CYPRESS Calif. Real Mex Restaurants Inc., the largest casual-dining Mexican restaurant operator, reported Friday that its third quarter net loss nearly doubled because of slowed sales and higher operating costs, particularly for labor and restaurant-opening expenses.
Real Mex, a privately held company with publicly traded debt, is owned by private-equity firm Sun Capital Partners. It operates nearly 200 restaurants under the El Torito, El Torito Grill, Acapulco, Chevys and Sinigual brands, among others.
For the quarter ended Sept. 28, Real Mex posted a loss of $1.1 million, compared with a loss of $608,000 a year ago. The company’s pre-opening expenses rose 88 percent during the latest quarter from five restaurant openings so far this year. Labor expenses, as a percentage of sales, increased 3 percentage points both from a sales slowdown and from the minimum wage increases earlier this year that took hold in several states where Real Mex operates.
Third quarter revenue fell 3.5 percent to $137.5 million, which reflected a same-store sales decrease of 3.7 percent, the company reported.
During the company’s June-ended second quarter, Real Mex booked impairment charges for the write-down of assets and goodwill because of the “continued impact of the downturn in the economy on current operations and growth projections,” it said. Those charges — $34 million for goodwill and other intangible assets and $1.6 million for property and equipment — led to a loss of $35.1 million for the nine months ended in September. A year ago, Real Mex booked a profit of $2.8 million for the first nine months of 2007.
Revenues fell 0.7 percent to $427.6 million for the nine months ended in September.
