Shares in Del Frisco’s Restaurant Group Inc. continued to rise Tuesday after Fidelity National Financial Inc. disclosed it had accrued an 8.1 percent stake in the multi-brand restaurant operator.
The stock price for Southlake, Texas-based DFRG was up nearly 2 percent at midday Tuesday, to more than $16 a share, after increasing 7.3 percent on Monday, when Jacksonville, Fla.-based Fidelity National disclosed in a Securities and Exchange Commission filing that it had increased its holdings in the company to nearly 1.9 million shares between Oct. 21 and Dec. 24. DFRG shares had traded as low as $12.25 each on Sept. 15.
DFRG, meanwhile, on Monday issued a press release on the Christmas Eve closure of its Del Frisco’s Grille in Phoenix, Ariz., which came on the heels the division’s shuttering in late November of its two-year-old Grille unit in Palm Beach, Fla.
DFRG, which owns and operates 50 restaurants including the Del Frisco’s Double Eagle and Sullivan’s Steakhouse concepts, said it would incur one-time lease termination and closing costs related to the Phoenix Del Frisco’s Grille in the fourth quarter.
“Closing our Phoenix Del Frisco’s Grille enables us to focus on other, more profitable restaurants and is therefore in the best interest of our company and shareholders,” said Mark S. Mednansky, DFRG’s CEO, in a statement.
“Although this particular restaurant has been challenged for some time,” Mednansky said, “the Grille concept continues to resonate with guests and we look forward to bringing Del Frisco’s Grilles to select locations that are a fit for the brand.”
As of the end of the third quarter on Sept. 8, DFGR operated 49 restaurants, comprised of 12 Del Frisco’s restaurants, 18 Sullivan’s restaurants and 19 Grille restaurants, in 21 states and the District of Columbia.
Fidelity National Financial, a title insurance and investment company, has a lengthy connection to restaurant holdings. It is a subsidiary of Fidelity National Financial Ventures LLC, a holding company that has a 55 percent stake in American Blue Ribbon Holdings, which owns the O’Charley’s, Ninety Nine Restaurant & Pub, Village Inn, Bakers Square and Legendary Baking concepts.
In September, Fidelity National Financial reached a separation agreement with J. Alexander’s, the upscale restaurant chain based in Nashville, in a spinoff that ended its three-year ownership of the chain.
The chairman of Fidelity National Financial is William P. Foley II, a former CEO of CKE Restaurants, parent to the Carl’s Jr. and Hardee’s chains.
Del Frisco’s same-store sales and earnings have struggled in the past few quarters. After releasing its third-quarter earnings on Oct. 13, Del Frisco’s executives said they planned to slow the company’s unit growth for 2016.
Del Frisco’s reported a loss of $1 million, or 4 cents a share, in the third quarter ended Sept. 8, compared with a profit of $1.8 million, or 8 cents a share, in the same period last year. Quarterly revenue increased 10.8 percent, to $68.6 million, from $61.9 million in the prior-year period.
Same-store sales in the quarter fell 3.5 percent at Del Frisco’s Grille and 1.4 percent at Del Frisco’s Double Eagle Steak House. Same-store sales rose 1.2 percent at Sullivan’s Steakhouse.
“We will be limiting development next year,” Mednansky said in October. “This will allow us to devote greater effort toward refining and improving operations at all of our existing restaurants as we continue to fine-tune our site selection process.”
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