Carrols 4Q sales rise as traffic, average check lift

Carrols Restaurant Group Inc.’s fourth-quarter same-store sales rose at its 298 legacy restaurants as it continues to integrate 278 additional units it acquired from Burger King Worldwide last year, the company said Thursday.

Same-store sales at Carrols’ legacy operations increased 7.3 percent in the quarter, fueled by a 1.1-percent rise in customer traffic and a 6.2-percent increase in the average check, which executives said included a 1.8-percent price hike.

The Syracuse, N.Y.-based company — which is Burger King’s largest franchisee — said revenue rose 87.5 percent to $162.6 million in the fourth quarter ended Dec. 30, 2012, which included $71.7 million in sales from the restaurants Carrols acquired from Burger King.

Average weekly sales at Carrols’ legacy restaurants rose 8 percent, to $23,967 from $22,198 in last year’s period. Average weekly sales for the acquired restaurants were $20,160. In an earnings call with analysts, Carrols chief executive Daniel Accordino said the company hopes to close that gap by 2014.

Commenting on the increased sales at the legacy restaurants, which have posted increases for six consecutive quarters, Accordino said, “We believe that the combination of innovation and targeted promotions from Burger King has enabled us to broaden our customer demographic, attract new customers and raise our average check. Profitability and restaurant operating margins have improved at our legacy restaurants reflecting the positive impact of Burger King's brand initiatives.”

Accordino said those initiatives at Burger King “have broadened our appeal to a wider demographic, including women and customers 50 and older, and have provided a better balance of value and premium offerings.”

New product introductions in April, along with the quick-service chain’s limited-time promotions, “have been effective in driving both sales and customer traffic throughout the year,” he said. “Premium limited-time offers in the fourth quarter included products such as the Wisconsin Cheddar Whopper, the Angry Whopper and the Chicken Parmesan sandwich. Other promotions included the 55th Whopper anniversary promotion, which offered a Whopper for 55 cents when customers bought one at full price, and a $1 Minibon promotion and a holiday sweets menu.”

Carrols is experiencing positive momentum from remodeling initiatives, and upgraded 80 restaurants in 2012 to the new 20/20 design, Accordino said.

For the quarter, Carrols posted a net loss from continuing operations of $8.8 million, or 39 cents per share, compared with a loss of $0.3 million, or 2 cents per share, in the year-ago period. The company said the net loss from continuing operations included certain charges — such as acquisition-related integration costs — totaling about $4 million, or 11 cents per share, which if factored in results in a total net loss of 28 cents per share.

For the full year ended Dec. 30, Carrols’ reported a 55.3-percent increase in revenue to $539.6 million, which includes a contribution of $174.3 million from the newly acquired Burger King units. Carrols posted a net loss from continuing operations for the year of $18.8 million, or 83 cents per share, compared with the preceding year’s loss of $500,000, or 2 cents per share.

Same-store sales at legacy restaurants increased 7.1 percent for the year.

Accordino told financial analysts that Carrols will continue to move ahead with its remodeling plans, spending $30 million to $40 million to complete 90 to 120 remodels in 2013. He said remodeled units have generated an 8- to 10-percent increase in sales.

Carrols anticipates closing four to six restaurants in 2013. At the end of the year, Carrols operated a total of 572 restaurants.

The company projected total revenue would climb to $670 million to $700 million in 2013, while same-store sales at legacy operations would rise 2 to 4 percent.

Contact Paul Frumkin at [email protected].
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