In a continuing effort to turn around stagnant sales, McCormick & Schmick’s Seafood Restaurants Inc. outlined a new multiyear remodeling plan, as well as hospitality upgrades and changes to come in management.
Bill Freeman, McCormick & Schmick’s chief executive, told analysts Tuesday that the chain had made other improvements over the past 18 months to its menu, bar program and marketing, which he said lifted traffic trends, better connected the brand with younger guests and improved guest satisfaction scores.
Last year, the company completed a “strategic review of our brand DNA and restaurant portfolio to determine what changes might be necessary to maximize our potential,” Freeman said.
As a result, McCormick & Schmick’s is embarking on several initiatives designed to drive sales, build traffic and improve margins:
-- The company is dedicating staff and funding toward the launch of a new hospitality training program that may include the recertification of all staff.
-- Back of the house systems will be upgraded.
--The company will launch a search for three key executive positions, though the positions were not specified.
In addition, McCormick & Schmick’s is dedicating about $10 million to $15 million toward a remodel program over the next two to three years.
Remodels will range from light brush-ups to more comprehensive redesigns, depending on the location, building needs, market analysis and guest preferences, said Freeman.
The upgrades might include lighting, furniture and fixtures, overall décor and artwork, as well as creating more “socially engaging spaces,” Freeman said.
Some locations will likely close temporarily to implement the upgrades, Freeman said, some for only days and others for weeks. The company is projecting the loss of 40 to 50 operating weeks in 2011 as a result of such closures.
Freeman said eight to 10 locations will be remodeled first this year and then the company will evaluate results to see how to apply upgrades going forward.
For the fourth quarter ended Dec. 29, McCormick & Schmick’s posted a loss of $25.1 million, or $1.69 per share, compared with a net loss of $16.6 million, or $1.12 per share, in the same quarter a year ago.
Same-store sales dropped 1.0 percent for the quarter on revenues that increased 3.4 percent to $91.6 million.
For the full year, McCormick & Schmick’s reported a net loss of $23.2 million, or $1.57 per share, compared with a loss of $15.6 million, or $1.05 per share, the previous year. The company booked $28.4 million in restructuring, impairment and other charges in the latest fourth quarter, compared with $19.8 million in charges a year earlier.
Full year revenue fell 2.3 percent to $351.1 million, and same-store sales declined 4.9 percent for the year.
Referring to both the recession and the Gulf Oil crisis, Freeman applauded the company’s team for “perseverance last year in navigating through demanding, and, in many cases, unanticipated and uncontrollable circumstances.”
Offering a peek at first quarter results, Freeman said same-store sales were down 4.5 percent in January, largely because of poor winter weather. February sales were slightly positive.
Though commodity costs have had an impact, the company has been able to mitigate such inflation with the use of its daily menu. The company said no price increases are expected in 2011.
In guidance for 2011, the company is projecting revenues between $345 million and $355 million, and between 35 cents to 40 cents in earnings per share not including the impact of the temporary closures for remodel work. Including those expected interruptions, earnings per share will range from 26 cents to 31 cents.
McCormick & Schmick’s operates 96 upscale-casual restaurants, including 89 in the United States and seven in Canada under The Boathouse brand.
Contact Lisa Jennings at [email protected]