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Total revenues for the 13-week period ended July 3, 2004, were $10,659,000, a record second quarter for the company and an increase of 4.6% over total revenues for the 13 weeks ended June 28, 2003. The increase primarily is the result of a 2.4% increase in same-store sales at company-operated restaurants versus the comparable period in 2003. Royalty fees also rose over the year-earlier period due to a net increase of 12 franchised restaurants since June 28, 2003.
Net income for the 13-week period ended July 3, 2004, was $502,000, or $0.10 per diluted share, an increase of 15.4% from net income for the second quarter of 2003 of $435,000, or $0.09 per diluted share. The increase in net income was primarily due to the higher total revenues described above.
During the second quarter of 2004, the company incurred an increase of approximately 16% in the cost of beef as well as other food cost increases driven primarily by higher fuel and transportation costs. To date, the company has been able to mitigate the negative impact of these cost increases on profitability with two menu price increases of approximately 2% that became effective in October 2003 and in June 2004. During the first and second quarters of 2003, the company also offered certain sandwich items at discounted prices in efforts to increase guest traffic and sales at company-operated restaurants. The company has not pursued this discounting strategy during 2004, which has helped lower the company's cost of restaurant sales as a percentage of restaurant sales compared with the year-earlier period.
The company incurred restaurant pre-opening costs of $58,000 during the 13-week period ended July 3, 2004, compared with zero costs during the year-earlier period. The company opened one company-operated restaurant on June 16, 2004, and another company-operated restaurant on July 9, 2004.
For the second quarter of 2004, same-store sales for company-operated restaurants increased 2.4% from the comparable period in 2003 while same-store sales for franchised restaurants declined 1.2% for the same period. Year-to-date same-store sales for 2004 increased 5.5% from the comparable period in 2003 for company-operated restaurants and decreased 1.7% for franchised restaurants.
Total revenues for the 26-week period ended July 3, 2004, totaled $20,142,000, compared with $18,762,000 in the prior-year period. Net income for the 26-week period ended July 3, 2004, was $794,000, or $0.15 per diluted share, compared with $685,000, or $0.14 per diluted share in the prior-year period.
Unit activity for the quarter included one company operated store opening, seven franchised store openings and one franchised store closing. During the second quarter, the company also entered into two agreements for the development of a combined total of ten additional stores to be opened in the Kansas City and Columbia, Missouri, areas over the next six years.
As of July 3, 2004, the company's restaurant system comprised 141 units, including 43 company-operated stores and 98 franchised stores (of which nine were co-branded restaurants under the agreement with Yum! Brands, Inc.). Expansion plans for the remainder of 2004 include the opening of two company-operated stores, one of which opened on July 9, 2004, and 19 franchised stores.
Back Yard Burgers operates and franchises quick-service restaurants in 17 states, primarily in markets throughout the Southeast region of the United States. The restaurants specialize in charbroiled, freshly prepared, great-tasting food. As its name implies, Back Yard Burgers strives to offer the same high-quality ingredients and special care typified by outdoor grilling in the backyard. Its menu features made-to-order gourmet Black Angus hamburgers and chicken sandwiches - charbroiled over an open flame, fresh salads, chili and other specialty items, including hand-dipped milkshakes, fresh-made lemonade and fresh-baked cobblers.
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