Diversified Restaurant Holdings Reports Positive Preliminary Same Store Sales for Fourth Quarter 2018; Executes Agreement to ...
01 March 2019 - 8:15AM
Business Wire
2.2% same-store sales growth in fourth
quarter breaks 11-quarter negative trend; Positive momentum has
continued into 2019
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, announced
preliminary unaudited sales results for the fourth quarter and year
ended December 30, 2018. DRH also announced that it has entered
into an agreement to acquire nine BWW restaurants located in the
Chicago market for $22.5 million.
David G. Burke, President and CEO, stated, “We achieved our
first positive quarterly same-store sales result in three years and
are encouraged with the early read into 2019, as our
quarter-to-date same-store sales have continued to trend
positively, despite severe weather across many of our regions.
Excluding those weather-related days, same-store sales growth has
been over 3% and traffic is the leading driver. We believe this is
a testament to the creative, measured approach being taken by the
new franchisor to reenergize and rebuild the Buffalo Wild Wings
brand, coupled with our focus on guest experience, loyalty
attachment and development of the delivery channel. We believe
there is a significant opportunity to build on this momentum
throughout the year as we execute on forthcoming brand-enhancing
initiatives with the support of a new, comprehensive marketing and
promotion strategy, starting in mid-March.”
He continued, “Given our excitement with the changes being made
at BWW, we believe that prudent, timely expansion will deliver
shareholder value. This transaction is particularly attractive to
us because the restaurants are located within our existing Midwest
footprint, centered in the Chicago market area where we currently
have nine other locations. With this additional scale, we expect to
further leverage our infrastructure, systems, marketing spend and
leading operational expertise to drive improved results in these
locations.”
These restaurants generated approximately $32.7 million in
revenue and approximately $4.5 million of EBITDA in 2018. DRH
expects to complete the purchase in the second quarter, subject to
franchisor consent and waiving of its right of first refusal, as
well as customary closing conditions. Mr. Burke concluded, “We are
evaluating various alternatives to financing this transaction,
which presents a tremendous recapitalization opportunity for DRH
aimed at adding longer-term stability and driving future value
creation.”
Preliminary 2018 Sales Results
Total revenue for the 2018 fourth quarter (a 13-week period) was
$39.1 million compared with $41.9 million in the fourth quarter of
2017 (a 14-week period). Fourth quarter, 13-week comparable sales
were up 2.2%, the first positive quarter since 2015. For the full
year 2018 (a 52-week period), the Company estimates total revenue
was $153.1 million compared with $165.5 million in 2017 (a 53-week
period).
Preliminary results remain subject to the completion of normal
year-end accounting procedures and are subject to change. The
Company will release financial and operating results for its fourth
quarter and year ended December 30, 2018 on March 7, 2019.
About Diversified Restaurant Holdings, Inc.
Diversified Restaurant Holdings, Inc. is one of the largest
franchisees for Buffalo Wild Wings with 64 franchised restaurants
in key markets in Florida, Illinois, Indiana, Michigan and
Missouri. DRH’s strategy is to generate cash, reduce debt and
leverage its strong franchise operating capabilities for future
growth. The Company routinely posts news and other important
information on its website at
http://www.diversifiedrestaurantholdings.com.
Safe Harbor Statement
The information made available in this news release contain
forward-looking statements which reflect DRH's current view of
future events, results of operations, cash flows, performance,
business prospects and opportunities. Wherever used, the words
"anticipate," "believe," "expect," "intend," "plan," "project,"
"will continue," "will likely result," "may," and similar
expressions identify forward-looking statements as such term is
defined in the Securities Exchange Act of 1934. Any such
forward-looking statements are subject to risks and uncertainties,
actual growth, results of operations, financial condition, cash
flows, performance, business prospects and opportunities could
differ materially from historical results or current expectations.
Some of these risks include, without limitation, the franchisor
waiving its right of first refusal, our ability to obtain financing
for the acquisition, the success of initiatives aimed at improving
the Buffalo Wild Wings brand, the impact of economic and industry
conditions, competition, food safety issues, store expansion and
remodeling, labor relations issues, costs of providing employee
benefits, regulatory matters, legal and administrative proceedings,
information technology, security, severe weather, natural
disasters, accounting matters, other risk factors relating to
business or industry and other risks detailed from time to time in
the Securities and Exchange Commission filings of DRH.
Forward-looking statements contained herein speak only as of the
date made and, thus, DRH undertakes no obligation to update or
publicly announce the revision of any of the forward-looking
statements contained herein to reflect new information, future
events, developments or changed circumstances or for any other
reason.
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version on businesswire.com: https://www.businesswire.com/news/home/20190228005962/en/
Investor and Media:Deborah K. PawlowskiKei Advisors
LLC716.843.3908dpawlowski@keiadvisors.com
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