Executives at Ignite Restaurant Group, which closed on its purchase of the Romano’s Macaroni Grill chain in April after its first quarter ended, said top-line revenues in the first three months were disappointing, but the casual-dining company still booked a profit increase.

Houston-based Ignite, which also owns the Joe’s Crab Shack and Brick House Tavern + Tap concepts, said net income was $2.2 million, or nine cents per share, for the quarter ended April 1, compared with $1.9 million, or 10 cents per share, in the prior-year period. Revenues rose to $118.2 million in the quarter from $103.4 million in the same period last year.

Systemwide same-store sales decreased 1.4 percent, with Joe's Crab Shack decreasing 2 percent and Brick House increasing 3.9 percent.

“I am certainly not happy with these sales results,” Ray Blanchette, Ignite’s chief executive said in a conference call with analysts, adding that headwinds were especially strong for casual dining in January and February.

“Joe’s Crab Shack represents a vast majority of our revenues and drives our overall comp sales results,” Blanchette said, noting that beyond same-store sales decreases, traffic fell 3.8 percent fell at the brand. He added that Joe’s has the opportunity to build traffic, which he said the new “Gulf Coast roots” advertising campaign would do.

“Despite the first-quarter softness in Joe's comp sales, new units continue to open and operate very strong,” he said. “Our average weekly sales at the non-comp restaurants are approximately $90,000 a week, compare that to the Joe's average of roughly $64,000 a week.”

Blanchette said he was pleased with the 3.9-percent same-store sales increase at Brick House. “This is a smaller brand, which has 15 locations; 14 of those restaurants are in the comp base,” he said, “but the strong comp growth in a challenging quarter is encouraging nonetheless.”

Ignite plans to open its 16th company-owned Brick House restaurant later in May in Parker, Colo.

The company said May 2 that it would begin franchising the Brick House concept and had hired Sam Rothschild as its first vice president of franchising. Rothschild has worked more than 30 years in restaurant franchising at such concepts as Applebee’s International, Bennigan’s, Hooters and Tony Roma’s.

“We think that there is potential for Macaroni Grill to continue its international expansion,” Blanchette said. “We think there may be some potential for Joe's abroad quite frankly. But at this point franchising is new to the company. We're doing a lot of work to understand just how significant, how material it will ultimately be. But we know there is a lot of demand for the Brick House brand. And at this point we don't have any signed agreements.”

Ignite closed on its $54 million acquisition of Macaroni Grill on April 9 and has named David Catalano as president of the brand.

Also for Macaroni Grill, Blanchette said, “we've changed the advertising agencies and prepared a new TV spot that will begin airing this week.”

Macaroni Grill had not run television advertising in the first quarter, Blanchette said, which pressured sales. “So at this point, the Macaroni restaurants are running 12-month AUV [average unit volumes] just under $2.1 million,” he said.

The new ads will feature Macaroni Grill’s create-your-own-pasta platform, Blanchette said. “We think it's unique to the brand and a compelling message,” he added. “It delivers everyday value. We're not discounting it. We believe at the $11 price point, it's already a compelling value.”

Bryan C. Elliott, an analyst with Raymond James, said in a note that “the sales and margin performance at Macaroni Grill will now likely be the key driver” of earnings per share and stock performance.

During the first quarter, Ignite opened a new Joe's Crab Shack restaurant in Savannah, Ga., and converted a Brick House to a Joe's Crab Shack in Ft. Lauderdale, Fla. Since April 1, the company has opened two additional Joe’s and expects to open as many as nine more new restaurants — mostly Joe’s — by the end of the year.

Ignite owns and operates 133 Joe's Crab Shacks, 186 Romano's Macaroni Grills and 15 Brick House Tavern + Taps. It franchises 12 Romano's Macaroni Grills in the United States and Puerto Rico and franchises 12 added units throughout nine nations.

Contact Ron Ruggless at ronald.ruggless@penton.com.
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