LRI Holdings Inc., the parent company of Logan’s Roadhouse, plans to drive traffic and sales by opening 20 new restaurants in fiscal 2012 and stressing value in advertisements, company executives said Friday in a call with analysts.
The Nashville, Tenn.-based steakhouse chain, with 207 company-owned stores and 26 franchised units, reported in the fourth quarter a 65.3-percent drop in net income from the previous year. Same-store sales for the quarter ended July 31 were flat.
Logan’s Roadhouse chief executive Thomas Vogel said the company’s two biggest challenges are improving same-store sales and dealing with commodity inflation of 5 percent to 7 percent.
Traffic was down for the quarter, and Vogel noted that half of the brand’s customers earn less than $50,000 a year.
“Our core customers were impacted by the economy,” he said.
Vogel also said an uptick in promotional discounts among national casual-dining chains has stolen some traffic and same-store sales from Logan’s Roadhouse.
To cope with the rising price of commodities, the chain has locked in 75 percent of its food contract costs for the year, including two-thirds of its beef costs, said Amy Bertauski, Logan’s Roadhouse chief financial officer.
The company aims to boost sales with value-oriented advertising, and cited its $13 average check as among the lowest in the casual-dining steakhouse segment.
The company also plans to spend $35 million on capital expenditures in fiscal 2012, Bertauski said.
Logan’s Roadhouse opened 15 new restaurants in fiscal 2011 and aim to grow unit count by 10 percent annually, Vogel said.