Third-quarter earnings results continued to showcase both bottom-line improvements driven by cost cutting, as well as stalled sales driven by consumers’ reluctance to start spending.
Wendy’s and Arby’s followed quick-service players McDonald’s and Burger King into the realms of reduced sales growth, which each operation plans to combat with more value items. Arby’s, for example, is expanding its test of a $1 value menu and will continue to promote its $5.01 combo meals.
Higher-end concepts, like Morton’s and McCormick & Schmick's, continue to feel the pressure of reduced business expenses, which have typically driven large business lunches and private parties.
Some companies, like Papa John’s International Inc. and Starbucks Corp. provided a silver lining to restaurant industry results by increasing their annual earnings guidance on better-than-expected results. Additional bright spots throughout the industry included reduced food costs and some outlooks that October sales trends have improved slightly.
Aselection of third-quarter financial results reported this week:
Wendy's/Arby's Group Inc. posted third-quarter net income of $14.7 million, or 3 cents a share, on revenue of $903.2 million. The company's results included pre-tax charges totaling $20.6 million related to last September's merger of Arby's parent Triarc Cos. Inc. and Wendy's International Inc. as well as impairment expenses. Wendy's North American same-store sales dipped 0.1 percent in the quarter, which the company attributed to 300 fewer restaurants serving breakfast, which the chain has shelved as it re-evaluates menu offerings. Sales trends were considerably worse at sister chain Arby's, where North American same-store sales fell 9 percent. The company said it would look to drive sales at Arby's by promoting value offerings, including expansion of the chain's $1 menu to additional markets. It will also continue marketing its $5.01 meal deals. At the end of the quarter, Wendy’s/Arby’s operated or franchised 6,608 Wendy's units and 3,739 Arby's locations.
Starbucks Corp.'s turnaround appears to be taking hold as fourth-quarter profit rose on costs savings and improved sales. Fourth-quarter net income totaled $150 million, or 20 cents a share, up from profit of $5.4 million, or 1 cent a share, in the same year-ago quarter. Revenue fell 3.7 percent to $2.4 billion, which the company blamed on currency conversions and fewer stores in operation. Fourth-quarter same-store sales fell 1 percent, which compares to a 5-percent drop in the fourth quarter of last year. For fiscal 2009, Starbucks earned $390.8 million, or 52 cents a share, compared with earnings of $315.5 million, or 43 cents a share, last year. Full-year revenue fell 6 percent to $9.8 billion. Same-store sales for the year decreased 6 percent. The parent of 16,635 coffeehouses worldwide said it had achieved full-year cost savings of about $580 million, which it said exceeded goals by about $30 million.
California Pizza Kitchen Inc. cited operating efficiencies for a 16.8-percent jump in third-quarter profit. Its sales continued to fall. Net income for the quarter totaled $5.8 million, or 24 cents per share, compared with $5 million, or 20 cents per share, a year ago. Latest-quarter revenue fell 5.3 percent to $164.8 million. Same-store sales at the company's full-service restaurants dropped 8 percent. The company said it is planning several traffic-building initiatives in the current fourth quarter, including the recently announced wine menu revamp, as well as new menu items, a sales productivity report, a takeout call center and expanded catering. California Pizza Kitchen ended the fourth quarter with 255 restaurants, including the namesake brand, the limited-menu ASAP variant, and two LA Food Show locations.
Morton’s Restaurant Group reported that revenues in the third quarter fell 12.2 percent to $64.1 million. Same-store sales dropped 16.8 percent. The company’s net loss of $3.3 million, or 21 cents per share, compared with a net loss of $63.7 million, or $4.02 per share. The year-ago quarter included an impairment charge of $66.2 million.
