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Kona Grill Inc. Reports Operating Results (10-Q)

August 02, 2012 | About:
10qk

10qk

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Kona Grill Inc. (KONA) filed Quarterly Report for the period ended 2012-06-30.

Kona Grill, Inc. has a market cap of $71.4 million; its shares were traded at around $7.71 with a P/E ratio of 18.4 and P/S ratio of 0.8.

Highlight of Business Operations:

Labor. Labor costs for our restaurants increased $0.2 million, or 2.3% to $8.2 million during the second quarter of 2012 compared to $8.0 million in the prior year quarter. The higher labor costs were attributable to increased staffing to support the year over year sales growth, higher turnover and increased worker compensation costs. Labor expenses as a percentage of restaurant sales increased 0.2% to 32.9% during the second quarter of 2012 from 32.7% during the prior year period, reflecting increased staffing levels as part of our guest service and hospitality initiatives implemented during the second half of 2011.

Occupancy. Occupancy expenses decreased $0.2 million, or 10.6% to $1.5 million during the second quarter of 2012 from $1.7 million during the same quarter in 2011. The lower occupancy expenses are primarily associated with an amendment in our lease agreement for one restaurant. Occupancy expenses as a percentage of restaurant sales decreased 0.9% to 6.2% in the second quarter of 2012 compared to 7.1% during the prior year period. The decrease in occupancy costs as a percentage of sales reflects the impact of the aforementioned changes in lease provisions as well as the increased leverage of the fixed portion of these costs from higher average weekly sales.

Labor. Labor costs in the first half of 2012 grew by $0.6 million, or 3.9% to $16.2 million compared to $15.6 million in the comparable prior year period. The increase was attributable to increased staffing to support the year over year sales growth and to a certain extent, higher turnover during the first half of 2012. Labor expenses as a percentage of restaurant sales however decreased 0.4% to 32.9% from 33.3% during the first half of 2011. The decrease in labor costs as a percentage of restaurant sales resulted from our effective leverage of fixed management wages and hourly labor expenses to support the comparable restaurant sales growth year over year.

Occupancy. Occupancy expenses decreased $0.3 million, or 8.9% to $3.1 million in 2012 year to date from $3.4 million during the first half of 2011. The lower occupancy expenses are primarily associated with an amendment in our lease agreement for one restaurant. Occupancy expenses as a percentage of restaurant sales decreased 0.9% to 6.3% in 2012 compared to 7.2% in prior year, reflecting the benefits of the aforementioned changes in lease provisions as well as the increased leverage of the fixed portion of these costs from higher average weekly sales.

Restaurant Operating Expenses. Restaurant operating expenses decreased $0.1 million to $6.9 million during the first half of 2012 on higher sales volume compared to $7.0 million in the same period in 2011. We saw similar trends year to date with lower marketing, credit card fees, utilities and remodeling expenses more than offsetting increased training and recruiting expenses from higher turnover, repair and maintenance costs, supplies and costs associated with the fire damage at our Troy, Michigan restaurant. Restaurant operating expenses as a percentage of restaurant sales also decreased 1.0% to 14.1% during the period compared to 15.1% during the first half of 2011.

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