Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: kh Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35  
Subject: 2002 Q3 Conference Call Notes Date: 11/8/2002 10:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Acquisition of Ninety Nine Restaurant and Pub

Closely-held Ninety Nine Restaurants to be acquired by CHUX for $160 million ($120 million cash, $40 in CHUX stock). Deal is expected to close in early 2003 and to be accretive up to $.10 per share in 2003.

The present owner (the Doe Family) will continue to manage the operation as a stand-alone brand on a day-to-day basis. However, CHUX CEO Burns disputed the notion (suggested by some analysts on the call) that O'Charley's is adopting a passive, “holding company” type model going forward. CHUX will be actively involved in all aspects of the 99 unit's operations, he said.

99 Restaurants has 74 stores - in ME, VT, NH, MA, RI, and CT. Plans to expand to western NY next year. In the past, 99 Restaurants has used cash to finance expansion and has no debt. Many stores located in residential neighborhoods rather than business districts.

CHUX management visited all 74 locations and generally found them to be up-to-date and in good repair. Some older stores have bars that are in need of remodeling to fit a “Sports Bar” theme that the company uses in its newer stores. Expenditure required to renovate was not specified.

99's average check is $12 (vs. average check for CHUX of $11.63).

99's Sales mix – 80% food and 20% bar (vs. 90% food and 10% bar for CHUX)

Same Store Sales

O'Charley's – After many years of SSS increases, SSS decreased for the second consecutive quarter. The decrease was .5% in Q3. Weak economic conditions and rainy weather were to blame. SSS has improved in first few weeks of Q4, however.

Stoney River – SSS decreased 2.7%, due to the economy. Sales tend to spike up and down as the stock market moves up and down. Trends like that are typical of “upscale” restaurants, Burns said.

99 restaurants – SSS increased by an unspecified amount.

Guidance for 2003

Earnings guidance for 2003 is $1.50 to $1.55, vs. expected $1.32 to $1.34 for 2002. The guidance for 2003 does not include the 99 Restaurant acquisition.

Projected SSS increase for 2003 is 0% to 2%.

Franchising Program

O'Charley's - The company is continuing to look at the possibility of franchising. No franchises yet.

99 restaurants - franchising unlikely at this stage.

2003 Expansion plans

O'Charley's - Most of the expansion will occur only in markets where CHUX already has a presence. Only one new market next year: Kansas City.

99 Restaurants – 10 new stores this year, 30 new stores in last three years. 10 to 12 new stores expected next year.

Food “To Go”

Carryout orders represent 4% of O'Charley's sales. Packaging is being improved. Carryout will be promoted more than it has been in the past, through advertising.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Post of the Day:
Value Hounds

Nu Skin Showing its Age?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement