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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