Market Overview

Diversified Restaurant Holdings Reports 5.8% Increase in Same-Store Sales for Second Quarter 2019

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Diversified Restaurant Holdings, Inc. (NASDAQ:SAUC) ("DRH" or the "Company"), one of the largest franchisees for Buffalo Wild Wings® ("BWW") with 64 stores across five states, today announced results for its second quarter ended June 30, 2019.

Second Quarter and Year to Date Information (compared with prior-year period unless otherwise noted)

  • Revenue totaled $38.9 million, up 5.1% despite one fewer restaurant
  • Same-store sales increased 5.8% with both traffic and average ticket up
  • Net loss significantly reduced to $0.5 million
  • Restaurant-level EBITDA(1) was $5.7 million or 14.6% of sales
  • Adjusted EBITDA(1) was $3.9 million or 9.9% of sales
  • Total debt of $96.6 million was down $5.9 million for the year-to-date period

(1)

 

See attached table for a reconciliation of GAAP net loss to Restaurant-level EBITDA and Adjusted EBITDA

"We achieved same-store sales growth for the third consecutive quarter, driven by our continued focus on the delivery channel, a favorable sports impact in our core markets and the improvements being made to the brand," commented Michael Ansley, Executive Chairman of the Board, President and Interim CEO. "While we continue to face headwinds around chicken wing prices, labor costs and delivery fees, we have rationalized our operations and overhead and, as a result, expect to better leverage our sales growth with improved earnings as we move forward. We removed $1.5 million in annualized costs and have identified another $0.5 million in additional savings as we have optimized our local marketing spend to more efficiently leverage our franchisor's national advertising campaigns."

"Buffalo Wild Wings is getting back to its roots with the fall advertising push and brand relaunch that are underway. There will be increased national advertising focused on football and the introduction this month of significant elements in support of the brand relaunch with the rollout of enhanced chicken products. The new hand-breaded chicken tenders, two new hand-breaded chicken sandwiches and new improved boneless wings are truly a step-change in quality and product offering, and we believe will drive additional traffic. We are also excited about the relaunch of BOGO Wing Tuesday, a long-time staple of BWW customers and an important component of our value proposition. By continuing to focus on delivering quality and value to our customers, we believe we are positioning BWW and DRH for long-term success."

Mr. Ansley added, "We continue to work with our advisors on our previously disclosed evaluation of strategic alternatives for the business and to restructure our debt." DRH does not intend to discuss or disclose developments with respect to this process until the Board has approved a definitive course of action.

Second Quarter Results

 

 

 

 

 

 

 

 

(Unaudited, $ in thousands)

 

Q2 2019

 

Q2 2018

 

Change

 

% Change

Revenue

 

$

38,920.2

 

 

$

37,039.1

 

 

$

1,881.1

 

 

5.1

%

Operating profit

 

$

1,040.0

 

 

$

262.8

 

 

$

777.2

 

 

295.8

%

Operating margin

 

2.7

%

 

0.7

%

 

 

 

 

Net loss

 

$

(469.3

)

 

$

(1,172.2

)

 

$

702.9

 

 

(60.0

)%

Diluted net loss per share

 

$

(0.01

)

 

$

(0.04

)

 

$

0.03

 

 

(75.0

)%

 

 

 

 

 

 

 

 

 

Same-store sales

 

5.8

%

 

(6.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant-level EBITDA(1)

 

$

5,664.1

 

 

$

5,540.2

 

 

$

123.9

 

 

2.2

%

Restaurant-level EBITDA margin

 

14.6

%

 

15.0

%

 

 

 

 

Adjusted EBITDA(2)

 

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