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Buffets, Inc. Announces Record Third Quarter
EDEN PRAIRIE, Minn., Oct. 28 /PRNewswire/ -- Clark C. Grant, Senior Vice
President of Finance and Treasurer of Buffets, Inc. (Nasdaq: BOCB), reported
that the quarter ended October 7, 1998, was the most profitable third quarter
in the history of the Company.
For the third quarter (12 weeks) of 1998, net earnings increased 28% to
$10,435,000 from $8,180,000 in the third quarter of 1997. Basic earnings per
share for the quarter increased 28% to $.23 on 45,393,000 shares, compared to
$.18 on 45,276,000 shares in 1997. Diluted earnings per share increased 22%
to $.22 on 49,987,000 shares compared to $.18 on 49,380,000 shares in the
third quarter of 1997. Restaurant sales for the quarter increased 7% to
$207,128,000 from $194,145,000 for the third quarter in 1997. Average weekly
sales increased during the quarter by .3% to $46,087 from $45,972 in 1997.
Comparable restaurant sales were up .9%.
For the forty-week period of 1998, net earnings increased 38% to
$31,894,000 compared to net earnings of $23,047,000 in 1997. Basic earnings
per share increased 37% to $.70 on 45,448,000 shares from $.51 on 45,225,000
shares in the same period of 1997. Diluted earnings per share increased 34%
to $.67 on 49,977,000 shares compared to $.50 on 49,133,000 shares in the
first forty weeks of 1997. Restaurant sales for the forty-week period
increased 7% to $668,536,000 from $625,422,000 in the same period of 1997.
Average weekly sales per restaurant increased during the first forty weeks by
1.9% to $45,549 from $44,693 for the same period in 1997. Comparable
restaurant sales were up 2.5%.
Commenting on the third quarter, Roe H. Hatlen, Buffets' Chairman and
Chief Executive Officer, stated, "We were very pleased with our third quarter
results and especially pleased that for the fifth consecutive quarter, we have
been able to build same store sales. Again this quarter we were also able to
improve restaurant margins and pretax margins; they increased to 15.0% and
8.1% respectively, up from 13.1% and 6.9% a year ago.
"Our marketing efforts continue to be successful in driving sales in an
extremely competitive environment. The third quarter was the first quarter
where we had television advertising in both comparable quarters and we were
pleased to have year over year sales increases. We now have 238 restaurants
receiving media support versus 147 last year. We are currently working on new
television commercials for 1999 and expect to expand our television coverage
to several other markets next year."
In regards to development, Mr. Hatlen stated, "Our new restaurants
continue to generate sales well above the Company average. We opened three
new restaurants during the third quarter and converted seven of the eleven
acquired Country Harvest Buffet restaurants to one of our buffet brands. We
expect to open approximately six Old Country Buffets(R) and two Original
Roadhouse Grills(SM) in the fourth quarter and convert three more of the
Country Harvest Buffet restaurants. In 1999 we will continue to focus on
improving returns at existing units. We will add new units carefully in light
of high real estate, construction and labor costs which in many cases make it
cheaper to buy an existing restaurant than build a new one. Our 1999 plan is
to open 15 to 20 new units with approximately 10 to 12 being buffet units and
the balance being Original Roadhouse Grills. In 1999 we also anticipate
converting the last Country Harvest Buffet restaurant to an Original Roadhouse
Grill and plan to convert seven of our southern restaurants to Country
Roadhouse Buffet & Grill.
"We continue to monitor our lower-performing restaurants and evaluate
their potential relative to our conversion and marketing successes. At the
present time we are implementing various operational activities to increase
the performance of these restaurants. If these initiatives do not achieve the
intended results by year end, it is possible that charges will be necessary
with respect to the affected restaurants.
"Looking to the fourth quarter, we will continue to invest in operational
excellence, including increased training expense for the conversion of the ten
Country Harvest Buffet restaurants we acquired in June and for the opening of
eight new restaurants during the quarter. After two years of successful
team-building since the HomeTown merger, we are in a very strong financial
position, with energized and committed restaurant level and corporate
management teams. We are currently working on our five year strategic plan
and are excited about the opportunities available to us."
Since the authorization of the current $40 million share repurchase, the
Company has repurchased a total of 756,000 shares of its Common Stock at an
average of $13.81 per share or $10.4 million.
