Updated Feb. 7 to correct Ninety Nine sales information in second paragraph
Restaurant chain O'Charley's posted a fourth-quarter loss of $20.6 million as operating costs rose and sales continued to atrophy. Per diluted share, the company's loss from continuing operations was 77 cents – which included one-time items related to restaurant closures and some staff cuts – more than double what analysts had expected.
Same-store sales at the Nashville-based chain's namesake concept fell more than 1 percent, while those at its Ninety Nine chain rose by 1.3 percent. Guests counts at the smaller Stoney River concept rose 10 percent. Overall food and drink costs rose to 30.5 percent of sales during the quarter from 29.4 percent while restaurant operating costs climbed 120 basis points to 22.0 percent of sales.
While calling the quarter and full-year numbers disappointing, CEO David Head said O'Charley's has positive momentum.
"During the fourth quarter, we made progress in our turnaround efforts as all three restaurant concepts achieved sequential improvement in sales comparisons and record guest satisfaction scores," Head said. "During 2011, we expect to continue our efforts to drive guest loyalty by ensuring that every guest experiences great food, great service and strong value, while we manage our costs to improve our financial performance. We strongly believe in the potential of our three concepts."
Head said he expects O'Charley's to post an operating profit of between $3 million and $6 million versus the $15.2 million operating loss this past quarter. Sales are expected to come in between $260 million and $266 million. Analysts' average forecast is for $267 million.
Head also announced that Stoney River President Tony Halligan is leaving the company to be succeeded by Fred Thimm, who comes to Nashville having been president and CEO of Al Copeland Investments' restaurant division as well as president and COO of The Palm restaurants. Halligan had been with leading Stoney River since February 2006 and had been a VP for six years before that.
Shares of O'Charley's (Ticker: CHUX) closed Thursday trading at $6.69. They're down 10 percent in the past three months.