continued focus on our four key growth drivers supports our vision for a ‘World with More Yum!’ and maximizes the creation of value for all Yum! stakeholders.”
David Gibbs, President and CFO, continued “The fourth quarter was a solid ending to a year where Yum! Brands met or exceeded each component of our full-year guidance. Despite headwinds from refranchising dilution and lapping a 53rd week, we delivered full-year core operating profit growth of 7%. We are on track with our strategic transformation to accelerate growth and made significant progress towards achieving these objectives in 2017. We look forward to updating you as we continue on our journey to build the world’s most loved, trusted and fastest-growing restaurant brands.”
All comparisons are versus the same period a year ago. Effective January 2017, we removed the reporting lags from our international subsidiary fiscal calendars. To accommodate these changes, Yum! Brands now reports on a monthly calendar basis though certain subsidiaries, including our U.S. subsidiaries, continue to be included in our consolidated results on a periodic basis with 3, 3, 3 & 4 four-week periods in each quarter, respectively. Prior year figures in this earnings release have been restated to present comparable results. An 8-K was filed on April 13, 2017 with restated quarterly and full-year 2016 results.
System sales growth figures exclude foreign currency translation (“F/X”) and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See Reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.
Unless otherwise noted, all results include the impact of lapping the 53rd week in 2016
- Worldwide system sales grew 4%, with KFC at 6%, Taco Bell at 3% and Pizza Hut at 1%, excluding the 53rd week.
- We opened 730 net new units for 3% net unit growth.
- We refranchised 896 restaurants, including 685 KFC, 144 Pizza Hut and 67 Taco Bell units, for pre-tax proceeds of $1.1 billion. We recorded net refranchising gains of $752 million in Special Items. As of quarter end, our global franchise ownership mix increased to 97%.
- We repurchased 7.5 million shares totaling $588 million at an average price of $79.
- Foreign currency translation favorably impacted divisional operating profit by $9 million.
- Worldwide system sales grew 5%, with Taco Bell at 7%, KFC at 6% and Pizza Hut at 2%, excluding the 53rd week.
- We opened 1,407 net new units for 3% net unit growth.
- We refranchised 1,470 restaurants, including 828 KFC, 389 Pizza Hut and 253 Taco Bell units, for pre-tax proceeds of $1.8 billion, recording net refranchising gains of $1.1 billion in Special Items.
- We repurchased 26.6 million shares totaling $1.9 billion at an average price of $72.
Fat Brands, Inc. Announces Initiation of Quarterly Cash Dividend
February 08, 2018–LOS ANGELES–(BUSINESS WIRE)
FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”), a leading global restaurant franchising company, today announced that its Board of Directors has approved its first quarterly cash dividend.
The Company’s Board of Directors declared an initial quarterly dividend of $0.12 per share of common stock, payable on April 16, 2018 to stockholders of record as of the close of business on March 30, 2018.
“We are pleased to announce the initiation of a quarterly cash dividend, which we believe reflects the strength and stability of our business model. Our predictable cash flow generation and strong balance sheet provide the financial flexibility to continue to grow our portfolio of brands while simultaneously returning a meaningful amount of capital to our stockholders,” said Andy Wiederhorn, President and CEO of FAT Brands.
The Company also intends to launch a Dividend Reinvestment Plan (“DRIP”), under which interested stockholders may reinvest all or a portion of their cash dividends in additional common shares of FAT Brands without paying any brokerage commission or service charge. The DRIP will be administered by the Company’s transfer agent, which will distribute plan enrolment materials and information to stockholders in the coming weeks. The Company’s controlling stockholder, Fog Cutter Capital Group, intends to reinvest its cash dividend into the Company as provided under the DRIP thereby allowing the Company to retain capital to continue its growth plans.
The declaration and payment of future dividends, as well as the amount thereof, are subject to the discretion of the Company’s Board of Directors. The amount and size of any future dividends will depend upon the Company’s future results of operations, financial condition, capital levels, cash requirements and other factors. There can be no assurance that the Company will declare and pay dividends in future periods.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual and casual dining restaurant concepts around the world. The Company currently owns five restaurant brands, Fatburger, Buffalo’s Cafe, Buffalo’s Express and Ponderosa & Bonanza Steakhouses, that have approximately 300 locations open and 300 under development in 32 countries. For more information, please visit www.fatbrands.com.
Chipotle Fourth Quarter Earnings Per Share Grows 182% to $1.55 on Revenue Increase of 7.3%
February 06, 2018–DENVER–(BUSINESS WIRE)
Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its fourth quarter and year ended December 31, 2017.
Overview for the fourth quarter of 2017 as compared to the fourth quarter of 2016:
- Revenue increased 7.3% to $1.1 billion
- Comparable restaurant sales increased 0.9% for the quarter
- Restaurant level operating margin was 14.9%, an increase from 13.5%
- Net income was $43.8 million, an increase from $16.0 million
- Diluted earnings per share was $1.55, including a benefit of $0.21 per share resulting from changes in U.S. tax law, compared to $0.55 in the fourth quarter of 2016
- Opened 38 new restaurants
Overview for the year ended December 31, 2017 as compared to the prior year:
- Revenue increased 14.7% to $4.5 billion
- Comparable restaurant sales increased 6.4%
- Restaurant level operating margin was 16.9%, an increase from 12.8%
- Net income was $176.3 million, an increase from net income of $22.9 million
- Diluted earnings per share was $6.17, including a benefit of $0.21 per share resulting from changes in U.S. tax law, compared to $0.77 in 2016
- Opened 183 new restaurants and closed or relocated 25, including 15 ShopHouse Southeast Asian Kitchen Restaurants
“During 2017, we have made considerable changes around leadership, operations, and long-term planning and it is clear that, while there is still work to be done, we are starting to see some success,” said Steve Ells, founder, chairman and chief executive officer. “2018 marks the 25th anniversary of Chipotle, and I am encouraged by the dedication all of our guests and employees have to this brand. Our focus this year will be to continue perfecting the dining experience, enhancing the guest experience through innovations in digital and catering, and reinvesting in our restaurants. We are making good progress on our search for a new CEO who can improve execution, drive sales and enable Chipotle to realize our enormous potential.”
Fourth quarter 2017 results
Revenue for the quarter was $1.1 billion, an increase of 7.3% from the fourth quarter of 2016. The increase in revenue was driven by new restaurant openings and to a lesser extent by a 0.9% increase in comparable restaurant sales. Comparable restaurants sales include a 0.6% reduction related to deferred revenue that was recognized during the fourth quarter of 2016 related to our Chiptopia Summer Rewards program. Comparable restaurant sales increased as a result of an increase in the average check, including a 2.4% impact from menu price increases taken in select restaurants during the second and fourth quarters of 2017, partially offset by a decrease in transactions. We opened 38 new restaurants during the quarter, and relocated or closed four restaurants, bringing the total restaurant count to 2,408.
