Carrols Restaurant Group Inc. (TAST, Financial) filed Quarterly Report for the period ended 2009-03-29.
CARROLS RESTAURANT GROUP INC. operating through its subsidiaries including Carrols Corporation is one of the largest restaurant companies in the United States. The Company operates three restaurant brands in the quick-casual and quick-service restaurant segments with over five hundred company-owned and operated restaurants in 16 states and several franchised restaurants in the United States Puerto Rico and Ecuador. Carrols Restaurant Group owns and operates two Hispanic Brand restaurants Pollo Tropical and Taco Cabana. It is also the largest Burger King franchisee based on number of restaurants and has operated Burger King restaurants since 1976. Carrols Restaurant Group Inc. has a market cap of $144.7 million; its shares were traded at around $6.7 with a P/E ratio of 11.1 and P/S ratio of 0.2.
Burger King restaurant sales increased $3.3 million, or 3.6%, to $94.5 million in the first quarter of 2009 reflecting an increase in comparable restaurant sales of 5.1% compared to the first quarter of 2008. Such increase was partially offset by the closure, excluding relocated restaurants, of eight Burger King restaurants since the beginning of the first quarter of 2008. Effective menu price increases in the first quarter were approximately 4.7% while our average check increased 7.5% reflecting menu mix changes including the effect of the resizing of menu item options for soft drinks and french fries.
Operating Costs and Expenses. Cost of sales as a percentage of total restaurant sales decreased to 29.0% in the first quarter of 2009 from 29.5% in the first quarter of 2008. Pollo Tropical cost of sales, as a percentage of Pollo Tropical restaurant sales, increased to 33.4% in the first quarter of 2009 from 32.6% in the first quarter of 2008 due primarily to higher chicken commodity prices (0.4% of Pollo Tropical sales) and higher prices of other commodities including rice, wheat-based products and yucca (2.0% of Pollo Tropical sales), all partially offset by the effect of menu price increases taken in 2008. Taco Cabana cost of sales, as a percentage of Taco Cabana restaurant sales, decreased to 29.3% in the first quarter of 2009 from 31.3% in the first quarter of 2008 due primarily to the effect of menu price increases taken in 2008 and lower commodity prices for cheese (0.7% of Taco Cabana sales) partially offset by increases in other commodity prices (1.2% of Taco Cabana sales) including produce. Burger King cost of sales, as a percentage of Burger King restaurant sales, decreased slightly to 26.7% in the first quarter of 2009 from 26.8% in the first quarter of 2008 due primarily to higher vendor rebates (0.3% of Burger King sales). Increases in commodity prices including beef and potato prices (0.9% of Burger King sales) and an increase in sales from lower margin menu items were substantially offset by the effect of menu price increases taken in 2008.
Restaurant wages and related expenses, as a percentage of total restaurant sales, decreased to 29.2% in the first quarter of 2009 from 30.0% in the first quarter of 2008. Pollo Tropical restaurant wages and related expenses, as a percentage of Pollo Tropical restaurant sales, decreased to 24.8% in the first quarter of 2009 from 25.7% in the first quarter of 2008 due to improved labor productivity and lower workers compensation claim costs (0.6% of Pollo Tropical sales). Taco Cabana restaurant wages and related expenses, as a percentage of Taco Cabana restaurant sales, decreased to 29.0% in the first quarter of 2009 from 29.3% in the first quarter of 2008 due primarily to lower medical insurance claim costs (0.2% of Taco Cabana sales) and improved labor productivity. Burger King restaurant wages and related expenses, as a percentage of Burger King restaurant sales, decreased to 31.3% in the first quarter of 2009 from 32.5% in the first quarter of 2008 due primarily to improved labor productivity, the effect of higher sales volumes on fixed labor costs and the effect of menu price increases taken in 2008.
Other restaurant operating expenses, as a percentage of total restaurant sales, decreased to 14.6% in the first quarter of 2009 from 15.1% in the first quarter of 2008. Pollo Tropical other restaurant operating expenses, as a percentage of Pollo Tropical restaurant sales, decreased to 13.9% in the first quarter of 2009 from 14.3% in the first quarter of 2008 due primarily to lower repair and maintenance expenses (1.1% of Pollo Tropical sales) partially offset by higher general liability claim costs (0.3% of Pollo Tropical sales) and higher utility costs (0.5% of Pollo Tropical sales). Taco Cabana other restaurant operating expenses, as a percentage of Taco Cabana restaurant sales, decreased to 13.5% in the first quarter of 2009 from 14.5% in the first quarter of 2008 due primarily to lower repair and maintenance expenses (0.5% of Taco Cabana sales), lower utility costs (0.2% of Taco Cabana sales) and lower security related costs. Burger King other restaurant operating expenses, as a percentage of Burger King restaurant sales, decreased to 15.7% in the first quarter of 2009 from 16.0% in the first quarter of 2008 due primarily to lower utility costs (0.2% of Burger King sales) and lower repair and maintenance expenses (0.1% of Burger King sales).
