Buffets, Inc. Announces Most Profitable Quarter in Company History

    EDEN PRAIRIE, Minn., Aug. 5 /PRNewswire/ -- Clark C. Grant, Senior Vice
 President of Finance and Treasurer of Buffets, Inc. (Nasdaq:   BOCB), reported
 the second quarter of 1998 was the most profitable quarter in the history of
 the Company.
     For the second quarter (12 weeks) of 1998, net earnings increased 37% to
 $11,594,000 from $8,492,000 in the comparable quarter in 1997.  Basic earnings
 per share for the quarter increased 32% to $.25 on 45,567,000 shares, compared
 to $.19 on 45,219,000 shares in 1997. Diluted earnings per share increased 33%
 to $.24 on 50,506,000 shares compared to $.18 on 49,070,000 shares in the
 second quarter of 1997.  Restaurant sales for the quarter increased 7% to
 $204,579,000 from $190,536,000 during the same quarter of 1997.  Average
 weekly sales per restaurant increased 2.2% to $46,532 from $45,543 for the
 second quarter 1997 and comparable restaurant sales were up 2.5%.
     For the twenty-eight weeks ended July 15, 1998, net earnings increased 44%
 to $21,459,000 from $14,867,000 in the same period in 1997.  Basic earnings
 per share increased 42% to $.47 on 45,471,000 shares from $.33 on 45,203,000
 shares in the same period of 1997.  Diluted earnings per share increased 41%
 to $.45 on 49,972,000 shares compared to $.32 on 49,028,000 shares in the
 first twenty-eight weeks of 1997. Restaurant sales for the twenty-eight week
 period increased 7% to $461,408,000 from $431,277,000 in 1997.  Average weekly
 sales per restaurant increased during the first twenty-eight weeks by 2.7% to
 $45,312 from $44,139 for the same period in 1997 and comparable restaurant
 sales were up 2.8%.
     Commenting on the second quarter, Roe H. Hatlen, Buffets' Chairman and
 Chief Executive Officer, stated, "We were very pleased with our second quarter
 results.  We continue to build on the foundation we laid in 1997 thanks to
 dedicated and inspired leadership from across our Company.  We are especially
 pleased that for the fourth quarter in a row, we have been able to build same
 store sales.  Equally pleasing is the fact that we have also been able to
 substantially improve restaurant margins and pretax margins this quarter to
 15.6% and 9.2% respectively up from 13.1% and 7.3% a year ago.
     "In regards to our sales growth, our marketing efforts continue to be very
 successful in helping us drive guest count both through our new TV commercials
 and through our local store marketing efforts.  We now have 200 restaurants
 receiving media support versus 119 restaurants last year.  We will expand our
 media coverage to 16 new restaurants in the third and fourth quarter as we
 test new radio spots and new cable TV commercials.
     "In regards to development, our new restaurants continue to generate sales
 well above the Company average.  We opened one new restaurant during the
 quarter and, as previously announced, we acquired 11 Country Harvest
 restaurants on June 30, 1998.  By the end of the year we will have all but one
 of the Country Harvest restaurants converted to our Buffet brands.  We are
 expecting them to give us a strong return on our investment.  We currently
 plan to open four restaurants in the third quarter and 8 to 10 restaurants in
 the fourth quarter.  Three of these new restaurants will be Original Roadhouse
 Grills as we continue to be pleased with the financial performance of the four
 Original Roadhouse Grills we currently operate.  We also continue to be
 pleased with our Country Roadhouse Buffet and Grill restaurant in Winston-
 Salem and by year end plan to convert two more of our buffet restaurants to
 this concept.
     "We continue to monitor our underperforming restaurants and evaluate their
 potential relative to our conversion and marketing successes.  Determination
 on several locations will be made by the end of the year.
     "Looking to the future, we are pleased to announce that Kerry Kramp, our
 Company's President, has also been appointed Chief Operating Officer in
 recognition of his continuing strong contribution to our Company.  Kerry and
 his operations team have done an outstanding job in positioning our Company
 for the future.  Dennis Scott, co-founder of Buffets will continue as Vice
 Chairman and take on additional new development and construction
 responsibilities."
     In conclusion, Mr. Hatlen stated, "We are looking forward to the balance
 of the year, including competing against results from the TV marketing program
 which we put in place last year at the end of the second quarter.  Our Company
 continues to improve financially and with over 80 million dollars of cash on
 hand, we are in an even stronger position to take advantage of opportunities
 that come our way."
     Buffets, Inc. currently operates 378 restaurants (248 Old Country
 Buffet(R), 115 HomeTown Buffet(R), 9 Country Harvest(SM), 4 Original Roadhouse
 Grill(SM), 1 PIZZAPLAY(SM), and 1 Country Roadhouse Buffet & Grill(SM)) in 35
 states and franchises 24 restaurants (5 Old Country Buffet and 19 HomeTown
 Buffet) in ten states.
     This press release contains forward-looking statements, including
 statements regarding expected restaurant development levels, and the perceived
 success of the Company's marketing programs and new and converted restaurant
 concepts.  In addition to the factors discussed above, other factors that
 could cause actual results to differ materially include changes in the cost
 and supply of food and labor, weather conditions, health and regulatory
 developments and general economic conditions.  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.
     In an effort to enhance the timeliness and efficiency of our quarterly
 stockholders communications, Buffets, Inc. is offering automated shareholder
 information toll-free.  To hear a recording of the quarterly financial
 results, call 1-888-731-9401.
                             http://www.buffet.com
 
