Ryan's 4Q Earnings Decline on Weak Sales :: Restaurant Supply Resource

Ryan's 4Q Earnings Decline on Weak Sales

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Ryan's Reports Fourth Quarter and Fiscal Year 2004 Results

Ryan's Restaurant Group, Inc. (Nasdaq: RYAN) today reported financial results for the fourth quarter and fiscal year 2004.

Fourth quarter restaurant sales amounted to $193.5 million compared to $197.6 million during the comparable quarter of 2003. Net earnings were $9,233,000 for the fourth quarter of 2004 and $12,399,000 for the fourth quarter of 2003. Earnings per share (diluted) were 22 cents and 28 cents for the fourth quarters of 2004 and 2003, respectively.

For the year ended December 29, 2004, restaurant sales amounted to $827.0 million compared to $805.0 million during 2003. Net earnings were $48.0 million in 2004 and $49.8 million in 2003. Earnings per share (diluted) were $1.11 in 2004 compared to $1.14 cents in 2003.

Commenting on the quarter, Charles D. Way, Chairman and CEO of the Company, said, "Our fourth quarter was impacted principally by weak sales levels. Total restaurant sales deceased by 2%, and same-store sales decreased by 4%. We believe that sales were impacted principally by continuing uncertain economic conditions and high energy costs, resulting in more careful spending and less restaurant visits by our customers. In addition, our December sales were adversely affected by severe winter weather during the second half of the month and by the timing of Christmas. We typically close our restaurants on Christmas Eve and Christmas Day, which fell on two significant sales days, Friday and Saturday, in 2004 compared to two lesser sales days, Wednesday and Thursday, in 2003."

Costs were well-controlled during the quarter, although margins were significantly impacted by the weak sales levels. Beef costs, which have been very high during the first nine months of 2004, improved during the fourth quarter and were essentially flat compared to the fourth quarter of 2003. Store-level costs were impacted by higher electricity and gas costs, and general and administrative expenses were impacted by costs related to Sarbanes-Oxley compliance. Substantially all other margin declines resulted principally from the impact of weaker sales levels on the fixed costs incurred at the restaurants, such as manager pay, depreciation and many costs included in 'other restaurant expenses'."

As we look forward into 2005, we have recently seen some improvements in our sales trends and are optimistic that these improvements will continue throughout 2005. Our new operations leadership team is focused on building average unit sales and has implemented new staffing parameters in order to improve customer service. Our store managers are actively pursuing local marketing opportunities designed to bring new customers to our restaurants. We are also upgrading the curb appeal of our restaurants in order to improve their visibility and impact. Our sales comparisons will continue to be difficult during the first quarter, but become easier during the second quarter and forward. Accordingly, we believe that it is very likely that we will show positive same-store sales starting during the second quarter. Sales growth during 2005 will also come from new restaurants and Fire Mountain conversions. We currently plan to build 17 to 21 new restaurants, including 4 to 6 potential relocations, and convert 20 to 25 existing restaurants to our Fire Mountain brand."

At December 29, 2004, the Company owned and operated 341 restaurants and was the franchiser of 7 restaurants. As noted in Company's annual report on Form 10-K for the fiscal year ended December 31, 2003 and other filings with the Securities and Exchange Commission, the franchise relationship with the Company's sole franchisee is expected to end by no later than June 30, 2005.

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Date Listed: 2005-01-26

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Industry: Restaurants
Category: Financial
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