Buffets, Inc. Announces Record First Quarter

May 07, 1998, 01:00 ET from Buffets, Inc.

    EDEN PRAIRIE, Minn., May 7 /PRNewswire/ -- Clark C. Grant, Senior Vice
 President of Finance, Treasurer (Nasdaq:   BOCB), reported that the quarter
 ended April 22, 1998, was the most profitable first quarter in the history of
 the Company.
     For the first quarter (16 weeks) 1998, net earnings increased 55% to
 $9,865,000 from $6,375,000 in 1997.  Basic earnings per share increased 57% to
 $.22 on 45,399,000 shares, compared to $.14 on 45,191,000 shares in 1997.
 Diluted earnings per share increased 50% to $.21 on 49,572,000 shares,
 compared to $.14 on 45,440,000 shares in 1997.  Restaurant sales for the
 quarter increased 6.7% to $256,829,000 from $240,741,000 during the same
 quarter of 1997.  Average weekly sales per restaurant increased during the
 first quarter by 3.0% to $44,386 from $43,089 for the first quarter 1997.
 Comparable restaurant sales were up by 3.0%.
     Commenting on the first quarter, Roe H. Hatlen, Buffets' Chairman and CEO,
 stated, "During the quarter we were able to capitalize on the efforts we made
 in 1997 to strengthen our Company.  For the quarter, on a 2.5% increase in the
 number of restaurants, we were able to grow sales 6.7% and restaurant profits
 40% compared to last year.  Put another way, on a $16.1 million increase in
 sales, our restaurants were able to increase restaurant profits by $9.7
 million.  Restaurant margins increased from 10% to 13.2%, a very respectable
 level for the first quarter.
     "In regards to sales growth, our marketing program continues to drive
 sales, both through the local store marketing program we rolled out last year
 and through the television advertising (benefiting 191 restaurants) which we
 aired in January, March and April.  Marketing expenditures for the quarter
 increased to $4.4 million versus $1.1 million last year and included the cost
 of four new commercials developed during the quarter.  Three of these new
 commercials began airing at the end of March and have been well received.  We
 were especially pleased that in the final four weeks of the quarter (a period
 when weather is not normally a disruptive factor) same store sales were up
 3.8% compared to 3.0% for the quarter overall.  Also affecting our sales
 during the quarter was El Nino, which positively affected our sales in the
 Midwest and East (mild winter) and negatively affected our business on the
 West coast (unseasonably heavy rains).
     "In regards to development, during the quarter we opened six buffet
 restaurants, closed two and relocated one.  We also refurbished 30 restaurants
 as part of the program we have in place to keep our restaurants fresh and
 current.  We are pleased that our new buffet restaurants opened during the
 quarter generated average weekly sales of $66,334, well above our average for
 the quarter of $44,386.  During the quarter we also converted one buffet
 restaurant to our first Country Roadhouse Buffet & Grill(SM) (as mentioned in
 our fourth quarter press release).  We continue to be pleased with the
 progress of the Country Roadhouse Buffet & Grill and plan two additional
 conversions during the balance of the year.  We currently plan to open one
 buffet restaurant in the second quarter and 14 to 16 additional buffet units
 by year end.  In addition, we plan to expand our Original Roadhouse Grills(SM)
 on the west coast by opening three more units by year end."
     In conclusion, Mr. Hatlen stated. "Our management teams have done an
 outstanding job in getting us off to a strong start.  We are excited about our
 future possibilities.  Operationally and financially we have the means to
 continue to grow this Company in a very competitive restaurant environment.
 We will continue to focus on our existing restaurants and strive to build
 sales and profits by doing even a better job of taking care of our restaurant
 staff and the guests they serve."
     Buffets, Inc. currently operates 364 restaurants (245 Old Country
 Buffet(R), 113 HomeTown Buffet(R), 4 Original Roadhouse Grill, 1
 PIZZAPLAY(SM), 1 Country Roadhouse Buffet & Grill) in 34 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 the perceived success of the Company's marketing programs
 and new 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 888-731-9401.  To receive a release via fax, please call
 "Company News On-Call" 800-758-5804 extension 122825.
                         Buffets, Inc. and Subsidiaries
                             Results of Operations
                                          Sixteen Weeks Ended
                                (In thousands, except per share amounts and
                                          average weekly sales)
                                    April 23,         April 22,
                                      1997   Percent    1998   Percent
     Restaurant sales              $240,741  100.0%  $256,829  100.0%
     Restaurant costs:
       Food costs                    83,779   34.8%    84,556  32.9%
       Labor costs                   73,801   30.7%    78,511  30.6%
       Direct and occupancy costs    58,951   24.5%    59,872  23.3%
         Total restaurant costs     216,531   90.0%   222,939  86.8%
     Restaurant profit               24,210   10.0%    33,890  13.2%
     Selling,general and
         administrative expenses     13,270    5.5%    17,893   7.0%
     Site closing costs                                   200   0.1%
                                     10,940    4.5%    15,797   6.1%
     Other (expense) income            (485)  -0.2%       244   0.1%
     Earnings before income taxes    10,455    4.3%    16,041   6.2%
     Income taxes                     4,080    1.7%     6,176   2.4%
     Net earnings                    $6,375    2.6%    $9,865   3.8%
     Earnings per share
             Basic                    $0.14             $0.22  57.1%
             Diluted                  $0.14             $0.21  50.0%
     Weighted average common
       shares assumed outstanding
             Basic                   45,191            45,399
             Diluted                 45,440            49,572
     Number of Company-owned
       restaurants open at
       end of period                    355               364   2.5%
     Average weekly sales of
       Company-owned restaurants
       open at end of period        $43,089           $44,386   3.0%
                                  December 31,      April 22,
                                      1997            1998
     Current assets                 $65,111         $81,970
     Property and equipment (net)   330,647         330,822
     Goodwill (net)                   5,624           5,517
     Other assets                     2,194           2,049
                                   $403,576        $420,358
     Current liabilities            $85,528         $92,762
     Long term debt                  44,454          43,758
     Deferred income                    212              91
     Deferred income taxes            6,695           6,417
     Stockholders' equity           266,687         277,330
                                   $403,576        $420,358

SOURCE Buffets, Inc.