Food costs were 34.2% of revenue, a decrease of 110 basis points compared to the fourth quarter of 2016. The decrease was driven by the benefit of the menu price increases, cost savings initiatives related to paper and packaging products, and relief in avocado prices during the fourth quarter of 2017 compared to the fourth quarter of 2016.
Restaurant level operating margin was 14.9% in the quarter, an improvement from 13.5% in the fourth quarter of 2016. The improvement was driven primarily by decreased promotional activity and lower food, beverage and packaging costs as a percent of revenue.
General and administrative expenses were 5.2% of revenue for the fourth quarter of 2017, a decrease of 110 basis points over the fourth quarter of 2016. In dollar terms, general and administrative expenses decreased compared to the fourth quarter of 2016 due to decreased non-cash stock-based compensation expense and lower legal costs.
Net income for the fourth quarter of 2017 was $43.8 million, or $1.55 per diluted share, compared to net income of $16.0 million, or $0.55 per diluted share, in the fourth quarter of 2016. Net income for the fourth quarter of 2017 included a $6.0 million benefit ($0.21 per diluted share) for changes in U.S. tax law.
Full year 2017 results
Revenue for the full year 2017 was $4.5 billion, up 14.7% from the prior year. The increase in revenue was driven by new restaurant openings and a 6.4% increase in comparable restaurant sales. Comparable restaurant sales for the full year included a 1.2% benefit from menu price increases during the second and fourth quarters and a 0.3% benefit from the accounting for deferred revenue during 2016 and 2017 related to Chiptopia Summer Rewards. Comparable restaurant sales improved primarily as a result of an increase in average check during 2017 compared to 2016.
We opened 183 new restaurants during the year and closed or relocated 25 (including the closure of 15 ShopHouse Southeast Asian Kitchen restaurants), bringing the total restaurant count to 2,408.
Food costs were 34.3% of revenue, a decrease of 70 basis points as compared to the prior year. The decrease was driven by the benefit of the menu price increases taken in select restaurants during the second and fourth quarters of 2017, combined with bringing the preparation of lettuce and bell peppers back into our restaurants after using pre-cut produce during portions of 2016, and cost savings initiatives related to paper and packaging products. These decreases were partially offset by higher avocado prices.
Restaurant level operating margin was 16.9% for the full year 2017, an improvement from 12.8% in the prior year. The improvement was driven by sales leverage, including the benefit of menu price increases, decreased marketing and promotional spend and labor efficiencies, partially offset by higher wages paid to crew and managers. Marketing and promotional expenses were 3.5% of revenue during 2017, compared to 5.1% of revenue during 2016.
General and administrative expenses were 6.6% of revenue for the full year of 2017, a decrease of 50 basis points over the prior year, primarily as a result of sales leverage. In dollar terms, general and administrative costs increased compared to the prior year primarily due to recording a liability of $30.0 million, which represents an estimate of potential claims and assessments by payment card networks related to the data security incident that was announced in April 2017. Additionally, increased bonus costs and higher non-cash stock-based compensation expense contributed to the increase. The increase was partially offset by lower legal costs, as well as decreased meeting costs because of the biennial All Managers Conference held in September 2016.
Our 2017 effective tax rate was 36.1%, a decrease of 4.7% from 2016, due to the enactment of the Tax Cuts and Jobs Act, and a lower state tax rate. This decrease was partially offset by federal credits on overall higher pre-tax operating income. The Tax Cuts and Jobs Act reduced the federal corporate income tax rate to 21% starting in 2018. As a result, we recognized a $6.0 million benefit related to the remeasurement of our deferred tax position at the lower rate.
Net income for the full year 2017 was $176.3 million, or $6.17 per diluted share, compared to net income of $22.9 million, or $0.77 per diluted share, for the prior year.
With regard to the impact of the Tax Cuts and Jobs Act, Jack Hartung, Chief Financial Officer, said, “We’re pleased that the lower income tax rate from the tax law change will result in savings of approximately $40 to $50 million in 2018. We plan to invest more than one-third of these tax savings in our people, including by making all of our restaurant managers and crew eligible for a one-time cash bonus, awarding one-time stock bonuses to a broad group of staff employees, and enhancing a number of other benefits such as parental leave and short term disability, all to help position Chipotle as the employer of choice in the restaurant industry. We’re excited to share further details about these programs in the coming days.”
For 2018, management is expecting the following:
- Comparable restaurant sales increases in the low single digits
- 130 – 150 new restaurant openings
- An estimated effective tax rate for the full year of between 30.0% and 31.0%, which includes an underlying effective tax rate of about 27% to 28%, plus the effect of prior year employee equity plans which may either expire without vesting (resulting in no tax deduction), or vest at lower realized values (resulting in a lower tax deduction). While we expect future underlying effective tax rates in the 27% to 28% range, these rates will be further impacted by volatility due to accounting for taxes associated with previous and future stock-based compensation awards as well as a deferred tax asset related to market-based performance stock awards which may not vest.
Chipotle will host a conference call to discuss the fourth quarter and full year 2017 financial results on Tuesday, February 6, 2018 at 4:30 PM Eastern time.
The conference call can be accessed live over the phone by dialing 1-877-451-6152 or for international callers by dialing 1-201-389-0879. The call will be webcast live from the company’s website on the investor relations page at ir.chipotle.com. An archived webcast will be available approximately one hour after the end of the call.
Steve Ells, our founder, Chairman and CEO, started Chipotle with the idea that food served fast did not have to be a typical fast food experience. Today, Chipotle continues to offer a focused menu of burritos, tacos, burrito bowls, and salads made from fresh, high-quality ingredients, prepared using classic cooking methods and served in an interactive style allowing people to get exactly what they want. Chipotle seeks out extraordinary ingredients that are not only fresh, but that are raised responsibly, with respect for the animals, the land, and the people who produce them. Chipotle prepares its food using real, wholesome ingredients and without the use of added colors, flavors or other additives typically found in fast food. Chipotle opened with a single restaurant in Denver in 1993 and as of December 31, 2017, operated 2,408 restaurants. For more information, visit Chipotle.com.
Dunkin’ Brands Reports Fourth Quarter and Fiscal Year 2017 Results
February 6, 2018
Fiscal year 2017: Dunkin’ Donuts U.S. comparable store sales growth of 0.6% – Flat Baskin-Robbins U.S. comparable store sales growth
Fiscal year 2017 highlights include:
- Dunkin’ Donuts U.S. comparable store sales growth of 0.6%
- Flat Baskin-Robbins U.S. comparable store sales growth
- Added 440 net new restaurants worldwide, including 313 net new Dunkin’ Donuts in the U.S.
- Revenues increased 3.8%, or 4.9% on a 52-week basis
- Diluted EPS increased 80.1%, or 82.7% on a 52-week basis, to $3.80
- Diluted adjusted EPS increased 7.5%, or 9.0% on a 52-week basis, to $2.43
Fourth quarter highlights include:
- All four business segments had positive comparable store sales
- Dunkin’ Donuts U.S. comparable store sales growth of 0.8%
- Baskin-Robbins U.S. comparable store sales growth of 5.1%
- Added 141 net new restaurants worldwide, including 126 net new Dunkin’ Donuts in the U.S.
