Sherman Oaks, California-based Worldwide Restaurant Concepts, formerly known as Sizzler International, has posted revenues of US$67.7m for its Q1 2003, ended 21 July, up 10.5% on the US$61.3m in the comparable period in FY 2002.
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Net income for the Q1 was US$3.3m (US$0.12 per diluted share) compared to net income of US$1.7m (US$0.06 per diluted share) in the same period a year ago. The increase in net income for the quarter was primarily the result of increased sales, tight cost controls, and a tax benefit from the utilisation of tax loss carry forwards.
Operations in Australia continued to report strong sales. Same store sales grew by 11.4% at Sizzler Australia and 8.6% at KFC. Both concepts reported increases in guest counts, despite a price increase of about 2% during the quarter to pass on labour and commodity price increases. The strengthening of the A$ exchange rate by 8% compared to the prior year also contributed about US$2.3m to revenue growth for the quarter.
Sizzler USA continued to execute its strategy of promoting high value entrees. Such promotions were the primary drivers of the division’s 0.6% increase in same store sales and 1.1% increase in guest counts compared to the same quarter in the prior year.
Pat & Oscar’s contributed US$2m of the quarterly revenue increase, primarily from the four new restaurants that opened last year. Pat & Oscar’s same store sales declined by 1.2% during the quarter, due to softening in the San Diego economy and expected continuing cannibalisation in the San Diego market. Excluding the effect of cannibalisation at one San Diego restaurant, same store sales would have increased by 1%.
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By GlobalData“We’ve continued to execute our strategies for revenue growth and generated very tangible results this quarter,” said Charles Boppell, president and CEO: “We’ve been facing economic uncertainty both domestically and internationally. By positioning our brands to provide great value as well as exciting flavors, we believe that we’re correctly positioned for this type of economic environment. Our Sizzler operations in the US and Australia and our KFCs all reported same store sales increases this quarter. We’re convinced that Pat & Oscar’s can also do well in this environment. We’ve strengthened their team, and we’re currently testing an equity-based incentive program for restaurant and market managers.”
Pat & Oscar’s expansion on track
Although Pat & Oscar’s did not plan to open any new restaurants this quarter, it is on track to open five to six restaurants this FY. Five sites are already under lease or signed letters of intent, including three in Los Angeles County, as part of the company’s development plan to widen its geographic reach. The next Pat & Oscar’s is expected to open in December.
“Based on extensive consumer and real estate research, we’ve developed an extensive real estate pipeline that will support a 30% to 40% increase in our Pat & Oscar’s restaurant count this FY, and will position us to continue to grow at this rate over the next few years,” commented Boppell.
Outlook For FY 2003
“We’ve continued to deliver top line and bottom line growth in an increasingly tough economic environment. We can’t influence the economic climate we’ll face in the coming months, but we can and will continue to deliver a dining experience that exceeds our guests’ expectations while we manage our costs. We’re confident that each of our divisions is focused on the appropriate growth strategies and that they have the leadership they need to succeed,” concluded Boppell.
Condensed consolidated statements of operations
(In US$000s, except per share data)
July 21, July 22,
2002 2001
Revenues
Restaurant sales $65,683 $59,273
Franchise revenues 2,004 1,999
Total revenues 67,687 61,272
Costs and Expenses
Cost of sales 22,259 20,201
Labor and related expenses 18,187 16,899
Other operating expenses 15,611 14,274
Depreciation and amortization 2,171 2,160
General and administrative expenses 5,464 5,477
Total operating costs 63,692 59,011
Operating income 3,995 2,261
Interest expense 817 869
Investment income 191 222
Other income — 412
Income before provision for income taxes 3,369 2,026
Provision for income taxes 112 362
Net income $3,257 $1,664
Basic and diluted earnings per share $0.12 $0.06
