Logan’s Roadhouse posted a loss of $9.8 million in the first quarter of its 2011 fiscal year as costs associated with the company’s sale to a private-equity group took a big bite out of its bottom line. Sales rose almost 7 percent to $136.1 million.
The sale in October to Kelso & Co. and some of Logan’s senior executives saddled the company with more than $20 million of transaction costs, pushing operating results $12 million into the red. A year ago, Logan’s posted an operating profit of $6.8 million.
CEO Tom Vogel said his team is “extremely pleased” with its first-quarter numbers. Same-store sales rose 2.6 percent, split evenly between increases in traffic and average check size.
CFO Amy Bertauski said some operating costs rose slightly because of rising liability insurance costs, hints of food inflation and higher advertising spending. There also was some evidence, she said, of diners continuing to trade down to less expensive offerings.
But in part because other costs were held in check or declined relative to sales, restaurant operating margins rose to 14.2 percent from 13.8 percent in the year-ago quarter.
On a conference call with analysts and investors, Vogel said the casual-dining market continues to be very competitive and added that steakhouse competitors such as Longhorn and Outback may be getting even more aggressive. Bar-and-grille operators such as Olive Garden, on the other hand, appear to be easing back on discounting, Vogel added.
Logan's opened five new stores in the quarter and is on track to add another 10 restaurants in the next six months. The company runs about 200 locations in 19 states.