Sales for the six month period ended June 1, 2008, were $28.2 million compared to sales of $28.5 million during the same period last year. Meritage reported a net loss for the six month period of $601,000, compared to a net loss of $1,158,000 for the same period last year. Consolidated EBITDA for the six months was $1.19 million compared to $665,000 in the same period of 2007, an increase of 78.6%.
Gary Rose, Meritage's Vice President & Chief Financial Officer, stated, "Our second quarter profit was largely due to improved operating performance, the recognized gain on the sale of the a newly constructed retail center, and an income tax refund from a prior year."
In late April, Wendy's and Arby's parent company (Triarc Companies) announced a merger agreement between the two companies. While this merger will not change the Wendy's brand, we are hopeful that leadership under future CEO, Roland Smith, will help the Wendy's franchise system experience improved restaurant margins that brings Wendy's closer to the industry average of 15%. Mr. Smith stated his intention to pursue expansion focused on breakfast and new unit growth. He also aims to improve margins significantly in the Wendy's company-owned stores, and develop synergies and efficiencies between the brands including possible dual-concept development in high-cost real estate markets.
The Company previously reported that it became a venture partner in a new resort development in the Bahamas managed by Jorge Perez and Steven M. Ross, founders of The Related Group. The development includes an upscale leisure and mixed-use resort opportunity including a marina, golf course, oceanfront lots and high-end hotels operated by international luxury hotel operators. Meritage will focus on real estate sales and marketing, as well as development services.
Meritage is one of the nation's premier franchise operators, currently operating 53 restaurants in two brands: Wendy's in the quick service restaurant segment and O'Charley's in the casual dining segment. The Company employs over 2,000 Michigan residents.
SAFE HARBOR STATEMENT
Certain information in this new release, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, constitutes forward-looking statements. Factors set forth in our Safe Harbor Statement, in addition to other possible factors not listed, could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company's Safe Harbor Statement at http://www.meritagehospitality.com.
Meritage Hospitality Group Inc. and Subsidiaries
Consolidated Statement of Operations
(Unaudited)
Three Months Ended
June 1, May 27,
2008 2007
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Food and Beverage Revenue $ 14,793,578 $ 14,636,354
Costs and Expenses
Cost of food and beverages 3,980,701 3,978,694
Labor and related expenses 5,064,950 5,069,685
Advertising expenses 582,528 573,758
Other operating expenses 3,891,141 3,867,927
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Total Operating Expenses 13,519,320 13,490,064
General and administrative expenses 729,947 642,453
Depreciation and amortization 515,099 596,391
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Total Costs and Expenses 14,764,366 14,728,907
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Income (Loss) from Operations 29,212 (92,553)
Other Income (Expense)
Interest expense (282,612) (231,012)
Debt extinguishment charges - -
Interest income 12,766 23,504
Other income 29,107 960
Gain on disposal of assets 291,057 (1,254)
Stock option expense (34,152) (25,000)
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Total Other Expense 16,166 (232,803)
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Income (Loss) Before Income Taxes 45,378 (325,356)
Income Tax Expense (Credit) (145,302) 13,373
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Income (Loss) from Continuing Operations 190,681 (338,729)
Discontinued Operations - (23,034)
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Net Income (Loss) $ 190,681 $ (361,763)
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CONTACT:
Gary A. Rose
Chief Financial Officer
Meritage Hospitality Group Inc.
616/776-2600