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Del Frisco's: Sales dip, traffic improves in 1Q

Del Frisco's: Sales dip, traffic improves in 1Q

Traffic began improving at the company's three brands toward the end of the quarter

Del Frisco’s Restaurant Group Inc. reported an overall same-store sales decrease of 0.5 percent for the first quarter of 2013 but saw traffic improve toward the end of the quarter at its Sullivan’s Steakhouse, Del Frisco’s Grille and Del Frisco’s Double Eagle Steak House brands.

The company attributed the dip in sales to softness at the beginning of the quarter ended March 19, with some sales rebounding throughout March. Inclement weather and other macroeconomic factors impacting consumers likely hurt sales, said Del Frisco’s chief executive Mark Mednansky on a Tuesday call with analysts.

“We were very gratified to see that our trend line improved in our March fiscal period and that all three concepts generated positive traffic over the last four weeks of the quarter, and perhaps even more important that momentum has stayed with us through April as well,” he said.

The slight same-store sales decrease was minimally impacted by pricing, Mednansky said. “In fact, there was no price intaking during the quarter and no pricing has been taken since the first quarter of 2012,” he said.

Net income for the quarter was $3.6 million, or 15 cents per share, compared with nearly $5 million, or 28 cents per share, the year-earlier quarter. Revenue increased 13 percent year-over-year to $59.8 million, compared with 52.9 million the year prior.

At Del Frisco’s Double Eagle Steak House, revenues increased 14.1 percent to $32.3 million during the first quarter, from $28.3 million the year prior. Same-store sales increased 1.9 percent at the restaurants, driven in part by a 0.5-percent increase in traffic. This was the brand’s 13th consecutive quarter of same-store sales growth, the company said in a statement.

Sullivan’s reported a revenue decrease of 3.4 percent for the quarter, down to $19.9 million from $20.6 million in the year-earlier quarter. Same-store sales fell 4 percent at the brand, due in part to an average check decrease of 1.4 percent.

Del Frisco’s Grille saw its revenues increase by 90 percent for the quarter, up to $7.6 million from $4 million the prior year. The increase was mostly due to 37 additional operating weeks resulting from three openings in 2012, and one Grille opening in early 2013, the company said in a statement.

Nicole Miller Regan, a senior research analyst at Piper Jaffray & Co., said the first-quarter results at Del Frisco’s were better than expected. “We believe second quarter-to-date trends are running in the positive low-single digit range but have maintained our estimates of flat comps,” she wrote in a post-earnings report.

Looking ahead to the end of 2013 and into 2014, she wrote: “We are encouraged by improving traffic trends and believe that significant leverage continues to exist in the company's model.”

For the full year 2013, the company expects same-store sales to increase 1.5 to 2.5 percent. Adjusted earnings per share are expected to be 92 cents to 96 cents for the year ended December 31.

“Our 2014 pipeline is also coming together and we see no reason why would not be able to expand our footprint by 10 percent annually,” Mednansky said.

Southlake, Texas-based Del Frisco’s reentered the stock exchange as a publicly traded company in July. As of March 19, the company owned and operated 35 restaurants in 19 states.

Contact Erin Dostal at [email protected].
Follow her on Twitter: @ErinDostal

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