Frisch's operates restaurants under the name of Frisch's Big Boy, as well as buffet-style Golden Corral restaurants under licensing agreements. All of Frisch's restaurants are in Ohio, Indiana and Kentucky, but the company plans to expand its Golden Corral operations into Michigan, Pennsylvania and West Virginia.
Same-store sales in the third quarter at the company's Big Boy restaurants increased a modest 1.4%, while same-store sales for its Golden Corrals declined 7.3% compared with the same period last year. Total sales in the quarter were $62.8 million, up 5.8% over the same period last year.
The company also recorded a non-taxable gain of $4.44 million in Q3 from life insurance proceeds realized upon the death of Jack C. Maier, chairman of the board, who died on February 2. Excluding that gain, earnings for the third quarter were about $1.7 million, or $0.33 per share, down 23.1% from last year's third quarter. (Maier was replaced last month by Daniel W. Geeding, a director of Frisch's since 1992, and VP and CFO of the Health Foundation of Greater Cincinnati and the Health Foundation Fund.)
"Most of the same-store sales gain at Big Boy can be attributed to menu price increases," noted Maier, which were spurred by higher commodity prices, especially for meat and dairy. "Even at Big Boy, our customer count was off 1.6% for the quarter on a same-store basis."
Things were even tougher for Golden Corral, according to Maier, where customer counts were down 8.5% on a same-store basis. Besides the aforementioned sluggish Midwestern economy and high gas prices, he also cited a sister-store effect. "That's when new stores temporarily take customers from existing store in the same market as the business grows," he said. "The good news is that the sister-store effect has diminished in Cincinnati, now that our new stores are established. More recently, we've experienced that problem in the Cleveland market. We expect the problem to resolve itself over time, however."
Despite these difficulties, the company plans to continue opening Golden Corral restaurants. Its 30th Golden Corral opened for business on Monday in Louisville; two more are scheduled to open in eastern Pennsylvania in August; and two more will open after that, later in the year. "The company is in compliance with its agreement with Golden Corral Systems to open 62 restaurants by 2011, which means five a year," said Maier. The company doesn't plan to open any new Big Boys this year, though it will be renovating some locations.
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