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Real Mex narrows 2Q loss as sales fall

CYPRESS Calif. Contending with the high rate of unemployment in California that has increasingly bedeviled other restaurant operators in the state, Real Mex Restaurants Inc. reported a 12.1-percent drop in same-store sales in its second quarter.

Real Mex, which operates 189 restaurants under the Acapulco, Chevys Fresh Mex, El Torito and other brands, reported on Wednesday a net loss of $4.1 million in the June 28-ended second quarter, which compared with a loss of $31.8 million in the year-ago quarter, when the company booked a non-cash, goodwill impairment charge of $34 million. Second-quarter revenue fell 10.9 percent to $135.9 million.

Real Mex's double-digit decline in same-store sales in the second quarter compared with a 1.4-percent increase a year earlier.

Real Mex operates 155 of its 189 restaurants in California, where the unemployment rate was 11.6 percent in June, the most recent month for which numbers were available, versus the national rate of 9.5 percent. That California jobless rate was up 63.3 percent from 7.1 percent in June 2008.

Other chains with a large percentage of restaurants in California, including Carl's Jr., El Pollo Loco and BJ's Restaurants, also have recently reported troublesome same-store sales trends.

Same-store sales fell 6.1 percent at Carl's Jr. for the four weeks ended July 13, compared with a same-store sales increase of 4.9 percent for the same period last year, according to parent company CKE Restaurants Inc. About 362 restaurants, or 87 percent of the company-operated stores within the 1,195-unit Carl's Jr. chain, are located in California.

At 417-unit El Pollo Loco, which has most of its restaurants in California, same-store sales decreased 7.0 percent at company-operated restaurants in the second quarter ended July 1, compared an increase of 2.0 percent in the 2008 quarter. At franchised branches, same-stores fell 6.6 percent in the second quarter, compared with an increase of 1.8 percent last year.

BJ’s Restaurants Inc. of Huntington Beach, Calif., which operated more than half of its 85 casual-dining restaurants in its home state, reported that same-store sales slipped 1.3 percent in its June 30-ended second quarter, compared with a same-store sales increase of 0.6 percent in the year-ago quarter.

For the six months ended June 28, Real Mex said it had a net loss of $13.1 million, versus a loss of $34.0 million in the first six months of 2008. The year-ago loss includes the $34 million goodwill impairment charge in the second quarter, which was related to the August 2006 merger of Real Mex with RM Restaurant Holding Corp., a subsidiary of Sun Capital Partners.

Revenue for the first six months of 2009 decreased 8.9 percent to $264.4 million, primarily as a result of a 10.7-percent decrease in same-store sales, the company said.

Contact Alan J. Liddle at [email protected].

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