Papa John’s International Inc. raised its 2009 earnings outlook after booking third-quarter profit of $11.7 million, or 42 cents per share. That compares with net income of $7.7 million, or 28 cents per share, in the same quarter a year ago. Latest-quarter revenue totaled $263.9 million, a 5.7-percent decrease from a year earlier. Papa John’s domestic systemwide same-store sales remained flat, reflecting a 0.6-percent decline at corporate units and a 0.2-percent increase at franchised locations. It said positive traffic trends have continued in October, the first month of the current fourth quarter. Full story
Einstein Noah Restaurant Group Inc. reported third-quarter net income of $60.9 million, or $3.65 per share, versus $4.5 million, or 28 cents per share, in the same quarter a year ago. The company said that net income improvement was tied to a deferred tax benefit of $56.8 million, among other factors. Revenues decreased 0.9 percent to about $100.0 million. Same-store sales fell 3.1 percent at company-operated restaurants and dipped 2.7 percent systemwide. Einstein Noah operates approximately 500 locations, most under the Einstein Bros. Bagels and Noah's New York Bagels brands, and licenses about 100 locations to others, primarily as Manhattan Bagel outlets.
Rubio's Restaurants Inc., parent of the 195-unit fast-casual Rubio's Fresh Mexican Grill chain, blamed higher costs and charges for store closures for a 38-percent drop in third-quarter profit. Net income for the quarter totaled $487,000, or 5 cents per share, compared with earnings of $789,000, or 8 cents per share, in the same year-ago quarter. Latest-quarter revenue rose 3 percent to $48.4 million. Same-store sales fell 2.7 percent. Full story
Caribou Coffee Co. Inc., parent of the nation’s second-largest coffeehouse chain, swung to a third quarter profit from a year-ago loss, as cost savings and higher commercial coffee sales offset sluggish sales trends. Caribou’s net income totaled $700,000, or 3 cents a share, compared with a net loss of $8.8 million, or 45 cents a share, in the year-earlier third quarter. Revenue rose 3 percent to $62.7 million, reflecting sales of $54.5 million at company-owned coffeehouses, where same-store sales dipped 0.5 percent. Caribou’s commercial sales of coffee, which company officials said would be a major focus for expansion, rose 46.8 percent to $6.6 million in the third quarter. Caribou has 525 coffeehouses, included 112 franchised or licensed branches.
Carrols Restaurant Group Inc., one the largest Burger King franchisees and parent to the Pollo Tropical and Taco Cabana fast-casual brands, reported third-quarter net income of $5.6 million, or 26 cents per share, up from net income of $3.7 million, or 17 cents per share, a year ago. Latest-quarter revenue fell 3.8 percent to $201.2 million Same-store sales fell 6.1 percent at its Burger King units and decreased 4.3 percent at Taco Cabana and 0.1 percent at Pollo Tropical. Full story
Red Robin Gourmet Burgers Inc. saw third-quarter net income fall 7.6 percent to $5.7 million, or 37 cents per share, compared with $6.2 million, or 40 cents a share, in the same quarter last year. The Greenwood Village, Colo.-based casual-dining specialist said latest-quarter revenue fell 10.4 percent to $186.9 million, and noted that same-store sales at company-operated restaurants fell 14.9 percent. Sales trends reflected a 13.8-percent fall off in guest counts, the company said. Same-store sales at franchised restaurants fell 14.4 percent in the U.S. and 0.2 percent in Canada. Red Robin ended the quarter with 304 company-operated namesake restaurants, while franchisees operated 132 branches. The company noted that restaurant-level operating profit decreased by 20.1 percent reflecting, in large part, a 1.6-percent increase in labor costs and 1-percent higher occupancy expenses.
McCormick & Schmick’s Seafood Restaurants Inc. reported a 3.6-percent drop in net income to about $1.3 million, or 9 cents per share, for its third quarter, which is roughly flat to the earnings per share for the same quarter in 2008. Revenue decreased 13.6 percent to $86.3 million, the Portland, Ore.-based operator of casual-dining restaurants said. It reported an 18.8-percent decrease in same-store sales, resulting from a 14.2-percent fall off in guest traffic coupled with a 4.6-percent dip in net pricing and product mix. At the end of the quarter, McCormick & Schmick’s operated 93 restaurants in the United States and Canada, compared with 89 a year earlier.
Contact Sarah E. Lockyer at [email protected].