- Revenues increased 5.3%, or 9.8% on a 13-week basis
- Diluted EPS increased 249.2%, or 267.2% on a 13-week basis, to $2.13
- Diluted adjusted EPS unchanged at $0.64, or increased 4.9% on a 13-week basis
Dunkin’ Brands Group, Inc. (Nasdaq: DNKN), the parent company of Dunkin’ Donuts (DD) and Baskin-Robbins (BR), today reported results for the 13-week fiscal fourth quarter and 52-week fiscal year ended December 30, 2017.
“In 2017, we made significant progress positioning Dunkin’ Donuts as America’s most-loved, beverage-led, on-the-go brand. Morning comparable store sales increased each quarter sequentially, and we had our highest quarterly beverage comparable sales of the year in the fourth quarter of 2017, driven by iced coffee and Frozen Dunkin’ Coffee. Our strategic focus on morning sales yielded improved customer counts in that critical daypart during the last three quarters of the year and we are actively working to drive afternoon traffic through p.m. beverages and food along with all-day value offers that kicked-off in January. Additionally, in 2017, we believe that Dunkin’ Donuts was once again one of the fastest growing retail brands by unit count in the country,” said Nigel Travis, Dunkin’ Brands Chairman and CEO. “Other accomplishments during 2017 included adding more than two million members to the Perks loyalty program bringing total membership to approximately 8 million, increasing out-of-restaurant retail sales of Dunkin’ branded consumer packaged goods by greater than 30 percent, and successfully testing a simplified menu across 1,000 restaurants. We strongly believe the simplified menu, which is expected to roll-out nationally by the end of the first quarter, will improve franchisees’ profitability and enable us to better serve customers.”
“We’re pleased to have delivered our revenue, operating income, and earnings per share targets for 2017, and look forward to sharing our growth targets for 2018 and beyond at our upcoming investor day on February 8 in Boston,” said Kate Jaspon, Dunkin’ Brands Chief Financial Officer. “In January, we announced an approximately five percent reduction in our general and administrative expense target in 2018 to two percent of systemwide sales. We are also encouraged by the recently passed tax reform act which includes provisions that we expect to be favorable to the majority of our franchisees as well as net beneficial to Dunkin’ Brands.”
RAVE Restaurant Group, Inc. Reports Second Fiscal Quarter 2018 Financial Results
February 6, 2018
Total consolidated revenue decreased 38.1% to $4.2 million compared to $6.8 million in the second quarter of fiscal 2017. – Pizza Inn domestic comparable store retail sales increased 2.7% from the same period of the prior year, while total domestic retail sales decreased by 3.3%.
RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the second quarter of fiscal 2018 ended December 24, 2017.
Second Quarter Highlights:
- Total consolidated revenue decreased 38.1% to $4.2 million compared to $6.8 million in the second quarter of fiscal 2017.
- Pizza Inn domestic comparable store retail sales increased 2.7% from the same period of the prior year, while total domestic retail sales decreased by 3.3%.
- Pie Five comparable store retail sales decreased 13.7% from the same period of the prior year, while total system-wide retail sales decreased by 18.8%.
- Company-owned Pie Five average weekly sales increased 10.2% year over year.
- Net loss improved by $7.3 million to $0.6 million for the second quarter of fiscal 2018 compared to $7.9 million for the same quarter of the prior year, primarily due to closures of underperforming Company Pie Five units, lower closed store expenses, increased gains from sale of assets, lower impairment expenses, lower lease termination expenses, and reductions to general and administrative expenses.
- On a fully diluted basis, the company reported a loss of $0.04 per share for the second quarter of fiscal 2018 compared to a loss of $0.74 per share for the same period of the prior year.
- Adjusted EBITDA of ($0.2) million was $0.9 million better than the same quarter of the prior year.
- Company-owned Pie Five operating cash flow decreased $0.1 million from the same period of the prior year.
- Net reduction of three Pie Five restaurants during the quarter brought the total Pie Five restaurants open at the end of the quarter to 80.
“By all indications, we have a solid plan in place that is driving improvements to profitability of continuing operations and lowering overhead expenses,” said Scott Crane, Chief Executive Officer of Rave Restaurant Group, Inc. “As we simplify our business through the outsourcing of our supply chain and distribution business, as well as reducing our corporate store footprint, we will lessen our overall financial exposure and improve the stability of our business model.”
Second Quarter Fiscal 2018 Operating Results
Revenues of $4.2 million and $9.6 million for the second quarter and year to date fiscal 2018 were 38.1% and 32.4% lower, respectively, than the same periods of the prior year. For the three and six month periods ended December 24, 2017, the Company reported a net loss of $0.6 million and $0.9 million, respectively, compared to a loss of $7.9 million and $9.4 million for the same periods of the prior year. On a fully diluted basis, the loss was $0.04 per share and $0.07per share, respectively, for the second quarter and year to date fiscal 2018, compared to a loss of $0.74 per share and $0.89 per share for the same periods of the prior year. The decreased loss for the three month period ended December 24, 2017 was primarily the result of $5.8 million improvement in loss from continuing operations before taxes from Company-owned restaurants, $0.8 million improvement in gain on sale of assets, and $0.5 million decrease in corporate general and administrative expenses. The decreased loss for the six month period ended December 24, 2017 was primarily the result of $6.4 million improvement in loss from continuing operations before taxes from Company-owned restaurants, $0.9 million improvement in gain on sale of assets, and $0.4 million decrease in corporate general and administrative expenses. The Company continued to provide a full valuation allowance against its deferred tax assets. Adjusted EBITDA improved $0.9 million and $1.4 million for the three and six month periods ended December 24, 2017to ($0.2) million and $0.5 million, respectively. The improvement in Adjusted EBITDA was driven by improvements to net loss, decreased depreciation and amortization, increased average weekly sales at Company-owned Pie Five locations, and positive comparable sales at Pizza Inn locations.
During the fiscal quarter ended December 24, 2017, the Company discontinued its Norco distribution division and revised its arrangements with third party suppliers and distributors of food, equipment and supplies. As a result, sale of food, equipment and supplies is no longer recognized as revenue and the cost of such items is no longer included in cost of sales. The Company now recognizes incentive revenues received from third party suppliers and distributors as revenue.
“Our new, simplified approach to supply chain management provides more transparency and efficiency for our franchisees. It has also provided us opportunities to make reductions in general and administrative costs,” said Crane.
Pie Five system-wide retail sales decreased 18.8% for the second quarter of fiscal 2018 when compared to the same period in the prior year, primarily driven by a 15.5% decrease in average units open. Comparable store retail sales decreased by 13.7% for the most recent fiscal quarter compared to the same period in the prior year. Year to date, Pie Five system-wide retail sales decreased 18.0% compared to the same period in the prior year, primarily driven by a 10.8% decrease in average units open. Comparable store retail sales decreased by 15.5% during the first six months of fiscal 2018 compared to the same period of the prior year.
