Del Frisco's Restaurant Group, Inc., the owner and operator of the Del Frisco's Double Eagle Steak House, Sullivan's Steakhouse, and Del Frisco's Grille restaurant concepts, reported financial results for the second quarter ended June 17, 2014.
Consolidated revenues increased 11.6 percent to $67.4 million from $60.4 million.
On a calendar basis, comparable restaurant sales increased 5.2 percent at Del Frisco's Double Eagle and represented the concept's 18th consecutive quarter of positive comparable restaurant sales. On a fiscal quarter basis, which includes a one-week calendar shift in the comparison due to the 53rd week in fiscal 2013, sales in the same restaurants increased 5.4 percent.
"Del Frisco's Double Eagle extended its enviable track record of positive comparable restaurant sales to 18 consecutive quarters, and in doing so, demonstrated its positioning as the go-to destination for upscale diners in the steakhouse category," says Mark S. Mednansky, CEO of Del Frisco's Restaurant Group, Inc.
On a calendar basis, comparable restaurant sales increased 0.9 percent at Sullivan's Steakhouse. On a fiscal quarter basis, which includes a one-week calendar shift in the comparison due to the 53rd week in fiscal 2013, sales in the same restaurants increased 0.7 percent.
"Sullivan's enhancements in the areas of menu, messaging, operations, and facilities are continuing to take root, and resulted in our affordable neighborhood steakhouse delivering positive comparable restaurant sales for the first time since the third quarter of 2012 along with improvement in restaurant-level EBITDA," Mednansky says. "Still, we are not yet satisfied with the brand's performance and we will continue our work to complete its revitalization."
Blended comparable restaurant sales, on a calendar basis, increased 2.2 percent across all three concepts. On a fiscal quarter basis, sales in the same restaurants increased 2.3 percent across all three concepts. Cost of sales, as a percentage of consolidated revenues, increased slightly to 30.1 percent from 30.0 percent.
Del Frisco's Grille opened its newest location in Burlington, Massacusetts, at the end of the second quarter, and now consist of 12 restaurants. Four more are slated to open this year.
"As [the Grille's] base of 'next generation' restaurants grows, we foresee newer locations having less of an impact on segment margins compared to what we have experienced in recent quarters," Mednansky says. "This was exhibited in the second quarter as restaurant sales and restaurant-level EBITDA grew at nearly similar paces of 58 percent and 53 percent, respectively."
Overall, Mednansky says the financial performance of Del Frisco's Restaurant Group met expectations, but the group has nonetheless delayed several new openings. The Del Frisco's Double Eagle opening in Washington, D.C., is now slated for the fourth quarter, and two of the three Grille openings slated for the fourth quarter have been pushed to a later date.
The group also delayed its sales projections for the Chicago Del Frisco's Double Eagle based on its current run rate. Sales projections for the Palm Beach Del Frisco's Grille have also been lowered, as the restaurant has not yet received clearance to serve lunch or brunch or make use of the the patio as the brand had modeled it.
"While these circumstances are unfortunate, they are also temporary, and in no way detract from Del Frisco's Restaurant Group being rightfully viewed as one of the most exciting growth stories within the restaurant industry," Mednansky says.
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