October 25, 2004

Chain Update: Landry's, Champps And Others

A number of leading chain restaurants have announced significant financial or operational news in recent days.

* Landry's Restaurants Inc., the nation’s second-largest operator of casual-dining seafood restaurants, has announced its earnings for the third quarter that ended Sept. 30, 2004. Revenue for this period totaled $314.4 million, compared to $302.2 million a year earlier. Net earnings for the quarter were $21.0 million, compared to $18.4 million reported last year. Earnings per share (diluted) for the quarter were $0.75, compared to $0.65 reported last year. Same-store sales for the company's restaurants were down by approximately 2% for the quarter due to the five named storms experienced in Florida and the eastern third of the Country during late August and September. Revenue for the nine months that ended on Sept. 30, 2004, totaled $907.7 million, compared to $851.6 million a year earlier. Net earnings for the nine months were $54.2 million, compared to $43.4 million reported last year. Earnings per share (diluted) for the nine months were $1.91, compared to $1.53 in the prior year.

* Champps Entertainment Inc. said results for its fiscal 2005 first quarter that ended on Oct. 3 were positive. Revenue increased by 13.5% over the same quarter the prior year to $55,497,000. First-quarter fiscal 2005 had 14 operating weeks compared to 13 operating weeks for fiscal 2004. Restaurant operating and franchise contribution increased by 18.8% to $5,730,000. Income from operations increased by 131% to $1,884,000. Earnings per diluted share increased by 120% to $0.11. Total revenue for the first quarter increased by 13.5% to $55,497,000 vs. $48,885,000 during the first quarter of last fiscal year. The revenue increase was primarily due to the first quarter of 2005 being a 14-week period, while the first quarter of 2004 was a 13-week period.

* Tampa, Fla.-based Blue Moon Group has launched for its Got Pizza Music Cafe. The 24-hour Music Video Station will be aired throughout all its Got Pizza Music Cafe locations and premiere music videos for all Blue Moon Group Artists. Blue Moon Group is a holding company with subsidiaries providing services to the music, entertainment and film industries. It is an emerging music and entertainment company engaged in the development, production and distribution of various types of music including pop, rock, R&B, hip hop, dance and country. The company recently signed a music distribution deal with Brody/Sony Red.

* Back Yard Burgers Inc. announced its results for the third quarter and nine months that ended on Oct. 2. Total revenue for the 13-week period that ended on Oct. 2, were $10,392,000, a record third quarter for the company and an increase of 5.9% over total revenue for the 13 weeks ended Sept. 27, 2003. The increase primarily is the result of improvements in same-store sales at company-operated restaurants compared with the year-earlier period. Another revenue boost came from an increase in franchise and area development fees, due to the opening of 11 franchised restaurants during the 13-week period that ended on Oct. 2, 2004, compared with two outlets that were opened in the year-earlier period, and higher royalty fees due to a net increase of 21 franchised restaurants since Sept. 27, 2003. Net income for the 13-week period that ended on Oct. 2, 2004, was $289,000 or $0.06 per diluted share, increasing from $202,000 or $0.04 per diluted share, in the 13-week period ended Sept. 27, 2003.

* Brinker International Inc. has announced that its most recent quarterly earnings fell sharply, but shares of the parent of the Chili's restaurant chain rose as much as 7% on news that it would sell its Big Bowl Asian unit, according to Reuters. The company, which has been losing market share to rival Applebee's International Inc., and whose sales suffered from recent hurricanes in Florida, also wrote down its investment in the Rockfish Grill chain. Net income for the first quarter that ended on Sept. 29 fell to $14.7 million or $0.16 per share, from $44.6 million or $.045 a share, a year earlier. Excluding one-time items, earnings were $.40 a share. Analysts on average were expecting $.39 on that basis. The company took a $10.1 million after-tax charge for its decision to sell Big Bowl to Lettuce Entertain You Enterprises for an undisclosed amount. Earlier this year, Brinker took a charge for writing down the value of the chain and said it would close seven of those restaurants.

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