WOODLAND HILLS, Calif., Nov. 11, 2008 (GLOBE NEWSWIRE) -- Grill Concepts, Inc. (Nasdaq:GRIL), operators of The Grill on the Alley and Daily Grill-branded restaurants, as well as a newly launched quick casual concept In Short Order -- Daily Grill, today reported financial results for its fiscal third quarter ended September 28, 2008.
Total revenues for the fiscal 2008 third quarter rose 14.5 percent to $24.4 million from $21.3 million in the same period a year ago. Sales at company-owned restaurants totaled $16.7 million, up 4.7 percent over $15.9 million in the 2007 fiscal third quarter, benefiting from new Daily Grill openings in Boston, MA and Fresno, CA. Management and license fees grew 29.0 percent to $846,000 from $656,000 in the prior-year period, primarily reflecting the opening of the Tulsa Daily Grill during the current third quarter and higher restaurant sales at the Seattle Daily Grill.
Consolidated comparable restaurant sales company-wide declined 8.0 percent for the third quarter of fiscal 2008, versus an increase of 9.1 percent in the year-ago third quarter. Comparable sales at The Grill on the Alley-branded restaurants declined 4.5 percent, versus very strong comparable restaurant sales gains of 15.7 percent in the prior-year third quarter. For the Daily Grill restaurants, comparable restaurant sales were down 10.7 percent for the fiscal 2008 third quarter, compared with an increase of 5.1 percent a year earlier.
"While the declines in comparable sales at our restaurants are disappointing, discretionary consumer spending has been severely impacted on a mass scale over escalating concerns about the economy," said Philip Gay, president and chief executive officer. "We recognize the greater focus on conserving capital, and the board and management team have determined that a more conservative approach to further growth would be in the best interest of our company, team members and shareholders. Accordingly, we have temporarily halted our accelerated expansion plans for new restaurants which would require significant cash commitments for development, until such time when our nation's economy eventually begins to show signs of recovery."
As part of a plan to conserve capital, the company will be breaking away from certain new lease commitments for 2009 and, consequently, accrued estimated restructuring costs of $1.7 million, equal to $0.19 per share, in its fiscal 2008 third quarter results. Grill Concepts also incurred additional litigation settlement expense of $268,000, equal to $0.03 per share, associated with the previously reported class-action lawsuit.
Primarily reflecting the company's operational performance in recent quarters and uncertainties surrounding the realization of cumulative net operating losses, management believes it is more likely than not that the deferred tax assets on the company's consolidated balance sheet will not be fully realizable in the foreseeable future and, in accordance with Financial Accounting Standards Board Interpretation No. 48, recorded a full valuation allowance against its net deferred tax assets at September 28, 2008 of $7.9 million, or $0.90 per share, resulting in a net tax provision of $6.3 million for the fiscal 2008 third quarter.
Including the two non-recurring operating expenses and the unusual income tax provision discussed above, the company sustained a net loss applicable to common stock of $11.1 million, equal to $1.26 per share, in the fiscal 2008 third quarter, based on 8.8 million weighted-average shares outstanding. This compares with a net loss applicable to common stock of $589,000, or $0.07 per share, for the fiscal 2007 third quarter, based on 7.9 million weighted-averages shares outstanding. Loss before interest, taxes, depreciation and amortization, pre-opening costs, minority interest, restructuring costs and litigation settlement accruals amounted to $589,000 for the 2008 fiscal third quarter. This compares with earnings before interest, taxes, depreciation and amortization, pre-opening costs and minority interest of $428,000 in the third quarter a year ago.
During the fiscal 2008 third quarter, Grill Concepts opened two new restaurants -- a Daily Grill-branded restaurant in the Tulsa Crowne Plaza in Tulsa, OK, mid-August and a Grill on the Alley in the Westlake Promenade in Thousand Oaks, CA on September 22, 2008. The company plans to open its seventh Grill on the Alley-branded restaurant in the Aventura Mall located in northeastern Miami-Dade County, Florida late this year, marking its fifth and final new restaurant opening for 2008.
