(By Balaseshan) Frisch's Restaurants Inc. (NYSEAMEX: FRS) reported a 28.3% drop in quarterly earnings due to higher taxes and discontinued operations. Sales declined 2.8% due to closure of underperforming Big Boy restaurants.
Earnings from continuing operations for the second quarter were $2.0 million or $0.39 per share, down from $2.06 million or $0.42 per share last year.
Sales declined 2.8% to $48.52 million, as a result of last fiscal year's closures of underperforming Big Boy restaurants offset in part by new restaurant openings.
Same store sales from continuing operations were down 1.7% in the latest quarter.
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Gross profit from continuing operations increased 2.7%, resulting from lower food and payroll costs as a percentage of revenues combined with menu price increases. Gross margin rose to 12.3% from 11.7%.
At the corporate level, administrative and advertising expense decreased 2.6% primarily as a result of lower head count resulting from cost cutting measures implemented in fiscal 2013.
"Our second quarter showed mixed results as lower customer counts adversely affected same store sales while our food and payroll costs, as a percentage of sales, declined from the prior year resulting in higher gross margin," said Craig Maier, President and Chief Executive Officer.
In addition, the company said it has reduced its costs and personnel in the corporate headquarters to better match overhead structure with business after the sale of Golden Corral.
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Frisch's currently operates 94 company-owned Big Boy restaurants and there are an additional 25 franchised Big Boy restaurants operated by licensees.
On November 30, 2012, the company's board of directors declared a $0.16 per share quarterly dividend payable December 21, 2012 to shareholders of record at the close of business on December 12, 2012. This represents the 208th consecutive quarterly dividend paid by Frisch's.
FRS closed Tuesday's regular session at $17.87. The stock has been trading between $16.50 and $33.50 for the past 52 weeks.