In keeping with health-based consumer trends, Pie Five recently introduced a cauliflower pizza crust to its dough line-up. The new cauliflower crust, along with continued testing of other product innovations, are all part of enhancing the Pie Five guest experience.
“We continue to see an opportunity to take advantage of growth in areas such as delivery, cauliflower pizza crusts, and shareable pizzas, with the goal of increasing frequency among our loyal guest base,” said Crane.
Pizza Inn total domestic retail sales decreased 3.3% and 2.1%, respectively, for the three and six month periods ended December 24, 2017, compared to the same periods of the prior year. Pizza Inn domestic comparable store retail sales increased 2.7% and 2.2%, respectively, for the three and six month periods ended December 24, 2017, compared to the same periods of the prior year.
“We are pleased that Pizza Inn continues to ride a growth trajectory with positive same store sales trends,” said Crane. “We recently announced a new concept, P.I.E, developed as a complement to the brand refresh and expansion initiatives at Pizza Inn. Convenience stores are a $575 billion industry with 70% of sales attributed to in-store purchases. This new concept allows Pizza Inn to diversify its footprint and is a great way to reach new customers in a faster setting, while still serving the same iconic, quality pizza our guests have come to expect.”
Geared towards convenience stores, but also an airport or entertainment venue option, P.I.E will allow customers to order and pay at a kiosk for grab-and-go, or pick up their food at a designated spot. Pizza Inn has a strong presence in the southeastern part of the country where the convenience store segment has the nation’s highest grouping of independent operators.
In the second quarter of fiscal 2018, two new franchised Pie Five restaurants were opened, while five franchised restaurants were closed, bringing the quarter-end total unit count to 80 restaurants. The Company also refranchised 11 Company-owned locations in the DFW market during the quarter.
“We are diligently pursuing a refranchising strategy at Pie Five,” said Crane. “This shift in our model allows us to focus on best-in-class support of our franchise community so that they can, in turn, provide a great guest experience.”
During the second fiscal quarter, the number of Pizza Inn domestic units declined to 156, while international units increased to 62.
“We continue to be pleased with new development and remodeling of Pizza Inn units,” said Crane. “In addition, our P.I.E concept is attractive to non-traditional operators because it allows them to have the quality of the Pizza Inn platform as an option. Historically, that quality hasn’t been available to them at a minimal investment.”
About RAVE Restaurant Group, Inc.
Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates and franchises approximately 300 Pie Five Pizza Co. and Pizza Inn restaurants domestically and internationally. Pie Five Pizza Co. is a leader in the rapidly growing fast-casual pizza space offering made-to-order pizzas ready in under five minutes. Pizza Inn is an international chain featuring freshly made pizzas, along with salads, pastas, and desserts. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “RAVE”.
Inspire Brands Launches Today with Arby’s, Buffalo Wild Wings as Foundation
February 5, 2018–Atlanta, GA–(RestaurantNews.com)
Inspire Brands, Inc., a new global, multi-brand restaurant company, launched today following the completion of a $2.9 billion acquisition of Buffalo Wild Wings, Inc. by Arby’s Restaurant Group, Inc.
Inspire was co-founded by Paul Brown of Arby’s and Neal Aronson of Roark. Brown will serve as Chief Executive Officer of the company. Inspire will oversee the continued growth and success of Arby’s, Buffalo Wild Wings and an emerging brand, R Taco, while building a platform for future strategic additions.
Inspire is one of the largest owner-operators of restaurants with more than 1,700 company-owned restaurants. System wide, Inspire includes more than 4,600 company-owned and franchised restaurants with more than 150,000 team members across 15 countries. The combined 2017 global system sales of its restaurants exceeds $7.6 billion.
“We believe the time is right to create a different kind of restaurant company – one with a broad portfolio of distinct brands across a full spectrum of restaurant occasions,” said Paul Brown, Chief Executive Officer of Inspire Brands. “Our goal is to build an organization that leverages the benefits of scale, not only to save cost, but also to enable outsized investments in long-term growth initiatives.”
The objective of Inspire is to build a family of powerful, distinct restaurant brands that each have high-growth potential, both domestically and Internationally. The Inspire organization is designed to enable each individual brand to benefit from and build off the strengths of the others.
“I’m incredibly excited about the opportunity ahead,” Brown said. “Our family of brands are iconic within their restaurant segments and have succeeded with the help of a strong franchise base, differentiated marketing and, most importantly, delicious food. I’m looking forward to accelerating their growth under our new model.”
Inspire will be led by a team of executives with deep and diverse experience in the restaurant industry, as well as with other multi-brand organizations. The Inspire headquarters will be based in Atlanta, Ga., and it will also operate a support center in Minneapolis, Minn.
About Inspire Brands
Inspire Brands is a leading global owner, operator, and franchisor of a portfolio of restaurant brands that includes more than 4,500 Arby’s, Buffalo Wild Wings, and R Taco locations. The company was founded in 2018 and is headquartered in Atlanta, Ga. For more information, visit InspireBrands.com
Roark is an Atlanta-based private equity firm and the majority owner of Inspire Brands. Roark’s focus is consumer, multi-unit, and franchise brands. For more information, visit RoarkCapital.com
Arby’s, founded in 1964, is the second-largest sandwich restaurant brand in the world with more than 3,400 restaurants in seven countries. For more information, visit Arbys.com
About Buffalo Wild Wings
Buffalo Wild Wings, founded in 1982, features a variety of boldly-flavored, made-to-order menu items including its namesake Buffalo, New York-style chicken wings. For more information, visit BuffaloWildWings.com
About R Taco
R Taco is a distinctive fast-casual taco concept featuring street-style tacos, all made fresh from scratch, by hand, and on premise. For more information, visit RTacos.com
Nathan’s Famous, Inc. Reports Third Quarter Results
February 02, 2018–JERICHO, NY—PRNewswire
Nathan’s Famous, Inc. (NASDAQ: NATH) today reported results for the third quarter of its 2018 fiscal year that ended December 24, 2017.
For the fiscal quarter ended December 24, 2017:
- Revenues increased to $22,083,000, as compared to $19,937,000during the thirteen weeks ended December 25, 2016;
- Income from operations increased to $5,370,000, as compared to $4,754,000during the thirteen weeks ended December 25, 2016;
- Adjusted EBITDA, as subsequently defined, increased to$5,855,000 as compared to $5,255,000 for the thirteen weeks ended December 25, 2016;
- Excluding the loss on debt extinguishment and revaluation of deferred tax liabilities as described below, net income and earnings per diluted share, would have been $1,051,000or $0.25 per share, as compared to $699,000or $0.17 per share, as reported, for the thirteen weeks ended December 25, 2016;
- In connection with our refinancing of the 10.000% Senior Secured Notes due 2020, we recorded a loss on debt extinguishment of $8,872,000, or $5,266,000, net of tax, or $1.25per diluted share. We expect the new 6.6250% Senior Secured Notes due 2025 to lower our cash interest expense by $3,562,500 per annum;
- Benefit for income taxes was increased by $436,000or $0.10 per diluted share resulting from the revaluation of its deferred tax liabilities resulting from the effects of tax reform;
- Net loss was $3,779,000, as compared to net income $699,000for the thirteen weeks ended December 25, 2016; and
- Loss per diluted share was $0.90per share, as compared to earnings of $0.17 per share for the thirteen weeks ended December 25, 2016.
