Naugles’ Owner Expects Chain to End 3-Year String of Losses
Naugles Inc., the financially ailing chain of fast-food restaurants, appears poised to halt an almost uninterrupted string of losses that has totaled more than $45 million over the past three years.
Collins Food International Inc., Naugles’ Los Angeles-based majority owner, revealed at its annual shareholders’ meeting this month that the 170-unit chain is expected to be profitable in the quarter ending in December, according to an analyst who attended the meeting.
Additionally, Collins is scheduled to increase its ownership position in Naugles from 50.1% to 91.8% later this year and will solidify its control of the company with the expected resignation in November of Naugles’ chairman and chief executive, Wayne Withers. Richard Bermingham, president of Collins and, since spring, president of Naugles as well, said he is likely to succeed Withers.
Withers could not be reached for comment Friday.
Sarah Stack, an analyst for Bateman Eichler, Hill Richards Inc., said she believes that cost-cutting measures--which have ranged from slicing meal portions and prices to installing an incentive-based pay structure for restaurant managers--led Collins to project the turnaround for the chain of Mexican-American restaurants.
Collins officials also revealed at the Aug. 20 meeting that Naugles’ sales, which have been dropping steadily for the past year, are “flattening out,” Stack said. “Those kind of things save money at a time when they need to save money,” she added.
Bermingham confirmed Friday that company executives believe Naugles will “just barely” post a profit for its second fiscal quarter.
He added, however, that the beleaguered company “still has a long way to go.”
Naugles posted a $26.6-million loss for the third quarter of its fiscal 1986--the largest three-month loss in the company’s 15-year history--and a $30.8-million loss for the first nine months of the fiscal year.
Naugles has yet to report annual or fourth-quarter results. Its 1986 fiscal year ended June 30.
