OCharleys Eats Meritage Earnings

October 11, 2004
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GRAND RAPIDS — Meritage Hospitality Group Inc., the nation’s only publicly traded Wendy’s restaurant franchisee and the nation’s first O’Charley’s franchisee, reported net sales for the third quarter ended Aug. 29 increased 7.1 percent to $14.1 million, vs. $13.2 million for 2003’s third quarter.

Earnings from operations were $752,000 for the just-passed quarter, compared with $851,000 for the year-ago period. According to Meritage, earnings from operations for the quarter reflect the impact of pre-opening and start-up expenses of $259,000 for development and August rollout of the first O’Charley’s in Grand Rapids

As a result, consolidated net earnings for the third quarter were $126,000 and net earnings were less than 0.01 cents per common share, compared with net earnings of $269,000 or 0.05 cents per share for the same period a year earlier.

Net sales for the first nine months were $39.6 million, up 11.2 percent over the $35.6 million reported for the first nine months of last year. Consolidated earnings from operations were $1.4 million vs. $1.3 million for the first nine months of 2003.

Wendy’s earnings from operations improved by 44 percent in the first three quarters, noted CEO Robert Schermer Jr.

“Our Wendy’s business segment continues to experience above-average same store sales growth compared to the entire Wendy’s system,” he said.

Two new Wendy’s are slated to open by the end of this year, at which time Meritage will have 48 Wendy’s and one O’Charley’s in operation.

Schermer said the company was “very encouraged” by initial O’Charley’s restaurant sales volumes and anticipates opening its second unit in the Detroit metropolitan area early next year.

“We remain optimistic about entering the casual dining segment and the growth vehicle that the O’Charley’s operations should provide to Meritage,” he said.       

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