For the thirty-nine weeks ended December 24, 2017:
- Revenues increased to $84,607,000, as compared to $77,366,000during the thirty-nine weeks ended December 25, 2016;
- Income from operations increased to $22,554,000, as compared to $21,609,000during the thirty-nine weeks ended December 25, 2016;
- Adjusted EBITDA, as subsequently defined, increased to$24,085,000 as compared to $23,231,000 for the thirty-nine weeks ended December 25, 2016;
- Excluding the loss on debt extinguishment and revaluation of deferred tax liabilities as described below, net income and earnings per diluted share, would have been $7,093,000or $1.68 per share, as compared to $6,756,000 or $1.61 per share, as reported, for the thirty-nine weeks ended December 25, 2016;
- In connection with our refinancing of the 10.000% Senior Secured Notes due 2020, we recorded a loss on debt extinguishment of $8,872,000, or $5,266,000, net of tax, or $1.25per diluted share. We expect the new 6.6250% Senior Secured Notes due 2025 to lower our cash interest expense by $3,562,500 per annum;
- Provision for income taxes was reduced by $436,000or $0.10 per diluted share resulting from the revaluation of its deferred tax liabilities resulting from the effects of tax reform;
- Net income was $2,263,000, as compared to $6,756,000for the thirty-nine weeks ended December 25, 2016; and
- Earnings per diluted share was $0.54per share, as compared to $1.61 per share for the thirty-nine weeks ended December 25, 2016.
About Nathan’s Famous
Nathan’s is a Russell 2000 Company that currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and thirteen foreign countries through its restaurant system, foodservice sales programs and product licensing activities. Last year, over 600 million Nathan’s Famous hot dogs were sold. Nathan’s was ranked #22 on the Forbes 2014 list of the Best Small Companies in America and was listed as the Best Small Company in New York State in October 2013. For additional information about Nathan’s please visit our website at www.nathansfamous.com.
Good Times Restaurants Reports Q1 Results
Total Revenues increased 37% to $22.7 million in Q1
Company reaffirms fiscal 2018 guidance
February 01, 2018–DENVER–(BUSINESS WIRE)
Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Good Times Burgers & Frozen Custard, a regional quick service restaurant chain focused on fresh, high-quality, all-natural products and Bad Daddy’s Burger Bar, a full-service, upscale concept, today announced its preliminary unaudited financial results for the first fiscal quarter ended December 26, 2017.
Key highlights of the Company’s financial results include:
- Same store sales for company-owned Good Times restaurants increased 5.9% for the quarter
- Same store sales for company-owned Bad Daddy’s restaurants increased 0.7% for the quarter on top of last year’s increase of 2.0%
- Total revenues increased 37% to $22,760,000 for the quarter
- The Company opened two new Bad Daddy’s restaurants during the quarter
- Sales for the Bad Daddy’s restaurants for the quarter were $14,987,000 and Bad Daddy’s Restaurant Level Operating Profit (a non-GAAP measure) was $2,355,000 or 15.7% as a percent of sales*
- Adjusted EBITDA (a non-GAAP measure) for the quarter increased 86% to $877,000 from $472,000 for the same quarter last year*
- The Company ended the quarter with $3.3 million in cash and $4.8 million drawn against its senior credit facility
Boyd Hoback, President & CEO, said, “During our first quarter, we continued to post very favorable same store sales results for both brands. Additionally, our new Bad Daddy’s stores that opened in fiscal 2017 and so far in fiscal 2018 are performing very well, averaging $54,000 per week during the quarter, or 12.3% above the system average with the two new North Carolina stores opening very strong in October. Our same store sales have remained on track so far during our second quarter and in addition to the two new Bad Daddy’s opened in October, we opened our first store in the Atlanta market in Chamblee, Georgia in early January. We have two more Bad Daddy’s under construction, one in Chattanooga, Tennessee, and a second Atlanta-area location, with three more expected to begin construction in the next couple of months. We have three additional leases signed awaiting landlord turnover with an additional five in the late stages of lease negotiation, all of which are in North Carolina, South Carolina, Georgia, Tennessee and Oklahoma. While labor is an industry pressure point, our Good Times labor as a percentage of sales only increased .4% and Bad Daddy’s labor decreased by .5% during the quarter compared to the prior year, reflecting the impact of additional Bad Daddy’s development in the southeast.”
Commenting on the Company’s guidance for fiscal 2018, Ryan Zink, Chief Financial Officer, stated “We are reiterating our prior guidance for fiscal 2018 which calls for 2018 revenues of approximately $100 million, and adjusted EBITDA of between $5.0 and $5.5 million. We have slightly shifted our new store opening projections towards the back half of the year, and subsequent to the end of the quarter, we closed our lowest-volume Good Times restaurant, but strong unit-level performance during the first quarter and second quarter to-date have enabled us to retain our revenue and Adjusted EBITDA projections.”
Fiscal 2018 Outlook:
The Company provides the following guidance for fiscal 2018:
- Total revenues of approximately $100 million to $102 million with a year-end revenue run rate of approximately $109 million to $111 million
- Total revenue estimates assume same store sales of approximately +3.5% for Good Times for the balance of the year, and approximately 4.1% for FY2018 in total. We expect same store sales of 1.3% for the year for Bad Daddy’s, including a three-week closure of the original Bad Daddy’s for building renovations. We expect comparable sales of 2.1%, 0.3%, and 2.0% for Q2, Q3, and Q4 respectively.
- General and administrative expenses of approximately $7.7 million to $7.9 million, including approximately $600,000 of non-cash equity compensation expense
- The opening of 6 additional new Bad Daddy’s restaurants (including 1 joint venture unit)
- Total Adjusted EBITDA* of approximately $5.0 million to $5.5 million
- Restaurant pre-opening expenses of approximately $2.6 – $2.7 million
- Capital expenditures (net of tenant improvement allowances) of approximately $9.5 – 10 million including approximately $1.2 million related to fiscal 2019 development
- Fiscal year end long term debt of approximately $10.5 to $11.0 million
*For a reconciliation of restaurant level operating profit and Adjusted EBITDA to the most directly comparable financial measures presented in accordance with GAAP and a discussion of why the Company considers them useful, see the financial information schedules accompanying this release.
