O’Charley’s Inc. has reported operating results for the 16-week period ended April 17, 2011.
Financial and Operating Highlights
- Comparable sales and guest counts increased in all three restaurant concepts:
- O’Charley’s comparable sales and guest counts for company-operated restaurants increased by 0.4 percent and 0.9 percent, respectively.
- Ninety Nine Restaurants’ comparable sales and guest counts increased 3.1 percent and 0.9 percent, respectively.
- Stoney River Legendary Steaks’ comparable sales and guest counts increased by 8.4 percent and 13.9 percent, respectively.
- First quarter revenue decreased by 0.8 percent to $265.0 million from $267.1 million in the first quarter of 2010 as a 1.5 percent increase in blended comparable restaurant sales was offset by a 2.2 percent decrease in restaurant sales resulting from restaurant closures in the prior year.
- The calendar shift of Easter into the second quarter of 2011 positively impacted first quarter restaurant sales by 0.4 percent.
- Restaurant-level margins declined to 14.7 percent of restaurant sales from 15.8 percent of restaurant sales in the same prior year quarter.
- Income from operations was $5.3 million, or 2.0 percent of revenue, compared to income from operations of $3.2 million, or 1.2 percent of revenue in the same prior year quarter. The company recognized impairment charges of $0.2 million and $3.1 million during the first quarters of 2011 and 2010, respectively.
- Income from continuing operations was $1.9 million, or $0.09 per diluted share, in the first quarter of 2011 compared to a loss from continuing operations of $1.6 million, or $0.08 per diluted share, in the same prior year quarter.
- Net income for the first quarter of 2011 was $1.8 million, or $0.08 per diluted share, compared to a net loss in the same prior year quarter of $4.3 million, or $0.21 per diluted share.
- The Company finished the quarter with $36.5 million of cash on the balance sheet and over $33 million remaining availability on its revolving credit facility.
“During the first quarter, we saw comparable sales increase at the O’Charley’s concept for the first time in 5 years. Our Ninety Nine and Stoney River concepts each had their third consecutive quarter of comparable sales improvement. Stoney River also had their sixth consecutive quarter of guest count increases,” said David W. Head, president and chief executive officer of O’Charley’s Inc.
“We believe that our improved sales performance was driven by our focus on these key points of our turnaround plan: (1) lead with food and win with food: serving a menu of memorable offerings priced to provide a compelling value for our guests; (2) operate great restaurants: consistently delivering a quality dining experience; (3) drive guest visits through effective messages: clearly communicating the attributes of our concepts; and (4) provide attractive and comfortable restaurants: delivering a great environment for our guests every day at each O’Charley’s, Ninety Nine and Stoney River restaurant.”
“While we are encouraged by the improvement in comparable sales and our improvements in our guest satisfaction metrics, we recognize that this is but the first step in strengthening guest loyalty in all three of our concepts. We are focused on translating this progress into long-term sustainable growth in sales and profitability. We are following a disciplined plan, with a highly-dedicated management team focused on executing our plan. Every team member understands that our work has just begun and we do not equate one quarter of positive sales and guest counts with success.”
Outlook for the Second Quarter of 2011
For the second quarter of 2011, the Company is forecasting total revenue of between $190 million and $195 million, loss/income from operations of between a loss of $1 million and income of $2 million, and adjusted EBITDA of between $9 million and $12 million. The Company’s second quarter is a 12-week quarter, whereas its first quarter was a 16-week quarter. Based upon historical seasonal patterns, average weekly sales per restaurant and restaurant level margins are higher in the first quarter than in the subsequent three quarters. Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of adjusted EBITDA to income from operations is included with the supplementary information to this release.
O’Charley’s Inc., headquartered in Nashville, Tennessee, is a multi-concept restaurant company that operates or franchises a total of 343 restaurants under three concepts: O’Charley’s, Ninety Nine Restaurant, and Stoney River Legendary Steaks. The O’Charley’s concept includes 227 restaurants in 18 states in the Southeast and Midwest, including 221 company-owned and operated O’Charley’s restaurants, and 6 restaurants operated by franchisees. The menu, with an emphasis on fresh preparation, features several specialty items, such as hand-cut and aged USDA choice steaks, a variety of seafood and chicken, freshly baked yeast rolls, fresh salads with special-recipe salad dressings and signature caramel pie. The Company operates Ninety Nine restaurants in 106 locations throughout New England and upstate New York. Ninety Nine has earned a strong reputation as a friendly, comfortable place to gather and enjoy great American food and drink at a terrific price. The menu features a wide selection of appetizers, salads, sandwiches, burgers, entrees and desserts. The Company operates 10 Stoney River Legendary Steaks restaurants in six states in the Southeast and Midwest. This steakhouse concept appeals to both upscale casual-dining and fine-dining guests by offering high-quality food and attentive customer service typical of high-end steakhouses, but at more moderate prices.