Buffets, Inc. currently operates 380 restaurants (251 Old Country Buffet,
119 HomeTown Buffet, 5 Original Roadhouse Grill, 2 Country Harvest Buffet
Restaurants, 2 Country Roadhouse Buffet & Grill and 1 PIZZAPLAY) in 38 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 conversions,
the perceived success and expected expansion of the Company's marketing
programs, and the likelihood of progress in addressing underperforming
locations and the risk of charges related to those units. 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, competition in the Company's various markets,
expenditures required for television coverage, changes in customer
preferences, 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. These and other facts are discussed in the Company's filings with
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K for the 1997 fiscal year. The Company assumes no obligation to
publicly release the results of any revisions or updates to these forward-
looking statements to reflect future events or unanticipated occurrences.
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.
http://www.buffet.com
Buffets, Inc. and Subsidiaries
Results of Operations
(Unaudited)
Forty Weeks Ended
(In thousands, except for per share amounts and average weekly sales)
October 8, October 7,
1997 Percent 1998 Percent
Restaurant sales $625,422 100.0% $668,536 100.0%
Restaurant costs:
Food costs 212,609 34.0% 215,511 32.2%
Labor costs 186,325 29.8% 201,353 30.1%
Direct and occupancy
costs 151,867 24.3% 154,741 23.2%
Total restaurant
costs 550,801 88.1% 571,605 85.5%
Restaurant profits 74,621 11.9% 96,931 14.5%
Selling, general and
administrative expenses 36,301 5.8% 46,472 7.0%
Other site closing costs 200
38,320 6.1% 50,259 7.5%
Other income (expense) -533 -0.1% 1,395 0.2%
Earnings before
income taxes 37,787 6.0% 51,654 7.7%
Income taxes 14,740 2.3% 19,760 2.9%
Net earnings $23,047 3.7% $31,894 4.8%
Earnings per share:
Basic $0.51 $0.70 37.3%
Diluted $0.50 $0.67 36.7%
Weighted average common
shares assumed outstanding:
Basic 45,225 45,448
Diluted 49,133 49,977
Number of Company-owned
restaurants open at
end of period 359 379 5.6%
Average weekly sales of
Company-owned restaurants
open at end of period $44,693 $45,549 1.9%
Twelve Weeks Ended
(In thousands, except for per share amounts and average weekly sales)
October 8, October 7,
1997 Percent 1998 Percent
Restaurant sales $194,145 100.0% $207,128 100.0%
Restaurant costs:
Food costs 65,078 33.5% 65,482 31.6%
Labor costs 56,412 29.1% 62,664 30.3%
Direct and occupancy
costs 47,148 24.3% 47,903 23.1%
Total restaurant
costs 168,638 86.9% 176,049 85.0%
Restaurant profits 25,507 13.1% 31,079 15.0%
Selling, general and
administrative expenses 12,190 6.3% 15,017 7.2%
Other site closing costs
13,317 6.8% 16,062 7.8%
Other income (expense) 99 0.1% 698 0.3%
Earnings before
income taxes 13,416 6.9% 16,760 8.1%
Income taxes 5,236 2.7% 6,325 3.1%
Net earnings $8,180 4.2% $10,435 5.0%
Earnings per share:
Basic $0.18 $0.23 27.8%
Diluted $0.18 $0.22 22.2%
Weighted average common
shares assumed outstanding:
Basic 45,276 45,393
Diluted 49,380 49,987
Number of Company-owned
restaurants open at
end of period 359 379 5.6%
Average weekly sales of
Company-owned restaurants
open at end of period $45,972 $46,087 0.3%
Condensed Consolidated Balance Sheet
(Unaudited)
Assets
(in thousands)
December 31, October 7,
1997 1998
Current assets $65,111 $115,589
Property and equipment (net) 330,647 331,537
Goodwill (net) 5,624 8,824
Other assets 2,194 1,882
$403,576 $457,832
Liabilities and Stockholders' Equity
Current liabilities $85,528 $93,245
Long-term debt 44,454 42,836
Deferred income 212
Deferred income taxes 6,695 29,880
Stockholders' equity 266,687 291,871
$403,576 $457,832
SOURCE Buffets, Inc.
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