Conference Call: Management will host a conference call to discuss its first quarter 2018 financial results on Thursday, February 1st at 3:00 p.m. MST/5:00 p.m. EST. Hosting the call will be Boyd Hoback, President and Chief Executive Officer, and Ryan Zink, Chief Financial Officer.
The conference call can be accessed live over the phone by dialing (888) 339-0806 and requesting the Good Times Restaurants (GTIM) call. The conference call will also be webcast live from the Company’s corporate website www.goodtimesburgers.com under the Investor section. An archive of the webcast will be available at the same location on the corporate website shortly after the call has concluded.
About Good Times Restaurants Inc.: Good Times Restaurants Inc. (GTIM) operates Good Times Burgers & Frozen Custard, a regional chain of quick service restaurants located primarily in Colorado, in its wholly owned subsidiary, Good Times Drive Thru Inc. Good Times provides a menu of high-quality all-natural hamburgers, 100% all-natural chicken tenderloins, fresh frozen custard, natural-cut fries, fresh lemonades and other unique offerings. Good Times currently operates and franchises a total of 37 restaurants.
GTIM owns, operates, franchises and licenses 27 Bad Daddy’s Burger Bar restaurants through its wholly-owned subsidiaries. Bad Daddy’s Burger Bar is a full service, upscale, “small box” restaurant concept featuring a chef driven menu of gourmet signature burgers, chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft microbrew beers in a high energy atmosphere that appeals to a broad consumer base.
J. Alexander’s Announces Preliminary Results of Special Meeting of Shareholders
J. Alexander’s Disinterested Shareholders Do Not Approve Proposal Related to Acquisition of Ninety Nine Restaurant & Pub
J. Alexander’s Remains Focused on Long-Term Growth
J. Alexander’s Announces Preliminary Unaudited Sales Results for the Fiscal Year and Quarter Ended December 31, 2017
February 01, 2018–NASHVILLE, TN–(BUSINESS WIRE)
J. Alexander’s Holdings, Inc. (NYSE: JAX) (“J. Alexander’s” or the “Company”) today announced results of the Special Meeting of Shareholders, held on January 30, 2018 and adjourned and reconvened on February 1, 2018 at 2:00 pm central at the Loews Vanderbilt Hotel in Nashville, Tennessee, to vote on the proposed acquisition of 99 Restaurants, LLC (“99 Restaurants”). J. Alexander’s received the requisite number of votes to approve Proposal 1 (shareholder approval of the merger agreement), Proposal 3a (shareholder approval of the reclassification charter amendment), Proposal 3b (shareholder approval of the authorized shares amendment) and Proposal 5 (shareholder approval of the adjournment proposal), but did not receive the requisite number of votes to approve Proposal 2 (disinterested shareholder approval). Therefore, J. Alexander’s expects that the merger agreement will be terminated. The vote is subject to certification by the Independent Inspector of Election.
Lonnie J. Stout, President and Chief Executive Officer of J. Alexander’s, said: “We appreciate the level of shareholder engagement that we experienced in connection with the proposed transaction. Approximately 90% of the outstanding shares were voted by our shareholders. In particular, we are grateful for the support we received, including from some of our largest shareholders. Further, the safeguards that our board put in place with respect to the transactions, and the requirement of the separate vote of the disinterested shareholders, served their intended purpose, allowing the disinterested shareholders to have the final decision.”
Stout continued: “While we are disappointed that shareholders did not approve this transaction, we are confident in our overall strategy, our strong culture and our ability to deliver value to shareholders. Looking forward, we remain focused on growing our business, strengthening our competitive position and enhancing our current restaurant concepts.
“We are also enthusiastic about executing on our organic growth strategies within our current concepts, including an additional J. Alexander’s restaurant that will open in King of Prussia, Pennsylvania, and a new Stoney River restaurant in Troy, Michigan, both of which will open later this year.”
J. Alexander’s also announced its preliminary unaudited sales results for the fiscal year and quarter ended December 31, 2017. For the J. Alexander’s Restaurant/Grills restaurants, preliminary results are as follows: average weekly same store sales increased by 2.3% to $117,200 for the quarter ended December 31, 2017 and increased by 3.0% to $114,500 for the fiscal year ended December 31, 2017. For the Stoney River Steakhouse and Grill restaurants, preliminary results are as follows: average weekly same store sales increased by 7.3% to $85,100 for the quarter ended December 31, 2017 and increased by 3.8% to $74,700 for the fiscal year ended December 31, 2017. For the quarter ended December 31, 2017, J. Alexander’s unaudited preliminary net sales are $61,338,000, up 7.0% from the $57,323,000 reported for the quarter ended January 1, 2017. For the fiscal year ended December 31, 2017, J. Alexander’s unaudited preliminary net sales are $233,255,000, up 6.2% from the $219,582,000 reported for the fiscal year ended January 1, 2017.
About J. Alexander’s
J. Alexander’s Holdings, Inc. is a collection of boutique restaurants that focus on providing high quality food, outstanding professional service and an attractive ambiance. The company presently owns and operates the following concepts: J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill and Lyndhurst Grill. J. Alexander’s Holdings, Inc. has its headquarters in Nashville, Tennessee. To learn more about J. Alexander’s, please visit www.jalexandersholdings.com.
Sentinel Sells Huddle House
Continues Successful Record of Investing in Restaurant Franchises
February 1, 2018–NEW YORK, NY–PRNewswire
Sentinel Capital Partners, a private equity firm that invests in promising, lower midmarket companies, today announced it has sold Huddle House, Inc., a leading franchisor of family dining restaurants in the Southeast. Financial terms of the transaction were not disclosed.
Based in Atlanta, Georgia, Huddle House was founded in 1964 with a focus on serving quality food in warm, friendly environments that bring communities together. Huddle House offers customers “Any Meal. Any Time.” with a broad menu of high quality, cooked-to-order food, 24-hour service, and breakfast, lunch, and dinner served all day. Huddle House has 349 units that generate more than $240 million in annual system-wide sales.
“Working closely with Huddle House’s talented management team has been a great experience,” said Jim Coady, a partner at Sentinel. “Throughout our ownership, Huddle House has achieved impressive, system-wide operational results that have increased efficiency and improved productivity at the individual restaurant level. Average unit volume increased by 14% on our watch, which reflects the commitment and dedication to excellence of the entire Huddle House team.”
“Sentinel has been a great partner to Huddle House and over the past six years, has helped us set and achieve meaningful strategic milestones,” said Michael Abt, CEO of Huddle House. “Our customers, franchisees, operators, and employees are super excited about Huddle House’s future.”
The past year has been highly productive for Sentinel. Besides selling Huddle House, Sentinel also completed exits from Checkers/Rally’s, the nation’s largest franchisor and operator of dual drive-thru hamburger QSRs; National Spine & Pain Centers, a leading service provider to interventional pain management physicians; PlayCore, the leading North American supplier of play, park, and recreation products; and WellSpring Consumer Healthcare, a North American marketer of OTC health brands. Also during the past year, Sentinel made four new platform investments: cabi, a leading direct marketer of women’s fashion apparel; Captain D’s, a leading restaurant operator in the QSR seafood sector; MB2 Dental Solutions, a rapidly-growing dental service organization with a unique physician-centric ownership model; and Nekoosa, a leading manufacturer of specialty paper and film products used in the graphics and commercial print markets.
