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Restaurant earnings in brief: Good Times, Bad Daddy, Kona Grill, STK, Freshii

A sampling of recent weeks’ earnings announcements from a variety of small-cap companies and their brands.
Photo courtesy of Kona Grill

The sales impact of the pandemic is likely to be more of a gut punch than forecasters initially expected, with lost revenues for the year likely to fall within a range of $250 billion to $300 billion, according to a just-updated projection from Restaurant Business’ research sister, Technomic. Yet that pain is not being equally distributed, as several public restaurant companies showed in the financial results they released almost simultaneously with the new outlook.  Here’s a sampling:

Good Times’ July comps rise 15.6%, while Big Daddy’s fall 19.6%
The regional chains dually operated by Good Times Restaurants posted markedly different results for the April-through-June period, which most operators found to be a journey from worst-imaginable conditions to the merely super-difficult, with a decline in same-store sales of 11.9% for Good Times and 36.7% for Big Daddy’s. The financial situations of both improved significantly in July, but the disparity persisted. Good Times, a fast casual specializing in all-natural burgers and frozen custard, averaged $28,900 per week in sales at its 33 restaurants, most of them in Colorado and many sporting drive-thrus. Bad Daddy’s, a pub concept, felt the impact of closed dining rooms more acutely. Still, its 39 branches averaged $38,100 in weekly sales for the month, the annual equivalent of about $2 million.

The parent company said it adapted to the times in several ways. For instance, even though the Good Times chain features fresh beef, its parent stockpiled supplies of frozen beef as a hedge against a shortfall in supplies and a corresponding spike in prices. Management also strived to keep Big Daddy’s menu from getting beef-heavy by adding salmon and a faux meat product, as well as bringing back a proprietary black bean burger. Coleslaw, shoestring fries and a tuna burger were dropped because of the labor needed for their preparation.

Executives also indicated that they would likely retain a larger staff if dining rooms should close for a second time in any of Big Daddy’s markets because restaffing the full-service operation proved so difficult the first time around.

Kona Grill’s July same-store sales decline 16%, STK’s fall 36%
The two main brands of The One Group similarly posted widely divergent results for July. Kona Grill, a polished-casual brand known for its sushi and seafood, posted a same-store sales decline of 16%, or less than half the drop suffered by its steakhouse sister, STK.  The latter is aiming to boost its topline by selling raw steaks to consumer, a business it’s named STK Meat Market.

Management said that both brands have been frustrated by the capacity caps that have been imposed in many markets. “We have to turn away as many as a 100 to 200 people a night, just because we don't have enough seats, even with 90-minute turns,” said One Group CEO Manny Hidalgo. He also noted that Kona benefitted from the rollout of a new menu that drew the attention of longtime fans and from sporting patios at many of its branches.

Freshii: 40 units closed, but a new retail partner is signed
The Canadian-based company describes itself as an omni-channel ready-to-eat food brand, a hybrid that sells grab-and-go products through a variety of channels, including such retailers as Walmart stores in Canada. Freshii’s same-store sales for the two-week period ended Aug. 9 climbed to within 30% of year-ago levels, but the environment was too difficult during the second calendar quarter for 40 below-average units to continue operating, according to management. The company said that 90% of its North American units are currently in operation, and that a test was begun of a new initiative aimed at capturing dinnertime sales. The trial includes the sale of pre-plated dinners and family sized evening meals. “We are pleased to see strong early guest trial of our dinner platform,” the company said in releasing its results for the quarter ended June 28.

Management also revealed that Freshii products are now being sold in 23 OnRoute roadside stores in Canada.

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