O’Charley’s Inc. blamed severe weather and falling sales at its three chains as it recorded a net loss for its first quarter.
For the quarter ended April 18, O'Charley's had a net loss of $4.3 million, or 21 cents per share, compared with year-ago profit of $6.9 million, or 34 cents per share. The latest quarter included $5.6 million in impairment charges related to four O'Charley's restaurants, which remain open, the company said.
First-quarter revenue fell 6.9 percent to $271.5 million from $291.7 million a year ago, said O'Charley's, which is parent to a namesake casual-dining chain as well as the Ninety Nine Restaurants and Stoney River Legendary Steaks brands.
Same-store sales fell 6.7 percent at the O’Charley’s brand, 6.0 percent at Ninety Nine Restaurants and 8.3 percent at Stoney River. Traffic was down at both O'Charley's and Ninety Nine, but guest counts were up 6.4 percent at the company's upscale Stoney River concept, the company said.
Jeff Warne, president and chief executive of O’Charley’s Inc., tied the company's poor performance to reduced consumer spending and severe weather. He also noted that the company's strategy of promoting value-priced entrees did not drive the expected higher sales of appetizers, drinks and dessert.
“We are disappointed with our financial results for the quarter, which were at the low end of our previously issued guidance when adjusted for impairment charges, and below several of our peers,” he said.
Several casual-dining chains have reported improving sales trends, including Texas Roadhouse, P.F. Chang's China Bistro and The Cheesecake Factory.
"We emphasized value-priced entrees in the quarter, expecting the lower average entree prices to be partially offset by incremental sales of appetizers, beverages and desserts," Warne said. "While our value-priced entrees positively impacted guest counts, we did not get the anticipated incremental sales."
O'Charley's did not offer full-year projections, but said it expected second-quarter revenue between $194 million and $200 million. It noted that the recent floods in Tennessee would reduce second-quarter revenue by as much as $500,000.
The company recorded revenue of $206 million for last year's second quarter.
Nashville, Tenn.-based O’Charley’s Inc. owns or franchises 368 restaurants under its three brands.
Contact Elissa Elan at [email protected].
