Del Frisco's Restaurant Group Inc. said Tuesday that its second-quarter profit rose 22 percent with improved revenue at its Double Eagle Steak House and Grille brands.

Executives of the Southlake, Texas-based DFRG said in a call with analysts that they were working on increasing guest traffic at the company’s Sullivan’s Steakhouse brand.

The company reported net income of $4.4 million, or 19 cents per share, for the period ended June 11, compared to $3.6 million, or 20 cents per share, in the year-earlier period. Revenue increased 19 percent to $60.4 million from $50.7 million a year earlier.

Del Frisco's Eagle Steak House showed a 17. 4-percent rise in second-quarter revenue, while revenue for the Del Frisco's Grille more than doubled. Revenue for Sullivan's Steakhouse slipped 2.7 percent.

Systemwide same-store sales rose 2.5 percent on top of a 4.2 percent gain in same-store sales in the same quarter of last year, said Mark S. Mednansky, DFRG’s chief executive. The company took no price increases in the second quarter, Mednansky said.

Del Frisco’s, with nine restaurants in the comparable-store base, saw same-store sales increase 5.9 percent, which was mostly due to guest traffic increases, said Mednansky. “This suggests to us that we have pricing capacity at this concept,” he said, “and we look to leverage that in the fourth quarter.”

Since the end of the second quarter, he added, the concept has started featuring a $49 prix-fixe menu at all stores but its New York unit. The menu includes an 8-ounce filet mignon paired with a choice of crab cakes, scallops or barbecue shrimp, and a salad and side dish.

On Sundays, the concept is offering a $99 three-course dinner for two, called “Power Couple Sundays.”

The Sullivan’s brand experienced a 2.7-percent decrease in same-store sales during the second quarter with a 1.5-percent increase in traffic. “We’re devoting significant resources to retooling the brand to ensure it is widely viewed as the affordable destination for upscale neighborhood steakhouse dining,” Mednansky said.

Management is focused on increasing guest counts at the brand, he explained. “We are therefore willing to accept some short-term deteriorating in average check if it yields higher guest counts.”

Jeffrey F. Carcara, DFRG chief operating officer, said the company has worked with designers to create a new look for the Sullivan’s dining and bar areas and have repositioned advertising.

The company, he added, rolled out a “Sure Thing” $39 menu early in the second quarter, a three-course meal option that includes appetizer, salad and entrée.

“While serving to reduce our check average in the near-term,” Carcara said, “it is enabling us to boost traffic as a means to showcase all the enhancements we are making to the brand.” The brand replaced 19 items on the menu, from appetizers to desserts, he said, and a “Sullivan’s Seasonals” section was added as a chef showcase.

DFRG, which had earlier said it would open five Del Frisco’s Grille units this year, plans to raise that number to six. “I’m very pleased that our construction team is ahead of schedule with our Chestnut Hill [Mass.] location, which is an affluent suburb of Boston,” Mednansky said.  “This unit was originally slated to open in 2014.”

DFRG opened Grille units in Atlanta last year and in Houston in the first quarter this year and both have had “widely successful honeymoon periods,” Mednansky said, adding that the concept has complimented the Del Frisco’s and Sullivan’s concepts and appeals to a younger, upwardly mobile and more female demographic than the other steak house concepts. Lunch is about 30 percent of the daypart mix, he added.

DFRG has 35 restaurants in 19 states and Washington, D.C. The brands are divided with 10 Del Frisco's, 19 Sullivan's and six Del Frisco's Grille locations.

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