In January 2018, Sentinel also announced the closing of its $2.15 billion sixth private equity fund and its $460 million inaugural junior capital fund.
About Sentinel Capital Partners
Sentinel Capital Partners specializes in partnering with entrepreneurial executives to buy and build lower midmarket companies in the United States and Canada. Sentinel targets eight industry sectors: aerospace/defense, business services, consumer, distribution, food/restaurants, franchising, healthcare, and industrials. Sentinel invests in management buyouts, purchases of family businesses, corporate divestitures, going-private transactions, and special situations of businesses with up to $65 million in EBITDA. For more information about Sentinel, please visit www.sentinelpartners.com.
About Huddle House
Committed to serving “Any Meal. Any Time.” Huddle House restaurants have become icons in the communities they serve throughout the country. The core values on which the brand was founded – serving freshly prepared, quality home-style food in a warm, friendly environment that brings the community together – are as true today as they were when it was founded 54 years ago. Today, the brand has 349 locations. For more information about Huddle House, please visit www.huddlehouse.com.
Brinker International Reports Second Quarter Results
January 30, 2018–DALLAS, TX–PRNewswire
Brinker International, Inc. (NYSE: EAT) today announced results for the fiscal second quarter ended Dec. 27, 2017.
Highlights include the following:
- On a GAAP basis, earnings per diluted share were $0.54 for the second quarter of fiscal 2018 representing a 21.7 percent decrease from $0.69 in the second quarter of fiscal 2017
- Earnings per diluted share, excluding special items, were $0.87for the second quarter of fiscal 2018 representing a 22.5 percent increase from $0.71 in the second quarter of fiscal 2017 (see non-GAAP reconciliation below)
- The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) negatively impacted GAAP net income by $3.9 million or $0.08per diluted share, consisting of $8.7 million or $0.18 per diluted share for the revaluation of the Company’s net deferred tax assets, partially offset by the impact from the decrease in the statutory tax rate of $4.8 million or $0.10per diluted share for the second quarter of 2017
- Brinker International’s total revenues were $766.4 million in the second quarter of fiscal 2018 decreasing 0.6 percent compared to the second quarter of fiscal 2017, and company sales were $742.7 million in the second quarter of fiscal 2018 decreasing 0.8 percent compared to the second quarter of fiscal 2017
- Chili’s company-owned comparable restaurant sales decreased 1.5 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017. Chili’s U.S. franchise comparable restaurant sales decreased 1.7 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017
- Chili’s international franchise comparable restaurant sales increased 0.1 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017
- Maggiano’s comparable restaurant sales increased 1.8 percent in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017
- Operating income, as a percent of total revenues, was 7.1 percent for the second quarter of fiscal 2018 compared to 8.0 percent for the second quarter of fiscal 2017 representing a decrease of approximately 90 basis points
- Restaurant operating margin, as a percent of company sales, was 14.9 percent for the second quarter of fiscal 2018 compared to 15.1 percent for the second quarter of fiscal 2017 representing a decrease of approximately 20 basis points (see non-GAAP reconciliation below)
- For the first six months of fiscal 2018, cash flows provided by operating activities were $119.7 million and capital expenditures totaled $48.6 million. Free cash flow was $71.1 million (see non-GAAP reconciliation below)
- The Company is updating its fiscal 2018 outlook and now estimates earnings per diluted share, excluding special items and the revaluation of the Company’s deferred tax accounts, to be in the range of $3.42 to $3.52 for fiscal 2018
“Brinker saw performance improve across the business during the second quarter, especially related to our initiatives to change traffic trends at Chili’s,” said Wyman Roberts, chief executive officer and president. “With this foundational strategy in place, we will focus on targeted segments of the business we believe will enhance the guest experience and drive traffic.”
McDonald’s Reports Fourth Quarter And Full Year 2017 Results And First Quarter 2018 Cash Dividend
January 30, 2018–OAK BROOK, IL–PRNewswire
McDonald’s Corporation today announced results for the fourth quarter and year ended December 31, 2017.
“2017 was a strong year for McDonald’s as customers responded to the many ways we are making their experience more convenient and enjoyable,” said McDonald’s President and Chief Executive Officer Steve Easterbrook. “We served more customers more often, achieved our best comparable sales performance in six years, gained share in markets around the world and made tremendous progress with growth platforms such as delivery, mobile order and pay and Experience of the Future.”
Fourth quarter highlights:
- Global comparable sales increased 5.5%, reflecting positive guest counts in all segments
- Due to the impact of the Company’s strategic refranchising initiative, consolidated revenues decreased 11% (15% in constant currencies)
- Systemwide sales increased 8% in constant currencies
- Consolidated operating income increased 9% (6% in constant currencies)
- Diluted earnings per share of $0.87 decreased 40% (42% in constant currencies), reflecting a net tax cost associated with the Tax Cuts and Jobs Act of 2017 (“Tax Act”), which totaled $0.84 per share. Excluding the impact of the Tax Act, diluted earnings per share was $1.71, an increase of 19% (16% in constant currencies)
Full year highlights:
- Global comparable sales increased 5.3%, reflecting positive guest counts in all segments
- Due to the impact of the Company’s strategic refranchising initiative, consolidated revenues decreased 7% (8% in constant currencies)
- Systemwide sales increased 7% in constant currencies
- Consolidated operating income increased 23% (23% in constant currencies), which benefited from a gain of approximately $850 million on the sale of the Company’s businesses in China and Hong Kong. Excluding the impact of the gain, as well as current and prior year impairment and strategic charges, consolidated operating income increased 9% (9% in constant currencies)
- Diluted earnings per share increased 17% (17% in constant currencies)
- Returned $7.7 billion to shareholders through share repurchases and dividends. In addition, the Company announced a 7% increase in its quarterly dividend to $1.01 beginning in the fourth quarter, demonstrating management’s continued confidence in the Company’s performance
On January 25, 2018, McDonald’s Board of Directors declared a quarterly cash dividend of $1.01 per share of common stock payable on March 15, 2018 to shareholders of record at the close of business on March 1, 2018.
In the U.S., fourth quarter comparable sales increased 4.5% as a result of strong performance of core menu items featured under the McPick 2 platform and beverage value, as well as strong consumer response to the new Buttermilk Crispy Tenders and delivery. Operating income for the quarter increased 4%, reflecting higher franchised margin dollars and G&A savings, partly offset by lower Company-operated margin dollars.
Comparable sales for the International Lead segment increased 6.0% for the quarter, led by continued momentum in the U.K. and Canada, as well as positive results across all other markets. The segment’s operating income increased 14% (7% in constant currencies), fueled by sales-driven improvements in franchised margin dollars.
