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Grill Concepts hurt in 2nd-Q by expenses, slow sales

WOODLAND HILLS Calif. Grill Concepts Inc., operator of 30 upscale restaurants under the Daily Grill and The Grill on the Alley brands, said Monday that higher preopening costs, a legal settlement and negative same-store sales led to the company’s larger loss in the second quarter.

For the quarter ended June 29, Grill Concepts posted a loss of $993,000, or 11 cents per share, compared with a year-ago loss of $39,000, or 1 cent per share.

Latest-quarter revenue rose 7.6 percent to $24.5 million and was driven by restaurant openings, including a new corporate-operated Daily Grill in Boston, which was the second of five planned openings for this year.

Blended same-store sales reflecting both of the company’s chains fell 6.3 percent for the second quarter, reflecting drops of 3.6 percent at The Grill on the Alley restaurants and 7.9 percent at the Daily Grill restaurants.

“Our restaurants have not been immune to the increasingly difficult economic environment that has adversely impacted the hospitality sector and discretionary consumer spending,” Philip Gay, Grill Concepts’ president and chief executive, said in a statement.

He noted that the latest-quarter blended same-store sales figures were up against a year-ago increase of 10.6 percent.

In addition to weak sales, Grill Concepts was hurt by higher preopening costs and increased depreciation and amortization related to the company’s expansion. The company also booked a litigation settlement expense of $780,000, or 5 cents per share, related to an ongoing class-action lawsuit that the company did not detail.

Grill Concepts said it would place additional focus on cost control and “careful” restaurant site selection. The company said it would close its managed Daily Grill restaurant in Memphis, Tenn., in September, following a mutual agreement with the Westin Beale Street Hotel.

Grill Concepts restaurants include five Grill on the Alley units, 24 Daily Grill units and one In Short Order – Daily Grill fast-casual location.

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