Despite recent moves to turn its brands around, Del Frisco’s Restaurant Group said it saw slower-than-expected sales during the third quarter, leading the company to limit its location growth for the next fiscal year.
"While we did see improvements in several areas, top line results did not meet our expectations for the third quarter,” CEO Mark Mednansky said, noting that the company is currently “working to reignite (its) sales momentum” in Q4.
Comp sales at Del Frisco’s Double Eagle brand fell 1.4 percent year over year, the result of declining guest counts, particularly in private dining, executives said. Same-store sales at sister brand Sullivan’s remained fairly flat compared to the year-ago quarter, increasing 1.2 percent.
Del Frisco’s remains especially dogged by declining comp sales at its lower-end Grille concept, which fell 3.5 percent year over year.
Executives again pegged the slip on consumer misconceptions about the concept, noting that it tends to be perceived as a pricey fine-dining establishment, when it’s designed to be more of an “everyday” destination.
During Q3, the Grille brand debuted a marketing campaign to highlight its approachability and made improvements to speed of service and other facets of the business, Mednansky said, adding that it’s too early to tell if those have had an effect on consumer perception.
The company restricted its location growth for 2016 to the relocation of a Double Eagle restaurant in Dallas, and the opening of two to three Del Frisco’s Grille units.
“This will allow us to devote greater effort towards refining and improving operations at all of our existing restaurants as we continue to fine-tune our site selection process,” Mednansky said. “After this transitional period, we anticipate resuming our 10 percent new unit growth plans in 2017 and beyond."
Del Frisco’s said it also plans to shed two underperforming Grille units by early 2016.
Revenues at the company increased 10.8 percent year over year, to $68.6 million.