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Restaurant 2Q earnings positive, outlook cautious

Restaurant companies continued to report second-quarter results this week, most of which included positive sales and profit trends through June.

While fundamentals remained strong, analysts are forecasting a tough road ahead as consumer confidence threatens to slip with the current market uncertainty.

“Volatility in the equity markets highlights the uncertainty felt among investors and consumers alike as economic growth slows,” the consumer research team at Robert W. Baird, including restaurant securities analyst David Tarantino, noted in a report Monday. “Broadly, fundamentals held up into the summer with most consumer categories still exhibiting growth. However, Baird’s consumer team is more cautious amid signs of worsening macro conditions.”

This week, Jamba Inc., Bob Evans Farms Inc. and Così Inc. reported results.

Jamba Inc.: Parent company of the 746-unit Jamba Juice chain reported its third consecutive quarter of positive same-store sales, as corporate locations posted a 4.3-percent increase for the quarter ended July 12. Franchised restaurants also generated positive same-store sales results, up 1.4 percent.

The company recorded a large surge in second-quarter net income, totaling $3.4 million, or 5 cents per share, compared with year-earlier earnings of $924,000, or 2 cents per share. Jamba booked an income tax benefit in the second-quarter and recorded lower operating expenses.

Second-quarter revenue fell 20.5 percent to $58.9 million, a result of the company’s refranchising efforts to sell corporate stores to franchisees.

Bob Evans Farms Inc.: For its first quarter of fiscal 2012, Bob Evans, which operates 563 Bob Evans restaurant and 145 Mimi’s Café locations, posted weaker sales trends at its restaurants, but an improved corporate bottom line.

Net income for the quarter ended July 29 totaled $17.8 million, or 59 cents per share, compared with earnings of $12.5 million, or 41 cents per share in the same quarter a year earlier. Total revenue fell 1.7 percent to $405.4 million.

Same-store sales fell 1.8 percent at Bob Evans and 4.8 percent at Mimi’s Café.

Così Inc.: The parent company of the 138-unit namesake fast-casual chain swung to a net loss for the quarter ended June 27, from a year-earlier profit, which was boosted by a one-time gain related to the sale of 13 restaurants.

The company’s second-quarter net loss totaled $634,000, or 1 cent per share, compared with a year-earlier profit of $3.8 million, or 7 cents per share, when Così booked $5.1 million, or 10 cents per share, on the sale of restaurants in Washington, D.C.

Second-quarter revenue fell 9.2 percent to $26.9 million. Same-store sales rose 0.5 percent at corporate restaurants and fell 1.3 percent at franchised locations.

“Our focus continues to be on driving sales and traffic across all dayparts, while remaining committed to controlling restaurant and administrative costs,” James Hyatt, Così's president and chief executive, said in a statement.

• Follow real-time stock market information at NRN’s Market Monitor.
Read earlier restaurant company earnings reports and all financial coverage.

Contact Sarah Lockyer at [email protected].
Follow her on Twitter: @slockyerNRN

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