Stout pointed out that part of J. Alexander’s Corporation’s reduction in food cost expense was based on favorable purchasing contracts on selected items, including a significant reduction in the price paid for salmon. He also noted that prices paid for produce were generally significantly lower than in the prior year’s quarter. “We also took an approximate 2% price increase late in the fourth quarter that offset some of the input cost increases incurred earlier in the year,” he said.
J. Alexander’s Corporation has added several lower food cost items to menus in many of the Company’s restaurants. These items include upscale tacos and flatbreads, both of which have strong appeal to younger guests of J. Alexander’s.
Beef prices paid by the Company did increase by almost 20% compared to the prior year. However, the effect of menu price increases and lower prices paid for certain other food commodities, combined with other actions by the Company to lower food costs, more than offset the effect of the higher beef prices. Cost of sales decreased to 31.5% of net sales for the first quarter of 2012 from 33% of net sales in the corresponding quarter of the previous year.
The Company’s average weekly guest counts on a same store basis decreased by 0.9% in the first quarter of 2012 compared to the corresponding quarter of 2011. The average guest check, including alcoholic beverage sales for the quarter, was an estimated $28.13 and increased by approximately 5.3% from the prior year’s comparable quarter. The estimated effect of menu price increases for the first quarter was approximately 4.2% compared to the first quarter of 2011.The Company’s total labor and related costs for the first quarter of 2012 decreased to 32.2% of net sales from 32.4% of net sales in the prior year first quarter. Other restaurant operating expenses decreased to 19.3% of net sales from 20.6% of net sales.