Recession Takes a Big Bite Out of Restaurant Sales : Dining: Irvine-based management firm has lost $55 million in 2 years. Dinner houses and fine-dining establishments are hardest hit.
Special occasions are being celebrated less frequently in El Torito and Charley Brown’s, and more often at Coco’s and Carrow’s, according to Restaurant Enterprises Group.
The Irvine-based company that operates those four chains, as well as seven others, has reported a loss of $27.7 million for 1991 and a 3.9% drop in sales, to $869.9 million. This brings the privately held company’s losses to nearly $55 million in the past two years.
For the record:
12:00 a.m. March 11, 1992 For the Record
Los Angeles Times Wednesday March 11, 1992 Orange County Edition Business Part D Page 2 Column 5 Financial Desk 1 inches; 29 words Type of Material: Correction
Restaurant Enterprises Group--The Irvine-based restaurant operator reported a net loss of $27,508,000 in 1990 and $28,277,000 in 1991. Losses reported in a story Tuesday were the firm’s pre-tax figures.
Robert T. Trebing, vice president of finance, said so-called dinner houses, such as El Torito, are suffering as customers seek cheaper dining--even for special occasions.
“That’s not surprising,” said Janet Lowder, president of Restaurant Management Services, a Rancho Palos Verdes consulting firm. “People aren’t going out unless it’s a special occasion. Dinner houses have been the second-hardest hit, after fine dining.”
Still, Restaurant Enterprises Group’s numbers are slightly below the industry average. The median for a restaurant’s profit was 4.6% of total sales in 1990, according to a report published by the accounting firm Deloitte & Touche.
Additionally, Restaurant Enterprises Group continues to struggle with a large debt: It reported an interest expense of $42.3 million in 1991, compared with $43.3 million in 1990. The company was formed in 1986 as a result of a management-led leveraged buyout of W.R. Grace & Co.’s restaurant division.
Trebing said the company’s cash flow is positive, but that it would be taking steps in the next year to return to profitability. “Advertising is going to be one of the first places we look,” Trebing said.
The company operates 607 restaurants in 25 states and the District of Columbia. Its chains include Coco’s, Carrow’s, jojo’s, Bob’s Big Boy and Allies in the family-style segment. Its dinner-house chains are Reuben’s, Charley Brown’s, Baxter’s, Casa Maria, Casa Gallardo and El Torito.
Douglas Christopher, an analyst with Crowell Weedon & Co. in Los Angeles, said a saturated restaurant market in Southern California and the stubbornness of the recession here are contributing to the industry’s problems. “There’s a lot more competition than in the last recession,” he said.
A handful of Orange County’s fine-dining restaurants--where the check averages about $23 per person or more--have even been forced to close this year.
Restaurant Enterprises Group
Sales and earnings continued to fall as consumers stepped down another notch on the dining-out scale, trading visits to dinner houses for family-style meals.
(Dollars in thousands, except per-share data)
Percent 1991 1990 Change Total revenue $869,862 $905,650 -3.9 Net earnings (loss) (27,755) (26,980) +2.9 Earnings per share (loss) (192.33) (233.02) -17.5
Source: Restaurant Enterprises Group