In the High Growth segment, fourth quarter comparable sales increased 4.0%, led by strong performance in China and positive results across the majority of the segment, partly offset by continued challenges in South Korea.
In the Foundational markets, fourth quarter comparable sales rose 8.0%, reflecting positive sales performance across all geographic regions.
“For 2018, we plan to invest about $2.4 billion of capital, the majority of which will be dedicated to reinvesting in our existing locations through accelerated deployment of Experience of the Future in the U.S.,” said McDonald’s Chief Financial Officer Kevin Ozan. “Our development plans also include the opening of about 1,000 new McDonald’s restaurants, 75% of which will be funded by our expanded network of developmental licensees and affiliates around the world. At the same time, we plan to continue making meaningful investments in technology to modernize the customer experience and redefine convenience. I’m confident that now is the opportune time to strategically invest in our business and our restaurants to drive profitable growth and become an even better McDonald’s.”
Steve Easterbrook concluded, “Our Velocity Growth Plan is working and we’re focused on aggressive execution in 2018 to achieve the even greater ambitions we have for our business and brand in the years ahead. With the commitment the McDonald’s system has to running great restaurants and maximizing our growth initiatives, we are confident that we will accelerate our momentum by capitalizing on our strong business model and distinct brand advantages in convenience, menu variety and value.”
Luby’s Reports First Quarter Fiscal 2018 Results
Same-store sales increased 0.8%
January 29, 2018–HOUSTON, TX–PRNewswire
Luby’s, Inc. (NYSE: LUB) today announced unaudited financial results for its sixteen-week first quarter fiscal 2018, which ended on December 20, 2017. Comparisons in this earnings release for the first quarter fiscal 2018 are referred to as “first quarter.”
First Quarter Key Metrics
(comparisons to first quarter fiscal 2017)
- Same-store sales increased 0.8%
- Culinary Contract Services sales increased $3.2 million
- Adjusted EBITDA increased $1.1 million
- Three new Fuddruckers franchise locations opened (one international location in Mexico, and domestic locations in Florida and Pennsylvania) in the first quarter
- Capital expenditures decreased $0.7 million
Chris Pappas, President and CEO, commented, “We are pleased to have generated positive same-store sales in the first quarter at both of our primary brands, Luby’s Cafeteria and Fuddruckers, leading to a company-wide increase of 0.8% same-store sales.
“We are encouraged by the progress of the operational and guest initiatives that we began implementing last year to help improve guest services, store level profit and EBITDA while closely managing expenses. These efforts are contributing to same-store sales growth as well as improving cost controls. In the first quarter, we grew Adjusted EBITDA by over $1.0 million.
“Our team continues to focus on enhancing guest experiences across all of our brands, including through in-store operational efficiencies, menu variety and new offerings and speed of service.
“In Culinary Contract Services, revenue grew significantly in the first quarter and remains on track to show substantial growth in fiscal year 2018. We remain optimistic in our ability to strengthen our iconic brands, grow our Culinary Contract Services segment and continue to control costs company-wide.”
Luby’s, Inc. (NYSE: LUB) operates 163 restaurants nationally as of December 20, 2017: 88 Luby’s Cafeterias, 68 Fuddruckers, seven Cheeseburger in Paradise restaurants. Luby’s is the franchisor for 111 Fuddruckers franchise locations across the United States (including Puerto Rico), Canada, Mexico, Italy, the Dominican Republic, Panama, and Colombia. Additionally, a licensee operates 34 restaurants with the exclusive right to use the Fuddruckers proprietary marks, trade dress, and system in certain countries in the Middle East. The Company does not receive revenue or royalties from these Middle East restaurants. Luby’s Culinary Contract Services provides food service management to 22 sites consisting of healthcare and corporate dining locations.
Starbucks Reports Record Q1 Fiscal 2018 Results
Net Revenues Up 6% to a Record $6 Billion; Global and U.S. Comp Store Sales Up 2%
China Net Revenues Up 30%; China Comps Up 6%
January 25, 2018–SEATTLE–(BUSINESS WIRE)
Starbucks Corporation (NASDAQ:SBUX) last week reported financial results for its 13-week fiscal first quarter ended December 31, 2017. GAAP results in fiscal 2018 and fiscal 2017 include items which are excluded from non-GAAP results.
Q1 Fiscal 2018 Highlights
- Global comparable store sales increased 2%, driven by a 2% increase in average ticket
- Americas and U.S. comp store sales increased 2%, driven by a 2% increase in average ticket
- CAP comp store sales increased 1%, driven by a 1% increase in transactions
- China comp store sales increased 6%, driven by a 6% increase in transactions
- Consolidated net revenues of $6.1 billion grew 6% versus the prior year
- GAAP operating margin of 18.4% declined 140 basis points compared to the prior year; non-GAAP operating margin of 19.2% declined 80 basis points
- GAAP Earnings Per Share of $1.57 included $0.79 of net gain related to the acquisition of East China and a $0.13 net benefit from other items which are excluded from non-GAAP results
- Non-GAAP EPS grew 25% to $0.65 per share and included a $0.07 benefit from changes in the U.S. tax law
- Active membership in Starbucks Rewards in the U.S. grew 11% versus the prior year to 14.2 million, with member spend representing 37% of U.S. company-operated sales, and Mobile Order and Pay representing 11% of U.S. company-operated transactions
- Starbucks Card reached 42% of U.S. and Canada company-operated transactions
- The company opened 700 net new stores globally, bringing total store count to 28,039 across 76 markets
- The company returned a record $2 billion to shareholders in the quarter through a combination of dividends and share repurchases
“Starbucks reported another quarter of record financial results in Q1 of fiscal 2018, with consolidated revenues up 6% over last year – up 7% excluding 1% for the impact of streamlining activities in the quarter. China grew revenues 30% in Q1, with the strategic acquisition of East China positioning us to accelerate our growth in the key China market,” said Kevin Johnson, president and ceo. “Today, Starbucks has two powerful, independent but complementary engines driving our global growth, the U.S. and China. Our work to streamline the company is sharpening our focus on our core operating priorities.”
“Starbucks delivered solid revenue and profit growth and our first ever $6 billion revenue quarter in Q1,” said Scott Maw, cfo. “We are laser-focused on accelerating growth in China and driving improvement across the U.S. business as we move into and through the back half of the year, and remain committed to delivering on the long-term targets we announced last quarter.”
Consolidated net revenues grew 6% over Q1 FY17 to $6.1 billion in Q1 FY18, primarily driven by incremental revenues from the opening of 2,305 net new stores over the past 12 months and a 2% growth in global comparable store sales.
Consolidated operating income declined 1% to $1,116.1 million in Q1 FY18, down from $1,132.6 million in Q1 FY17. Consolidated operating margin declined 140 basis points to 18.4%, primarily due to food-related mix shift in the Americas, as well as restructuring costs related to the company’s ongoing efforts to streamline business operations.