Buffets, Inc. Announces Fourth Quarter 1997 Results

Feb 18, 1998, 00:00 ET from Buffets, Inc.

    EDEN PRAIRIE, Minn., Feb. 18 /PRNewswire/ -- Clark C. Grant, Executive
 Vice President of Finance and Treasurer of Buffets, Inc. (Nasdaq:   BOCB),
 reported that for the fourth quarter of 1997 net earnings were up 102.7% on a
 7.8% increase in sales versus the same period in 1996.  Average weekly sales
 and comparable restaurant sales were also up 2.6% and 1.4%, respectively.
     For the fourth quarter (12 weeks) of 1997, net earnings increased 102.7%
 to $5,551,000 from $2,739,000 in 1996.  Basic earnings per share increased
 100% to $.12 on 45,363,000 shares in 1997 compared to $.06 on 45,089,000 in
 1996.  Restaurant sales for the 1997 quarter increased 7.8% to $183,107,000
 from $169,870,000 for the fourth quarter in 1996.  During the quarter, average
 weekly sales increased by 2.6% to $42,771 from $41,702 in 1996 and  comparable
 restaurant sales were up 1.4%
     For the fifty-two weeks ended December 31, 1997, restaurant sales
 increased 7.7% to $808,529,000 from $750,707,000 in 1996.  Net earnings
 increased 12.3% in 1997 to $28,598,000 compared to net earnings of $25,463,000
 in 1996, before taking into account the 1996 third quarter pre-tax non-cash
 and merger charges of $49,572,000 ($32,666,000 after related tax benefit or
 $.72 per share).  Basic earnings per share increased to $.63 in 1997 on
 45,257,000 shares from $.56 on 45,068,000 shares. Average weekly sales per
 restaurant increased during the fifty-two weeks by 1.3% to $44,242 from
 $43,669 for the same period in 1996.  Comparable restaurant sales were
 down .9%.
     Commenting on the fourth quarter, Roe H. Hatlen, Buffets' Chairman and
 Chief Executive Officer, stated, "The game plan set in place at the beginning
 of the 1997 year is working and producing strong financial results.  For the
 second quarter in a row, we have been able to grow same store sales and
 profits versus prior year thanks to the dedicated efforts of our restaurant
 management and operational teams across the country. Our marketing program
 (benefiting 181 restaurants) continues to drive sales and our new menu, which
 was rolled out late in the second quarter, continues to enable us to achieve
 operational efficiencies.  The 1997 efforts to strengthen local store
 marketing and implement a certified hourly training program, coupled with a
 new management incentive system, were also key elements in enabling us to
 achieve improved results."
     In regards to development, Mr. Hatlen stated, "three restaurants were
 opened during the quarter (18 for the year) and three new restaurants, one
 conversion and one relocation, have opened subsequent to the close of the
 fourth quarter.  Included in these openings were two new restaurant concepts
 that the company is testing as possible Buffet conversion concepts as well as
 new growth vehicles.  Both opened in  previously closed Old Country Buffet
 restaurants.  Pizza Play(SM) opened in December in Columbus, Ohio and features
 a pizza, pasta, and salad buffet as well as a large game room.  The restaurant
 experienced a modest opening, but has been building business and will initiate
 its first marketing campaign during the first quarter of 1998.  The first
 Country Roadhouse Buffet & Grill(SM) opened in January in Winston-Salem, and
 features a relaxed country western atmosphere, complete with a display grill
 for steaks, pork chops, and ribs.  It also features rotisserie chicken and
 numerous other new products in an exciting new buffet setting particularly
 appealing to southern markets.  Country Roadhouse Buffet & Grill opened
 strong.  It is still too early to gauge success, however we are cautiously
 optimistic that one, if not both, of these restaurants will provide us with
 future growth opportunities."
     In regards to 1998, Mr. Hatlen stated, "the Company is off to a strong
 start aided by a mild winter in the Midwest as well as continued strong
 marketing and operational achievements.  For the first six weeks of 1998,
 average weekly sales were up 3.5% and comparable restaurant sales were up 3.3%
 compared to the first six weeks of 1997."
     Mr. Hatlen further stated, "we are excited about our opportunities in
 1998.  We will continue to focus on operational excellence and we plan to
 double our marketing expenditures to $18 million.  We believe we have the
 operational team in place that will enable us to grow our restaurant sales and
 profits so that we can produce strong financial gains in 1998.  Development
 plans for 1998 call for 25 new restaurants and several additional conversions
 of the new concepts we are testing."
     Buffets, Inc. currently operates 363 restaurants (241 Old Country
 Buffet(R), 116 HomeTown Buffet(R), 4 Roadhouse Grill, 1 Pizza Play(SM), 1
 Country Roadhouse Buffet & Grill(SM) in 34 states and franchises 24
 restaurants (5 Old Country Buffet(R) and 19 HomeTown Buffet(R)) in ten states.
     This press release contains forward-looking statements, including
 statements regarding the Company's prospects related to new restaurant
 concepts, including Pizza Play(SM) and Country Roadhouse Buffet & Grill(SM),
 the success of the Company's conversion efforts, the perceived success of the
 Company's strategies, planned operational initiatives, amount of planned
 marketing expenditures in 1998, and the number of restaurants expected to open
 or be converted during 1998.  In addition to the factors discussed above,
 other factors that could cause actual results to differ materially include the
 highly competitive nature of the restaurant industry, the level of success in
 integrating the merged companies' operations, the timing of television
 advertising planned for 1998 and the cost and effectiveness of this and other
 marketing initiatives, changes in the cost and supply of food and labor,
 weather conditions, health and regulatory developments and general economic
 conditions.  The decision to expand the Company's Roadhouse Grill(SM), Country
 Roadhouse Buffet & Grill(SM) and PizzaPlay(SM) concepts is contingent on the
 development cost and profitability associated with those concepts and the
 Company's development priorities.  In addition, the ability of the Company to
 open new restaurants depends on a number of factors, including its ability to
 find suitable locations and negotiate acceptable leases and land purchases,
 its ability to attract and retain qualified restaurant  managers and the
