O’Charley’s Inc. (NASDAQ: CHUX) today announced that it has closed 11 underperforming O’Charley’s restaurants and five underperforming Ninety Nine restaurants.
David Head, president and chief executive officer of O’Charley’s Inc. said, “Our decision to close these restaurants was a difficult one as we understand the impact this has on our team members and the communities we serve. We deeply appreciate the hard work, passion and enthusiasm of our team members and managers at the affected locations. Everyone impacted by this decision has been offered severance payments, and where geographically feasible we are working hard to find opportunities for these team members at other O’Charley’s and Ninety Nine restaurants, as well as with restaurants operated by our competitors.
“These closings permit us to focus our energy and efforts on improving the performance of our remaining 339 company-operated restaurants in 25 states. We continue to strongly believe in the potential of our three concepts which enjoy high brand loyalty and guest appeal. We expect to continue to focus on our turnaround plan which centers on ensuring that every guest experiences great food, great service and strong value while we manage our costs to profitability.”
Eight of the 16 closed restaurants will be treated as discontinued operations in the Company’s financial statements. Not including the discontinued operations, the Company estimates that total pretax charges in the fourth quarter of 2010 relating to these closings for asset impairment, future lease obligations and severance will be approximately $5.0 million. The Company estimates that the closing of these 16 restaurants will increase annual income from operations by approximately $1.5 million, and will increase annual Adjusted EBITDA by approximately $1.0 million.