Rusty Pelican Reports 3.1% Drop in Earnings

Rusty Pelican Restaurants Inc. reported net earnings of $93,000 for the second quarter of its fiscal 1987, a 3.1% drop from $96,000 posted a year earlier. Revenues for the quarter ended Jan. 18 dropped 1.6% to $12.6 million from $12.8 million.

Six-month earnings of $140,000 were down 23.9% from $184,000 recorded a year earlier. Revenue for the period totaled $25,593, down $5.8% from $27,165.

The Irvine-based dinner-house chain attributed the earnings decrease to lower sales of alcoholic beverages, higher insurance costs, and a general slump in the restaurant industry. Randy Howatt, company president, noted that food sales were 2.5% ahead of last year and said the company is “cautiously optimistic” about results for the near future.

Rusty Pelican, which owns and operates 20 restaurants in seven states, last winter faced a takeover threat and harsh criticism from shareholder Edward Grace III, a major Rhode Island investor and restaurateur.

Grace gave up his bid for control of the company two weeks ago, saying that he had gained confidence in Rusty Pelican’s management and expected the company’s earning to improve as early as the fiscal 1987 third quarter.

On Tuesday, Grace said that the flat earnings for the second quarter show that “Rusty Pelican is headed in the right direction.” Grace said that the company historically has been least productive in its fiscal second quarter because its restaurants do not cater to holiday business.

Another drain on second quarter earnings were costs associated with a new Rusty Pelican restaurant that opens this week in Glendale, Grace said. “The opening should eliminate those (related) expenses” and the new restaurant should add $4 million to $5 million in sales annually, he predicted.