Revenue and same-store sales and increases couldn'toffset the expenses, said O'Charley's chairman and CEOGregory Burns. Revenue for the second quarterincreased 6.5% to $214.2 million from $201.2 millionfor the same period last year. Same-store sales for all three O'Charley's concepts--O'Charley's Restaurants, Ninety Nine Restaurant andPub and Stoney River Legendary Steaks--rose just 1.5%during the quarter. Burns said that chains continuedto be impacted by high gasoline costs, creating adecrease in customer count at O'Charley's Restaurantsand Stoney River Legendary Steaks of half a percent.Moreover, Ninety Nine Restaurant and Pub saw a 2.1%decrease in average check.

During the second quarter, the restaurant operatorsigned its largest franchise development agreement incompany history with Covelli Enterprises for 50O'Charley's restaurants in Florida, Ohio, Pennsylvaniaand West Virginia. During 2005, O'Charley's expectsits franchisees and joint venture partners to open atotal of four to five new O'Charley's restaurants.

Three new company-operated O'Charley's restaurantsopened during the second quarter and one store closed,bringing the total number of company-operatedO'Charley's restaurants to 226 at the end of thequarter. Thirteen to 15 new company-operatedO'Charley's restaurants are planned for 2005. For the restaurateur's other concepts, one new NinetyNine restaurant opened during the second quarter,bringing the total number of Ninety Nine restaurantsto 102 at the end of the quarter. One milestone forNinety Nine was the ground breaking of the firstrestaurant in suburban Philadelphia, the concept'snewest market.