Despite strong BK results, Carrols’ profit drops 35%

SYRACUSE N.Y. Echoing most of the restaurant companies that reported financial results this week, Carrols Restaurant Group Inc. said increased costs ate into earnings for the second quarter, leaving the Burger King franchisee and Taco Cabana operator-franchisor with a 35-percent decline in net profits.

The decline came despite a 5.9-percent rise in same-store sales for Burger King units operated by Carrols, the chain’s largest franchisee. The company also is the parent and franchisor of the Pollo Tropical quick-service brand.

Total revenues for the quarter rose 5.1 percent year-over-year to $210.7 million. Total costs and expenses increased 7.3 percent.

For the three months ended June 29, Carrols earned $3.3 million, or 15 cents per share, compared with net income of $5.1 million, or 24 cents per share, in the same quarter last year.

Same-store sales increased 0.1 percent at Pollo Tropical restaurants and decreased 0.6 percent at Taco Cabana stores. Carrols chairman and CEO Alan Vituli attributed the soft sales at the two brands to tough economic challenges in the Florida and Texas markets as well as broader challenges currently affecting the entire foodservice industry.

All three of Carrols’ restaurant groups, including the Burger King franchised locations, are expected to raise menu prices to offset escalating commodity and utility costs.

As of June 30, Carrols' system comprised 557 restaurants, including 319 Burger Kings, 88 Pollo Tropical units and 150 Taco Cabana locations.