While many restaurant companies are restating earnings this year, some are accepting more blame for the accounting meltdowns than others. Last Wednesday, Outback Steakhouse announced it would restate financial results between 2000 and the first three quarters of 2004, instantly erasing $24.4 million of previously booked earnings.
In its 10-K filing, Outback called the amount immaterial, asserting that nothing was wrong in its accounting department aside from an acknowledged "deficiency" in determining lease terms.
"Our management concluded that our internal control over financial reporting was effective as of December 31, 2004," the restaurant giant stated in the 10-K.
Lone Star Steakhouse & Saloon stated that its oversight was "insufficient" after restating for the last several years, slashing earnings by $7.3 million. Nevertheless, it concluded that "effective internal control" over financial reporting remained in effect.
Panera restated earnings for fiscal 2002 through 2004 but did not experience significant reductions in profits. Because of that, an admitted failure to review Generally Accepted Accounting Principles did not translate into a "material weakness" in financial controls, according to the company's 10-K. Moreover, Panera stated, no system is airtight.
At least one restaurant chain did point a finger at itself.
Sandwich chain Cosi restated earnings for the last four years, pushing its net loss higher by $1.7 million--a mere drop in its $170 million bucket of red ink since inception.
The company identified a "material weakness" in its internal controls, adding: "We are responsible for the preparation and integrity of the consolidated financial statements appearing in this our Annual Report."