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Mexican Restaurants, Inc. Announces 2010 First Quarter Operating Results

2010-05-18

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Mexican Restaurants Inc For the Company’s 2010 first quarter ended April 4, 2010, Mexican Restaurants (NASDAQ:CASA) reported a net loss of $399,147 or $0.12 per diluted share, compared with net income of $179,853 or $0.05 per diluted share for the first quarter of fiscal year 2009.

The first quarter ended April 4, 2010 included a net loss from discontinued operations of $103,716 compared with a net loss from discontinued operations of $93,230 for the first quarter of fiscal year 2009.

The Company’s restaurant revenues for the first quarter of fiscal year 2010 decreased $2.2 million or 11.4% to $17.0 million compared with $19.2 million for the same quarter in fiscal year 2009. The decrease in restaurant revenues primarily reflects a decrease in same-store sales. For the first quarter ended April 4, 2010, Company-owned same-restaurant sales decreased approximately 11.7% and franchised-owned restaurant sales, as reported by franchisees, decreased approximately 11.0% over the same quarter in fiscal 2009.

Commenting on the Company’s first quarter results, Curt Glowacki, Chief Executive Officer, stated, “Declining same-store sales continues to be our biggest obstacle to returning to profitability, as cost leverage is lost when same-store sales decline. We believe such decreases are a result of the continued weakness in the economy and its impact on consumers’ dining habits. Based on our current economic outlook, we plan to focus our energies on improving existing restaurant same-store sales, growing cash flow, and paying down existing debt. Although we do not plan to open new Mission Burrito or other brand restaurants in fiscal year 2010, we will continue to work on refining our concepts for future growth. The timing of that will be dependent on the economy and our Company’s performance. We continue to focus on the fundamentals of running great restaurants that offer delicious food at very affordable prices while positioning the Company to exit the recession stronger both financially and operationally.”

Mexican Restaurants, Inc. operates and franchises 72 Mexican restaurants. The current system includes 55 Company-operated restaurants, 16 franchisee operated restaurants and one licensed restaurant.

Mexican Restaurants, Inc. and Subsidiaries Consolidated Statements of Operations (Unaudited)

		13-Week			13-Week
		Period Ended			Period Ended
		4/4/2010			3/29/2009
Revenues:
Restaurant sales	$	16,853,074		$	19,013,557
Franchise fees, royalties and other		123,912			138,289
		16,976,986			19,151,846
Costs and expenses:
Cost of sales		4,944,913			5,250,244
Labor		5,817,086			6,122,989
Restaurant operating expenses		4,384,888			4,782,338
General and administrative		1,448,500			1,686,730
Depreciation and amortization		858,366			867,957
Impairment and restaurant closure expense		5,221			22,453
Gain on involuntary disposals		--			(7,231	)
Loss on sale of property and equipment		3,715			36,762
		17,462,689			18,762,242

Operating income (loss)		(485,703	)		389,604

Other income (expense):
Interest income		11,783			980
Interest expense		(61,769	)		(62,194	)
Other, net		18,568			10,501
		(31,418	)		(50,713	)

Income (loss) from continuing operations before income taxes		(517,121	)		338,891
Income tax (expense) benefit		221,690			(65,808	)
Income (loss) from continuing operations		(295,431	)		273,083

Discontinued operations:
Income from discontinued operations		--			75,456
Restaurant closure expense		(181,543	)		(190,572	)
Loss on sale of assets		--			(581	)
Loss from discontinued operations before income taxes		(181,543	)		(115,697	)
Income tax benefit		77,827			22,467
Loss from discontinued operations		(103,716	)		(93,230	)

Net income (loss)	$	(399,147	)	$	179,853

Basic income (loss) per common share
Income (loss) from continuing operations	$	(0.09	)	$	0.08
Loss from discontinued operations		(0.03	)		(0.03	)
Net income (loss)	$	(0.12	)	$	0.05

Diluted income (loss) per common share
Income (loss) from continuing operations	$	(0.09	)	$	0.08
Loss from discontinued operations		(0.03	)		(0.03	)
Net income (loss)	$	(0.12	)	$	0.05

Weighted average number of common shares (basic)		3,309,628			3,269,341

Weighted average number of common shares (diluted)		3,309,628			3,270,057