Advertising expense, as a percentage of total restaurant sales, was 4.0% in the both the first quarter of 2009 and the first quarter of 2008. Pollo Tropical advertising expense, as a percentage of Pollo Tropical restaurant sales, decreased to 3.0% in the first quarter of 2009 from 3.7% in the first quarter of 2008 due to higher radio expenditures in 2008. Pollo Tropical advertising costs are currently expected to be approximately 2.4% to 2.6% of Pollo Tropical restaurant sales for all of 2009, but there can be no assurance in this regard. Taco Cabana advertising expense, as a percentage of Taco Cabana restaurant sales, increased to 4.2% in the first quarter of 2009 from 3.7% in the first quarter of 2008 due primarily to the timing of promotions in 2009. Taco Cabana advertising costs are currently expected to be approximately 3.8% to 4.0% of Taco Cabana restaurant sales for all of 2009, but there can be no assurance in this regard. Burger King advertising expense, as a percentage of Burger King restaurant sales, decreased slightly to 4.3% in the first quarter of 2009 from 4.4% in the first quarter of 2008 due to decreased promotional activities in certain of our Burger King markets. Our Burger King advertising costs are currently expected to be approximately 4.2% of our Burger King restaurant sales for all of 2009, but there can be no assurance in this regard.
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CARROLS RESTAURANT GROUP INC. operating through its subsidiaries including Carrols Corporation is one of the largest restaurant companies in the United States. The Company operates three restaurant brands in the quick-casual and quick-service restaurant segments with over five hundred company-owned and operated restaurants in 16 states and several franchised restaurants in the United States Puerto Rico and Ecuador. Carrols Restaurant Group owns and operates two Hispanic Brand restaurants Pollo Tropical and Taco Cabana. It is also the largest Burger King franchisee based on number of restaurants and has operated Burger King restaurants since 1976. Carrols Restaurant Group Inc. has a market cap of $144.7 million; its shares were traded at around $6.7 with a P/E ratio of 11.1 and P/S ratio of 0.2.
Highlight of Business Operations:
Restaurant operating margins in 2009 were favorably impacted by lower food costs and the leveraging or reduction of operating costs including restaurant labor, utilities and repairs and maintenance. As a percentage of total restaurant sales, cost of sales decreased 0.5% to 29.0% in the first quarter of 2009 compared to 29.5% in the first quarter of 2008 due primarily to a 2.0% decrease in food and paper costs at our Taco Cabana restaurants, as a percentage of Taco Cabana restaurant sales, primarily from a moderation in commodity price increases and the effect of menu price increases taken in the last half of 2008. As a percentage of total restaurant sales, restaurant wages and related expenses decreased 0.8% to 29.2% due to improvements in labor productivity including reduced employee turnover at all three of our restaurant concepts. Other restaurant operating expenses also decreased 0.5%, as a percentage of total restaurant sales, in the first quarter of 2009 to 14.6%.Burger King restaurant sales increased $3.3 million, or 3.6%, to $94.5 million in the first quarter of 2009 reflecting an increase in comparable restaurant sales of 5.1% compared to the first quarter of 2008. Such increase was partially offset by the closure, excluding relocated restaurants, of eight Burger King restaurants since the beginning of the first quarter of 2008. Effective menu price increases in the first quarter were approximately 4.7% while our average check increased 7.5% reflecting menu mix changes including the effect of the resizing of menu item options for soft drinks and french fries.
