Cost-Cutting Campaign Returns Restaurant Chain to Profitability : Results: Under new management, Hamburger Hamlet reduces expenses by nearly $1.5 million and posts a profit of $30,000 in first quarter.

Sales have yet to rebound, but an extensive cost-cutting campaign returned Hamburger Hamlet Restaurants Inc. to profitability in the first quarter that ended March 26.

The 45-year-old restaurant chain, led by a new management regime installed over the summer, shed nearly $1.5 million in costs in the first quarter, compared with the same three-month period a year earlier.

As a result, the Sherman Oaks-based company posted a quarterly profit of $30,000, after reporting a $327,000 loss in the first quarter of 1994. The profit comes on the heels of a $10.6-million loss last year and despite the fact that sales declined to $16.6 million in the latest quarter, down 5% from $17.4 million a year earlier.

“Obviously, they’re doing a pretty good job of turning this thing around,” said Stephen Weinress, a restaurant industry analyst at L. H. Friend, Weinress & Frankson, an Irvine-based brokerage.

Weinress said his office had stopped tracking Hamburger Hamlet in recent years as the 35-restaurant chain struggled to combat Southern California’s economic woes and fierce competition from new restaurant chains, such as the Cheesecake Factory and California Pizza Kitchen.

“While they were working through the troubles, it took a very contrarian investor to want a piece” of the company, Weinress said. But now Hamburger Hamlet “definitely comes back on our watch list,” he said.

The company has been on a drive to cut costs since the arrival in August of new CEO Shawn Holder, formerly an executive with the Chart House restaurant chain. Holder and Hamburger Hamlet’s chief financial officer, Jack Lavine, eliminated 30 of 70 corporate positions last year and began whittling away at other expenses.

In the latest quarter, the company’s cuts included $164,000 in food and beverage costs, $310,000 in operating expenses and $309,000 in depreciation expenses.

The first-quarter results from a year ago also reflected a onetime $355,000 charge for a severance package awarded to the company’s former CEO, who resigned at the behest of Hamburger Hamlet board members last year.

But the company must still find a way to reverse a decline in sales at existing stores, which dipped 3.9% in the latest quarter compared with a year earlier.

“Building same-store sales continues to be our primary challenge,” said Holder, who has previously detailed plans to improve the menu, appearance and service at existing restaurant locations.