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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