SOUTHFIELD, Mich. - April 1, 2013 // GLOBE NEWSWIRE // - Diversified Restaurant Holdings, Inc. (OTCQB:DFRH) ("DRH" or the "Company"), the creator, developer, and operator of the unique, full-service, ultra-casual restaurant and bar Bagger Dave'sLegendary Burger Tavern® ("Bagger Dave's") and one of the largest franchisees for Buffalo Wild Wings® ("BWW"), announced results for the fourth quarter and year ended December 30, 2012.
Fourth quarter revenue of $26.1 million (a 14-week period) was up $10.0 million, or 62.4%, from the fourth quarter of 2011 (a 13-week period). Fiscal 2012 (a 53-week period) sales grew $16.7 million to $77.4 million from fiscal 2011 (a 52-week period). Sales growth was driven by the addition of eight corporate-owned restaurants and eight acquired locations as well as improved economic conditions in the areas in which the Company operates. At the end of 2012, there were 45 total restaurants operating, comprised of 12 Bagger Dave's and 33 BWW, compared with 28 restaurants at the end of 2011. On a consolidated basis, excluding the additional week in 2012, same store sales were up 9.2% and 7.6% for the fourth quarter and fiscal 2012, respectively.
"Our 2012 record results demonstrate the effectiveness of our growth strategy and brand recognition in the marketplace. We continued investing in our restaurant portfolio by adding 16 corporate locations and upgrading our current facilities," commented T. Michael Ansley, President and CEO of DRH.
Mr. Ansley added, "We strive to provide a consistent and unique dining experience to our customers. While we have been growing rapidly our customers remain our top focus and maintaining this consistent experience is paramount to our ongoing success."
Food, beverage, and packaging costs increased to $8.2 million in the fourth quarter of 2012 from $4.8 million in the prior-year period, primarily due to the opening of new restaurants along with the impact of increased commodity food prices and inflationary factors. The average cost per pound for bone-in chicken wings increased dramatically in 2012 compared with the average cost per pound in 2011. Food, beverage, and packaging costs as a percentage of sales were 31.4% and 29.9% in the fourth quarters of 2012 and 2011, respectively.
Compensation costs increased $2.5 million to $6.6 million in fourth quarter of 2012 from $4.1 million in fourth quarter of 2011 due to the increased staffing needs for the new restaurants. However, as a percentage of sales, labor costs improved to 25.3% in fourth quarter of 2012 from 25.7% in the prior-year period.
Net loss attributable to DRH in the fourth quarter of 2012 was $623,008, a decrease from net income of $528,293 in the same period of the prior year.
Total revenue of $77.4 million for fiscal 2012 reflects $6.7 million that was attributable to revenue generated from the new locations that did not meet the criteria for same-store-sales reporting. In addition, $4.1 million was attributable to the eight BWW locations purchased in September 2012, and a $5.9 million increase in same store sales growth.
Operating expenses were up 32.8% in 2012, reflecting the addition of the new stores during the year.
DRH generated $1.6 million in operating profit in 2012, a decrease of $2.0 million compared with $3.6 million in 2011, primarily due to increased food, beverage, and packaging costs as a result of the number of restaurants operated and a 62.8% year-over-year increase in the average cost per pound for bone-in chicken wings. For fiscal 2012, net income attributable to DRH was $180,099, or $0.01 per diluted share, compared with net income of $1.8 million, or $0.10 per diluted share, in fiscal 2011.
The increase in the number of restaurants was the result of two expansion programs. The Company opened nine restaurants, six Bagger Dave's and three BWW, during 2012 which included the fourth quarter opening of the largest BWW, by square footage, in Downtown Detroit, Michigan. The first franchised Bagger Dave's was also opened in Missouri in June 2012. Additionally, the Company acquired eight BWW restaurants with four operating in Illinois and four in Indiana. The acquisition included the right to develop a fifth Indiana BWW restaurant location, which the Company intends to open by the end of 2013.
Cash and cash equivalents were $2.7 million at December 30, 2012, compared with $1.5 million at December 25, 2011. The Company generated $7.6 million in cash from operations in 2012, up $1.0 million over the prior year, as a result of improved working capital.
Capital expenditures increased to $15.7 million in 2012, with new restaurant construction accounting for $14.5 million. The Company is committed to reinvesting in its stores and is following a definitive schedule of continued improvements and remodeling to maintain a positive dining experience for its guests. For 2013, the Company estimates capital expenditures to range between $22.5 million and $26.0 million, with the majority focused on new restaurant opening expenses.
In 2013, DRH plans to open 10 additional restaurants which will be comprised mostly of Bagger Dave's. Over the next five years, in total, the Company expects to open 35 to 45 new Bagger Dave's and 14 new BWW.
Mr. Ansley concluded, "We will remain aggressive in our growth strategy as we progress through 2013. We invested time and resources into building brand recognition for our Bagger Dave's restaurants and we expect significant growth to come from this franchise moving forward. We will also continue expanding our portfolio by adding additional Buffalo Wild Wings restaurants as opportunities for acquisition and geographic expansion arise."
Diversified Restaurant Holdings, Inc. ("DRH" or the "Company") is the owner, operator, and franchisor of the unique, full-service, ultra-casual restaurant concept, Bagger Dave's Legendary Burger Tavern® ("Bagger Dave's") and one of the largest Buffalo Wild Wings® ("BWW") franchisees. Between the two concepts, the Company currently operates 44 corporate-owned restaurants in Michigan, Florida, Illinois, and Indiana, and one franchised Bagger Dave's in Missouri, for a total of 45 restaurants. The Company routinely posts news and other important information on its website at www.diversifiedrestaurantholdings.com.
Bagger Dave's offers a full-service, family-friendly restaurant and bar with a casual, comfortable atmosphere. The menu features freshly-made burgers (never frozen), accompanied by more than 30 toppings from which to choose, along with fresh-cut fries, hand-dipped milkshakes, and a selection of craft beer and wine. Signature items include Sloppy Dave's BBQ®, Train Wreck Burger®, and Bagger Dave's Amazingly Delicious Turkey Black Bean Chili®. The Bagger Dave's concept emphasizes local flair by showcasing historical photos of the city in which each restaurant resides and features an electric train that runs above the dining room and bar areas. Currently, there are 11 corporate-owned locations and one franchised location. For more information, visitwww.baggerdaves.com.
DRH operates 33 BWW restaurants: 15 in Michigan, 10 in Florida, four in Illinois and four in Indiana. The Company has opened 19 new BWW restaurants in fulfillment of its 32-restaurant Area Development Agreement ("ADA") with franchisor Buffalo Wild Wings, Inc. (Nasdaq:BWLD). The remaining 13 restaurants under the ADA agreement, along with an additional franchise agreement in Indiana, suggest that the Company will operate 47 BWW's by 2017.
The information made available in this news release contains 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 and the Company's 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 impact of economic and industry conditions, competition, food and drug safety issues, restaurant 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 our 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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Deborah K. Pawlowski
Kei Advisors LLC
Phone: 716.843.3908
Email: dpawlowski@keiadvisors.com
David G. Burke
Chief Financial Officer
Phone: 248.223.9160
Diversified Restaurant Holdings, Inc.
Diversified Restaurant Holdings, Inc. owns and operates Bagger Dave's Burger Tavern, a full-service, family-friendly restaurant and full bar.