During the next 12 months, the chain, which operates the Lone Star, Del Frisco, Sullivan's and Texas Land & Cattle brands, will close 30 underperforming units including 13 owned locations and 17 leased locations. The chain currently operates 285 domestic units.
"Overall, 2005 was a disappointing year for the company, especially for the Lone Star brand," said CEO Jamie B. Coulter during the chain's earnings call. He explained that the high cost of beef, along with increased operating expenses, impacted the chain's performance.
For fiscal year 2005, net income was $30.1 million, or $1.51 per share, compared to $31.2 million, or $1.49 per share, in 2004. Income from continuing operations was $21.3 million compared to $31.4 million for the same period in 2004, while revenues were relatively flat at $669.4 million compared to $667.5 million.
The chain said that the stores closures will improve future operating cash flow including $15 million to $20 million in proceeds from the sale of the owned properties. Lone Star chief executive officer Coulter said during the call that the chain may end up closing more stores in addition to the 30 already announced.
During fiscal 2005, the chain achieved overall same-store sales increases of 2.8% with Lone Star's comp's declining by 2.5% and its premium brand, Del Frisco's, improving by 7.8%.
The chain remodeled 11 existing Lone Star restaurants and opened two new prototype Lone Star restaurants during fiscal 2005 and did not remodel any existing restaurants or open any new restaurants for its other concepts throughout the year.
So far in 2006, two new Lone Stars have opened and there are four remodels and eight new Lone Star restaurants currently in various stages of construction. Additionally, three new Texas Land & Cattle restaurants, one new Del Frisco's restaurant and one new Sullivan's restaurant are currently under construction. Moreover, the chain has lined up sites for 21 new restaurants.
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