Top-line growth continued to be a struggle for most restaurant companies in the fourth quarter, while corporate profits benefited from cost-cutting initiatives and favorable comparisons to year-ago results. Outlooks for 2010 cited more of the same for the restaurant industry, as executives cited caution surrounding the economy and the consumer.
Carrols Restaurant Group Inc., one of Burger King’s largest franchisees and the owner-operator of two fast-casual chains, said it could not predict what this year would bring because of “continuing uncertainties with regard to the overall economy and consumer spending, and in particular, a lack of visibility regarding the key drivers of comparable sales for its Burger King restaurants.”
Papa John’s International Inc. said domestic same-store sales for 2010 are expected to come in between a negative 1 percent and positive 1 percent, about the same as the flat result posted in 2009. CEC Entertainment Inc., the parent to the Chuck E. Cheese chain, said same-store sales for 2010 are expected to increase between 1 percent and 2 percent, from 2009, when same-store sales fell 2.8 percent.
McCormick & Schmick’s Seafood Restaurants Inc., a high-end operator, said sales will continue to be challenged in 2010, after a 2009 that included a same-store sales decline of 15.7 percent.
While sales continue to elude restaurants, profits are shoring up. Cracker Barrel Old Country Store Inc., for example, saw its fiscal second-quarter net income jump 38 percent. The company raised its earnings outlook for 2010, despite continued softness on the sales side, as it has been able to benefit from commodity deflation. Texas Roadhouse Inc. also saw its profit rise 42 percent in the latest quarter, as margins continued to improve. Texas Roadhouse said food cost deflation would help drive a 2010 earnings increase of between 5 percent and 10 percent.
Last week, the following restaurant companies reported quarterly results:
- CEC Entertainment Inc.: See earnings release and stock activity on Market Monitor
- Einstein Noah Restaurant Group Inc.: See coverage here, and stock activity on Market Monitor
- Carrols Restaurant Group Inc.: See coverage here, and stock activity on Market Monitor
- Papa John’s International Inc.: See coverage here, and stock activity on Market Monitor
- McCormick & Schmick’s Seafood Restaurants Inc.: See coverage here, and stock activity on Market Monitor
- Cracker Barrel Old Country Store Inc.: See coverage here, and stock activity on Market Monitor
- Texas Roadhouse Inc.: See earnings release and stock activity on Market Monitor
Contact Sarah Lockyer at [email protected] .