Third Quarter 2013 Financial Results
The following summarizes the Company's results for the third quarter ended September 30, 2013 compared to the same quarter in the prior year:
- Total revenues increased 1.5% to $967.6 million versus $952.9 million for the same quarter in 2012. This increase was primarily due to additional revenues from the opening of 51 new restaurants not included in the Company's comparable restaurant sales base. This increase was partially offset by a decrease in comparable restaurant sales at existing restaurants primarily driven by a change in product sales mix, partially offset by general menu price increases and the impact of the closing of seven restaurants since September 30, 2012.
- Blended domestic comparable restaurant sales for Company-owned restaurants declined 0.3% while traffic rose by 0.2% for the Company's four core concepts. Results for Company-owned restaurants, by concept, were as follows:
|THREE MONTHS ENDED SEPTEMBER 30, 2013||COMPANY- OWNED|
|Domestic comparable restaurant sales (stores open 18 months or more)|
|Carrabba's Italian Grill||—%|
|Fleming's Prime Steakhouse and Wine Bar||4.2%|
- The number of weekdays and weekend days in a given reporting period can impact the Company's reported comparable restaurant sales. During the third quarter of 2013, the trading day impact on blended domestic comparable restaurant sales for Company-owned restaurants was (0.7)%. Exclusive of the trading day impact, the third quarter blended domestic comparable restaurant sales for Company-owned restaurants would have been approximately 0.4%.
- Restaurant level operating margin (calculated as Restaurant sales less Cost of sales, Labor and other related costs and Other restaurant operating expenses) was 12.5% in the current quarter as compared to 13.5% in the third quarter of 2012, a decrease of 100 basis points. This decrease was primarily attributable to commodity inflation primarily associated with beef and seafood, higher kitchen labor expense, a payroll tax audit contingency (approximately 50 basis points), increased operating supplies expenses and changes in the mix on product sales. The decrease was partially offset by higher productivity savings and lower health and general liability insurance claims experience.
- Adjusted operating income as a percentage of Total revenues for the third quarter was consistent at 3.7% for both the third quarter of 2013 and 2012. This was driven primarily by lower restaurant level operating margins offset by decreases in General and administrative expenses. The decrease in General and administrative expenses was mainly attributable to lower corporate and field compensation and bonus expense and lower professional fees. These decreases were partially offset by a gain from the settlement of a lawsuit in the third quarter of 2012.
Effective November 1, 2013, the Company completed the acquisition of a controlling interest in its Brazilian joint venture by purchasing 80% of the issued and outstanding capital stock of its joint venture partner which held a 50% interest in the Brazilian joint venture. As a result, the Company now holds a 90% interest in the Brazilian joint venture which operates Outback Steakhouse restaurants in Brazil. The Company completed the acquisition for total consideration of R$240.8 million (BRL) (or approximately $110.5 million) in cash, subject to a net working capital adjustment, and financed it primarily with borrowings of $100.0 million on its existing revolving credit facility and available cash.
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