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McCormick & Schmick’s sees $2.5M net loss in 3Q

One day before McCormick & Schmick’s Seafood Restaurants Inc. announced its acquisition by Landry’s Inc., chain officials reported a loss for the third quarter, even as improving trends in September indicated that revitalization efforts were taking hold.

For the quarter ended Sept. 28, the Portland, Ore.-based seafood restaurant chain reported a net loss of $2.5 million, or a loss of 17 cents per share, compared with earnings of $1.04 million, or 7 cents per share, for the same quarter a year ago.

The results included about $800,000 in expenses related to the company’s evaluation of strategic alternatives.

During the third quarter, McCormick & Schmick’s same-store sales fell 1 percent on a revenue decline of 4.2 percent to $81.4 million, in part because of the closure of four restaurants earlier this year as well as the loss of operating weeks as some locations were closed temporarily for remodels.

Bill Freeman, McCormick & Schmick’s chief executive, said he was encouraged by positive sales trends in September, with a growing number of U.S. locations showing improvement.

“Despite the challenges of an uncertain economy, higher commodity inflation and other factors, there were promising signs in both improving sales trends and guest satisfaction scores as a result of our strategic revitalization program, which continues to support our long-term strategy for recovery,” Freeman said.

The company’s secondary Boathouse brand in Canada rebounded in the third quarter, Freeman said, generating “strong positive comparable sales in both August and September.”

Earlier this year, the upscale-casual chain launched a revitalization plan that included a multi-year effort to evaluate the company’s restaurant portfolio, upgrade service and the guest experience, tweak the menu and refresh aging restaurants.

The company said six restaurants have been remodeled so far this year and one more rebuild is scheduled for completion before Thanksgiving.

“Our newly remodeled restaurants continued to generate comparable sales trends that significantly exceed company averages,” Freeman said. “These restaurants have a strong average post-remodel comparable restaurant sales increase of approximately seven percentage points. In addition, our guest satisfaction scores noticeably improved, which we attribute largely to our focus on enhancing service and hospitality.”

Based on results to date, continued Freeman, “We are very encouraged that our upgrade program, together with our continued efforts to elevate service and hospitality through focused training initiatives, will generate attractive returns and contribute to the successful revitalization of the overall company.”

McCormick & Schmick’s operates 92 restaurants, including 85 in the United States and seven in Canada under The Boathouse brand.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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