Star Buffet Inc. (STRZ, Financial) filed Quarterly Report for the period ended 2009-08-10.
Star Buffet Inc. is engaged primarily in the restaurant industry. The company owns and operates franchised HomeTown Buffet restaurants BuddyFreddys restaurants JB's restaurants JJ North's Grand Buffet restaurants North's Star Buffet restaurants Holiday House restaurants and Mexican-themed restaurants operated under the Casa Bonita name. The company's restaurants are located in the western states and are focused upon providing customers with a wide variety of fresh high quality food at moderate prices primarily in the buffet format. Star Buffet Inc. has a market cap of $11.1 million; its shares were traded at around $3.4301 with and P/S ratio of 0.1.
Consolidated net income for the 28-week period ended August 10, 2009 increased approximately $11,000 to $939,000 or $0.29 per diluted share as compared with net income of $928,000 or $0.29 per diluted share for the comparable prior year period. The increase in net income is due to a increase in income from operations of approximately $78,000 primarily from a $306,000 gain on property disposals related to the fire in Jonesboro, Arkansas and lower general and administrative costs of approximately $399,000 offset by higher depreciation and amortization and impairment of long-lived assets. Total revenues decreased approximately $9.7 million or 16.9% from $57.4 million in the 28 weeks ended August 11, 2008 to $47.7 million in the 28 weeks ended August 10, 2009. The decrease in revenues was primarily attributable to 12 closed stores resulting in a sales decline of approximately $5.6 million and sales declines of approximately $5.6 million in comparable same store sales. The decline in sales was partially offset by $1.5 million increase attributable to new stores or stores only opened for a portion of the second quarter of last year. The Company believes the decline in same store sales is a result of weaker economic conditions and due to new restaurant competition in certain markets. The decline in sales on a same store basis significantly impacts consolidated net income because occupancy, salaries, benefits, and other expenses are primarily fixed in nature and generally do not vary significantly with restaurant sales volume. Occupancy and other expense includes major expenditures such as rent, insurance, property taxes, utilities, maintenance and advertising.
In April 2009, the Company refinanced an existing real estate mortgage with the Bank of Utah. The Company entered into a $1,194,000 five year fixed rate real estate mortgage with the Bank of Utah. The mortgage has monthly payments including interest of $10,972. The interest rate is 7.25%.The mortgage is secured by the HomeTown Buffet in Layton, Utah and the JB s restaurant in Vernal, Utah. The Company used the funds to payoff the previous loan with the Bank of Utah of $696,000 and to reduce the obligation to Wells Fargo.
In May, 2009, the Company had a kitchen fire in Jonesboro, Arkansas. The Company has $800,000 worth of property coverage and $150,000 extra expense coverage subject to a $100,000 deductible. The Company will spend approximately $635,000 to replace the Barnhill s Buffet and booked a gain of $306,000 after deducting the net loss of existing assets of $229,000 and the $100,000 deductible. As part of trade receivables the Company has booked $335,000 insurance proceeds receivable as of August 10, 2009.
Subsequent to August 10, 2009, the Company financed part of the $1.1 million purchase of the land and building of its Whistle Junction restaurant in Titusville, Florida with a real estate mortgage with the Mainstreet Community Bank of Florida. The Company entered into a $750,000 twenty year fixed rate real estate mortgage with a balloon payment due August 26, 2014. The mortgage has monthly payments including interest of $6,100. The interest rate is 7.5%. The mortgage is secured by the Whistle Junction restaurant in Titusville, Florida.
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Consolidated net income for the 12-week period ended August 10, 2009 decreased approximately $308,000 to $85,000 or $0.03 per diluted share as compared with net income of $393,000 or $0.12 per diluted share for the comparable prior year period. The decrease in net income is due to a decrease in income from operations of approximately $464,000 primarily from higher impairment and depreciation costs partially offset by lower interest expense and a $306,000 gain on property disposals related to the fire in Jonesboro, Arkansas. Total revenues decreased approximately $4.7 million or 19.5% from $24.2 million in the 12 weeks ended August 11, 2008 to $19.5 million in the 12 weeks ended August 10, 2009. The decrease in revenues was primarily attributable to 10 closed stores resulting in a sales decline of approximately $2.1 million and sales declines of approximately $3.3 million in comparable same store sales. The decline in sales was partially offset by $700,000 increase attributable to new stores or stores only opened for a portion of the second quarter of last year.Consolidated net income for the 28-week period ended August 10, 2009 increased approximately $11,000 to $939,000 or $0.29 per diluted share as compared with net income of $928,000 or $0.29 per diluted share for the comparable prior year period. The increase in net income is due to a increase in income from operations of approximately $78,000 primarily from a $306,000 gain on property disposals related to the fire in Jonesboro, Arkansas and lower general and administrative costs of approximately $399,000 offset by higher depreciation and amortization and impairment of long-lived assets. Total revenues decreased approximately $9.7 million or 16.9% from $57.4 million in the 28 weeks ended August 11, 2008 to $47.7 million in the 28 weeks ended August 10, 2009. The decrease in revenues was primarily attributable to 12 closed stores resulting in a sales decline of approximately $5.6 million and sales declines of approximately $5.6 million in comparable same store sales. The decline in sales was partially offset by $1.5 million increase attributable to new stores or stores only opened for a portion of the second quarter of last year. The Company believes the decline in same store sales is a result of weaker economic conditions and due to new restaurant competition in certain markets. The decline in sales on a same store basis significantly impacts consolidated net income because occupancy, salaries, benefits, and other expenses are primarily fixed in nature and generally do not vary significantly with restaurant sales volume. Occupancy and other expense includes major expenditures such as rent, insurance, property taxes, utilities, maintenance and advertising.
In April 2009, the Company refinanced an existing real estate mortgage with the Bank of Utah. The Company entered into a $1,194,000 five year fixed rate real estate mortgage with the Bank of Utah. The mortgage has monthly payments including interest of $10,972. The interest rate is 7.25%.The mortgage is secured by the HomeTown Buffet in Layton, Utah and the JB s restaurant in Vernal, Utah. The Company used the funds to payoff the previous loan with the Bank of Utah of $696,000 and to reduce the obligation to Wells Fargo.
In May, 2009, the Company had a kitchen fire in Jonesboro, Arkansas. The Company has $800,000 worth of property coverage and $150,000 extra expense coverage subject to a $100,000 deductible. The Company will spend approximately $635,000 to replace the Barnhill s Buffet and booked a gain of $306,000 after deducting the net loss of existing assets of $229,000 and the $100,000 deductible. As part of trade receivables the Company has booked $335,000 insurance proceeds receivable as of August 10, 2009.
Subsequent to August 10, 2009, the Company financed part of the $1.1 million purchase of the land and building of its Whistle Junction restaurant in Titusville, Florida with a real estate mortgage with the Mainstreet Community Bank of Florida. The Company entered into a $750,000 twenty year fixed rate real estate mortgage with a balloon payment due August 26, 2014. The mortgage has monthly payments including interest of $6,100. The interest rate is 7.5%. The mortgage is secured by the Whistle Junction restaurant in Titusville, Florida.
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