Operating Costs and Expenses. Cost of sales as a percentage of total restaurant sales decreased to 29.0% in the first quarter of 2009 from 29.5% in the first quarter of 2008. Pollo Tropical cost of sales, as a percentage of Pollo Tropical restaurant sales, increased to 33.4% in the first quarter of 2009 from 32.6% in the first quarter of 2008 due primarily to higher chicken commodity prices (0.4% of Pollo Tropical sales) and higher prices of other commodities including rice, wheat-based products and yucca (2.0% of Pollo Tropical sales), all partially offset by the effect of menu price increases taken in 2008. Taco Cabana cost of sales, as a percentage of Taco Cabana restaurant sales, decreased to 29.3% in the first quarter of 2009 from 31.3% in the first quarter of 2008 due primarily to the effect of menu price increases taken in 2008 and lower commodity prices for cheese (0.7% of Taco Cabana sales) partially offset by increases in other commodity prices (1.2% of Taco Cabana sales) including produce. Burger King cost of sales, as a percentage of Burger King restaurant sales, decreased slightly to 26.7% in the first quarter of 2009 from 26.8% in the first quarter of 2008 due primarily to higher vendor rebates (0.3% of Burger King sales). Increases in commodity prices including beef and potato prices (0.9% of Burger King sales) and an increase in sales from lower margin menu items were substantially offset by the effect of menu price increases taken in 2008.
Restaurant wages and related expenses, as a percentage of total restaurant sales, decreased to 29.2% in the first quarter of 2009 from 30.0% in the first quarter of 2008. Pollo Tropical restaurant wages and related expenses, as a percentage of Pollo Tropical restaurant sales, decreased to 24.8% in the first quarter of 2009 from 25.7% in the first quarter of 2008 due to improved labor productivity and lower workers compensation claim costs (0.6% of Pollo Tropical sales). Taco Cabana restaurant wages and related expenses, as a percentage of Taco Cabana restaurant sales, decreased to 29.0% in the first quarter of 2009 from 29.3% in the first quarter of 2008 due primarily to lower medical insurance claim costs (0.2% of Taco Cabana sales) and improved labor productivity. Burger King restaurant wages and related expenses, as a percentage of Burger King restaurant sales, decreased to 31.3% in the first quarter of 2009 from 32.5% in the first quarter of 2008 due primarily to improved labor productivity, the effect of higher sales volumes on fixed labor costs and the effect of menu price increases taken in 2008.
Other restaurant operating expenses, as a percentage of total restaurant sales, decreased to 14.6% in the first quarter of 2009 from 15.1% in the first quarter of 2008. Pollo Tropical other restaurant operating expenses, as a percentage of Pollo Tropical restaurant sales, decreased to 13.9% in the first quarter of 2009 from 14.3% in the first quarter of 2008 due primarily to lower repair and maintenance expenses (1.1% of Pollo Tropical sales) partially offset by higher general liability claim costs (0.3% of Pollo Tropical sales) and higher utility costs (0.5% of Pollo Tropical sales). Taco Cabana other restaurant operating expenses, as a percentage of Taco Cabana restaurant sales, decreased to 13.5% in the first quarter of 2009 from 14.5% in the first quarter of 2008 due primarily to lower repair and maintenance expenses (0.5% of Taco Cabana sales), lower utility costs (0.2% of Taco Cabana sales) and lower security related costs. Burger King other restaurant operating expenses, as a percentage of Burger King restaurant sales, decreased to 15.7% in the first quarter of 2009 from 16.0% in the first quarter of 2008 due primarily to lower utility costs (0.2% of Burger King sales) and lower repair and maintenance expenses (0.1% of Burger King sales).
Advertising expense, as a percentage of total restaurant sales, was 4.0% in the both the first quarter of 2009 and the first quarter of 2008. Pollo Tropical advertising expense, as a percentage of Pollo Tropical restaurant sales, decreased to 3.0% in the first quarter of 2009 from 3.7% in the first quarter of 2008 due to higher radio expenditures in 2008. Pollo Tropical advertising costs are currently expected to be approximately 2.4% to 2.6% of Pollo Tropical restaurant sales for all of 2009, but there can be no assurance in this regard. Taco Cabana advertising expense, as a percentage of Taco Cabana restaurant sales, increased to 4.2% in the first quarter of 2009 from 3.7% in the first quarter of 2008 due primarily to the timing of promotions in 2009. Taco Cabana advertising costs are currently expected to be approximately 3.8% to 4.0% of Taco Cabana restaurant sales for all of 2009, but there can be no assurance in this regard. Burger King advertising expense, as a percentage of Burger King restaurant sales, decreased slightly to 4.3% in the first quarter of 2009 from 4.4% in the first quarter of 2008 due to decreased promotional activities in certain of our Burger King markets. Our Burger King advertising costs are currently expected to be approximately 4.2% of our Burger King restaurant sales for all of 2009, but there can be no assurance in this regard.
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