Chanticleer Holdings, a franchisee of international Hooters® restaurants and a minority owner in the privately held parent company of the Hooters® brand, today announced its financial results for the three and six months ended June 30, 2013.
Mike Pruitt, Chairman and CEO of Chanticleer, commented, “…combined with key strategic initiatives coming to fruition as planned, our company is growing stronger. For the first six months, our six operating stores in three countries are performing well. Revenue growth, gross margin improvement and an 11.5% growth in restaurant EBITDA all contributed to net loss improvement of 6.6%.
Highlights Include:
• Restaurant revenue for the second quarter 2013 decreased 3.2% to $1.6 million, compared with $1.7 million in the second quarter 2012. This decrease is primarily attributed to a 16% drop in the currency exchange rate, which was offset by an increase from Chanticleer’s Budapest, Hungary, location which opened in August 2012. Restaurant revenue for the six months ended June 30, 2013, increased 6.5% to $3.3 million, compared with $3.1 million in the same period a year ago. As of June 30, 2013, the company had six restaurants (five consolidated and one joint venture) compared with five restaurants (four consolidated and one joint venture) as of June 30, 2012.
• Gross profit margins for the second quarter 2013 improved 3.1% to 61.3% compared with 58.2% in the same period a year ago. Gross profit margins for the six months ended June 30, 2013, improved 3.4% to 61.5% compared with 58.1% in the second quarter 2012.
• Same-store gross sales for restaurants opened more than a year increased 6.1% in South Africa currency (Rands) and decreased 9.8% in USD for the six months ended June 30, 2013 compared with last year, due to fluctuations in the exchange rate.
• Restaurant operating expenses for the second quarter 2013 were $932,000 or 56.8% of restaurant revenue, compared with $923,000 or 54.4% of restaurant revenue for the year-ago quarter. Restaurant operating expenses for the six months ended June 30, 2013, were $1.9 million or 58.2% of restaurant revenue, compared with $1.7 million or 54.9% of restaurant revenue for the year-ago quarter. Operating expenses for the 2013 periods included our Budapest, Hungary, location (opened in August 2012) whose operating expenses were a higher percentage of revenue compared with our South African stores.
• Net loss attributable to Chanticleer Holdings from continuing operations for the second quarter 2013 was $682,000 or $0.18 per share, compared with $805,000 or $0.54 per share for the year-ago second quarter. Total net loss for the 2013 second quarter was $707,000 or $0.19 per share, compared with $844,000 or $0.56 per share.
• Net loss attributable to Chanticleer Holdings from continuing operations for the six months ended June 30, 2013, was $1.4 million or $0.39 per share, compared with $1.4 million or $0.58 per share for the year-ago period. Total net loss for the six months ended June 30, 2013 was $1.4 million or $0.39 per share, compared with $1.5 million or $0.62 per share.
• In March 2013, the company announced its exiting of the operation of its investment management business. During the second quarter 2013 the company received two months of cost-saving benefits, and beginning in the third quarter 2013, the savings are estimated to be $50,000 per quarter. The revenues and expenses are presented as discontinued operations in our statement of operations for the three and six months ended June 30, 2013 and June 30, 2012.
• Restaurant EBITDA for the three and six months ended June 30, 2013 was approximately $75,000 and $111,000, respectively compared with $63,000 and $100,000 in the same periods a year-ago. Our improved gross margins were offset by an increase in operating expenses, including professional fees and higher payroll costs.
• General and administrative expenses (“G&A”) for the second quarter 2013 was $621,000 or 37.3% of revenue, compared with $611,000 or 35.5% of total revenue in the year-ago quarter. G&A for the six months ended June 30, 2013 was $1.4 million or 40.5% of revenue, compared with $1.1 million or 33.8% of total revenue in the year-ago quarter. These costs increased primarily because of increases in audit and legal fees, additional costs related to NASDAQ fees and SEC filings, as well as an increase in corporate personnel, offset by a decrease in G&A attributable to our discontinued operations.
• On August 2, 2013, the Company entered into a Binding Letter of Intent with West End Wings Limited for the purchase of the Nottingham, England Hooters restaurant location for a total purchase price of three million one hundred and fifty thousand dollars ($3,150,000). The closing is contingent upon the completion of a full and accurate audit, and is expected to occur the earlier of the completion of the audit or October 31, 2013. The company closed on a $3 million funding in the form of convertible debt from a consortium of investors to finance this purchase.
In conclusion, Pruitt stated, “During the second quarter, we exited the investment management business which allows us to save that expense and to focus solely on expanding our restaurant business abroad and here in the United States.
“I am pleased to tell you that on August 2, 2013, Chanticleer Holdings signed a Binding Letter Of Intent with West End Wings Ltd. for the purchase of the existing Nottingham, England Hooters restaurant location for $3,150,000 in cash. We expect to close pending a complete and acceptable audit on or before October 31, 2013.
“This will be our first Hooters restaurant in Great Britain, and based on this store’s past operational performance, we believe it will be a great entry into a very receptive and American food-friendly country. West End Wing’s management has been very successful and as the new owners, we will benefit greatly from their experience and knowledge.
“Going forward, we will continue to evaluate restaurant opportunities at home and abroad, as well as continue to improve performance in our existing operations.”
For more information, visit www.ChanticleerHoldings.com
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