O’Neill concluded, “As announced last quarter, our Board of Directors is reviewing strategic alternatives to maximize value for all stockholders, and we have no further update to provide at this time. Our Company priorities of executing on our asset-light expansion strategy, de-levering our balance sheet, paying a quarterly dividend, building on our comparable sales momentum, and realizing operational improvements through our comprehensive cost savings program have not changed. In fact, we are pleased to have already made substantial progress on these action items and expect continued focus will further strengthen our business model.”
Second Quarter 2012 Financial Results
For the second quarter ended July 3, 2012, system-wide comparable store sales increased +1.3%, reflecting +3.9% growth in average check that was driven primarily by product mix, pricing, and an increase in catering sales, and partially offset by lower comparable transactions. Total revenues increased 2.2% to $106.0 million from $103.7 million, reflecting a 3.0% increase in Company-owned restaurant sales, while manufacturing and commissary revenues decreased 7.2% due to recent commissary closures.
Restaurant gross margin as a percentage of company-owned restaurant sales increased 150 basis points to 17.7% from 16.2%, and was due primarily to operational efficiencies in food costs, and to a lesser extent, overall sales leveraging and higher pricing.Manufacturing and commissary gross margin as a percentage of manufacturing and commissary revenues increased from 12.0% to 22.9%, and was due to benefits from various cost initiatives related to the efficiency program, but particularly, the closure of all five commissaries by the end of the first quarter of this year. Overall, gross margin was $21.1 million in the second quarter of 2012 compared to $18.3 million in the second quarter of 2011, and as a percentage of total revenues, increased to 19.9% from 17.7% in the year-ago period. General and administrative expenses increased to $10.0 million in the second quarter of 2012 from $8.6 million in the second quarter of 2011, and was primarily due to higher variable incentive compensation.