                          Financial Highlights Follow
 
 
                         Buffets, Inc. and Subsidiaries
                             Results of Operations
                                 July 15, 1998
                                  (Unaudited)
 
                                     Twenty-Eight Weeks Ended
                              (In thousands, except for per share amounts
                                      and average weekly sales)
                           July 16,                     July 15,
                            1997         Percent          1998          Percent
     Restaurant sales     $431,277        100.0%        $461,408        100.0%
 
     Restaurant costs:
     Food costs            147,531         34.2%         150,029         32.5%
     Labor costs           129,913         30.1%         138,689         30.1%
     Direct and
      occupancy costs      104,719         24.3%         106,838         23.1%
     Total restaurant
      costs                382,163         88.6%         395,556         85.7%
 
     Restaurant profits     49,114         11.4%          65,852         14.3%
     Selling, general and
      administrative
      expenses              24,111          5.6%          31,455          6.8%
     Other site
      closing costs                                          200          0.1%
                            25,003         5.8%           34,197          7.4%
 
     Other (expense) income   (632)       -0.2%              697          0.2%
     Earnings before
      income taxes          24,371         5.6%           34,894          7.6%
 
     Income taxes            9,504         2.2%           13,435          2.9%
 
     Net earnings          $14,867         3.4%          $21,459          4.7%
 
     Earnings per share:
     Basic                   $0.33                         $0.47         42.4%
     Diluted                 $0.32                         $0.45         40.6%
 
     Weighted average common
      shares assumed
      outstanding:
     Basic                  45,203                        45,471
     Diluted                49,028                        49,972
 
     Number of Company-owned
      restaurants open at
      end of period            357                           376          5.3%
 
     Average weekly sales
      of Company-owned
      restaurants open
      at end of period     $44,139                       $45,312          2.7%
 
 
                                        Twelve Weeks Ended
                               (In thousands, except for per share amounts
                                and average weekly sales)
                           July 16,                     July 15,
                            1997         Percent          1998          Percent
     Restaurant sales     $190,536        100.0%        $204,579        100.0%
 
     Restaurant costs:
     Food costs             63,752         33.5%          65,473         32.0%
     Labor costs            56,112         29.4%          60,178         29.4%
     Direct and occupancy
      costs                 45,768         24.0%          46,966         23.0%
     Total restaurant
      costs                165,632         86.9%         172,617         84.4%
 
     Restaurant profits     24,904         13.1%          31,962         15.6%
 
     Selling, general and
      administrative
      expenses              10,841          5.7%          13,562          6.6%
     Other site closing
      costs
                            14,063          7.4%          18,400          9.0%
 
     Other (expense) income   (147)        -0.1%             453          0.2%
     Earnings before
      income taxes          13,916          7.3%          18,853          9.2%
 
     Income taxes            5,424          2.8%           7,259          3.5%
     Net earnings           $8,492          4.5%         $11,594          5.7%
 
     Earnings per share:
     Basic                   $0.19                         $0.25         31.6%
     Diluted                 $0.18                         $0.24         33.3%
 
     Weighted average
      common shares
      assumed outstanding:
     Basic                  45,219                        45,567
     Diluted                49,070                        50,506
 
     Number of Company-owned
      restaurants open at
      end of period            357                           376          5.3%
 
     Average weekly sales of
      Company-owned
      restaurants open
      at end of period     $45,543                       $46,532          2.2%
 
 
 
                      Condensed Consolidated Balance Sheet
                                  (Unaudited)
                                     Assets
 
                                          December 31,             July 15,
                                              1997                   1998
                                                    (in thousands)
     Current assets                         $65,111                $101,994
     Property and equipment (net)           330,647                 329,836
     Goodwill (net)                           5,624                   8,958
     Other assets                             2,194                   1,914
                                           $403,576                $442,702
 
 Liabilities and Stockholders' Equity
 
     Current liabilities                    $85,528                $101,671
     Long-term debt                          44,454                  43,272
     Deferred income                            212
     Deferred income taxes                    6,695                   6,522
     Stockholders' equity                   266,687                 291,237
                                           $403,576                $442,702
 
 

SOURCE Buffets, Inc.

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