EAGAN Minn. Buffets Holdings Inc., operator or franchisor of 651 restaurants under the Old Country Buffet, HomeTown Buffet, Ryan’s, Fire Mountain and Tahoe Joe’s Famous Steakhouse brands, recorded a nearly 5-times-larger net loss for the quarter ended Sept. 29, on expenses from its year-ago acquisition of Ryan’s Restaurant Group and higher interest and operating costs.
Buffets reported a net loss of $5.3 million for the first quarter of the company’s fiscal 2008, compared with a year-earlier net loss of $1.1 million. Latest-quarter revenues increased 76 percent to $376.5 million, mainly because of the Ryan’s acquisition, which closed on Nov. 1, 2006.
Buffets currently is trying to sell its 11-unit Tahoe Joe’s chain, and said it expects a deal to be struck within the current fiscal year. Tahoe Joe’s results were not included in the company’s latest statements, as they were accounted for as discontinued operations. Buffets also said it hired investment bank Houlihan, Lokey, Howard & Zukin Capital to advise the company on its capital structure and business plan.
In the latest quarter, the company logged a $7.5 million increase in interest expense from the year before and $1.6 million of merger integration costs. Buffets also booked an 82-percent increase in total restaurant costs, which also were higher as a percentage of total sales, the company said.
First-quarter same-store sales decreased by 0.2 percent for the Old Country Buffet, Country Buffet and HomeTown Buffet chains. Same-store sales fell 4 percent for the Ryan’s and Fire Mountain steak-buffet chains. The declines, which occurred in spite of check average increases ranging from 2.2 percent to 2.8 percent, were blamed on guest traffic drops related to consumers’ concerns about economic factors like high gas prices and the pending adjustable rate mortgage resets, Buffets said.