 availability of capital.  The Company assumes no obligation to publicly
 release the results of any revision or updates to these
 forward-looking statements to reflect future events or unanticipated
     To hear the latest recorded quarterly financial results call 888-731-9401.
 To receive a release via a fax, please call "Company News On-Call"
 800-758-5804 extension 122825.  To access the Company's website via the
 Internet our address is: http://www.buffet.com
                         Buffets, Inc. and Subsidiaries
                             Results of Operations
     (In thousands, except for per share
     amounts and average weekly sales)      Fifty-Two Weeks Ended
                                  January 1,            December 31,
                                   1997      Percent      1997      Percent
     Restaurant sales             $750,707     100.0%    $808,529     100.0%
     Restaurant costs:
       Food costs                  263,137      35.0%     273,942      33.9%
       Labor costs                 218,121      29.1%     240,956      29.8%
       Direct and occupancy costs  178,526      23.8%     197,106      24.4%
         Total restaurant costs    659,784      87.9%     712,004      88.1%
     Restaurant profits             90,923      12.1%      96,525      11.9%
     Selling, general and
       administrative expenses      47,594       6.3%      48,158       6.0%
     Merger and other
       merger related costs          6,584       0.9%
     Duplicate site closing costs   10,702       1.4%
     Impairment of assets           27,739       3.7%         258       0.0%
     Other site closing costs        4,547       0.6%       1,242       0.1%
                                    (6,243)*    -0.8%      46,867**     5.8%
     Other income (expense)           (520)     -0.1%        (359)     -0.0%
     Earnings (loss) before
      income taxes                  (6,763)*   -0.9%       46,508**     5.8%
     Income taxes                      440       0.1%      17,910       2.3%
     Net earnings (loss)           ($7,203)*    -1.0%     $28,598**     3.5%
     Earnings (loss) per share
      Basic ***                     ($0.16)*                $0.63 **
      Diluted ****                  ($0.16)*                $0.62 **
     Weighted average common
      shares assumed outstanding
       Basic ***                    45,068                 45,257
       Diluted ****                 45,068                 49,140
     Number of Company-owned
       restaurants open at
       end of period                   346                    360
     Average weekly sales of
       Company-owned restaurants
       open at end of period       $43,669                $44,242       1.3%
     (In thousands, except for per share
     amounts and average weekly sales)        Twelve Weeks Ended
                                  January 1,            December 31,
                                   1997      Percent      1997      Percent
     Restaurant sales             $169,870     100.0%    $183,107    100.00%
     Restaurant costs:
       Food costs                   61,053      36.0%      61,333      33.5%
       Labor costs                  51,691      30.4%      54,631      29.8%
       Direct and occupancy costs   41,961      24.7%      45,239      24.7%
         Total restaurant costs    154,705      91.1%     161,203      88.0%
     Restaurant profits             15,165       8.9%      21,904      12.0%
     Selling, general and
       administrative expenses      10,727       6.3%      11,857       6.5%
     Merger and other
       merger related costs
     Duplicate site closing costs
     Impairment of assets                                     258       0.1%
     Other site closing costs                               1,242       0.7%
                                     4,438       2.6%       8,547**     4.7%
     Other income (expense)             41       0.0%         174       0.1%
     Earnings (loss)
      before income taxes            4,479       2.6%       8,721**     4.8%
     Income taxes                    1,740       1.0%       3,170       1.8%
     Net earnings (loss)            $2,739       1.6%      $5,551**     3.0%
     Earnings (loss) per share
      Basic ***                      $0.06                  $0.12**
      Diluted ****                   $0.06                  $0.12**
     Weighted average common
      shares assumed outstanding
           Basic ***                45,089                 45,363
           Diluted ****             45,089                 49,162
     Number of Company-owned
       restaurants open at
       end of period                   346                    360
     Average weekly sales of
       Company-owned restaurants
       open at end of period       $41,702                $42,771       2.6%
     * Reflects a non-cash and merger charge totaling $49,572,000 ($32,666,000
     or $.72 per share after tax).
     ** Reflects a non-cash charge totaling $1,500,000 ($923,000 or $.02 per
     share after tax).
     *** "Basic" earnings (loss) per share is calculated by dividing net
     earnings applicable to common shares outstanding.  This replaces "primary"
     earnings (loss) per share, which included common stock equivalents in the
     calculation.  Prior period per share amounts have been restated to reflect
     the current presentation.
     **** "Diluted" earnings (loss) per share includes options and convertible
     securities, if dilutive,  in the calculation.
                                   Condensed Consolidated Balance Sheet
                                   January 1,             December 31,
                                     1997                    1997
                                                (in thousands)
     Current assets                $34,463                 $65,111
     Property and equipment (net)  327,721                 330,647
     Goodwill (net)                  5,974                   5,624
     Other assets                    2,525                   2,194
                                  $370,683                $403,576
     Liabilities and Stockholders' Equity
     Current liabilities           $83,643                 $85,528
     Long-term debt                 46,578                  44,454
     Deferred income                   405                     212
     Deferred income taxes           3,266                   6,695
     Stockholders' equity          236,791                 266,687
                                   $370,683                 $403,576

SOURCE Buffets, Inc.