Brazil Fast Food Announces Fourth Quarter and Fiscal Year 2010 Results

Brazil Fast Food Corp. (OTC Bulletin Board: BOBS)  the second largest restaurant chain with 789 points of sale, and operating in Brazil under the (i) Bob’s brand, (ii) KFC and Pizza Hut São Paulo as franchisee of Yum! Brands, and (iii) Doggis as franchisee of GED, today announced financial results for the fourth quarter and fiscal year ended on December 31, 2010.

“Looking ahead, we plan to continue to pursue our multi-brand strategy with a focus on improving our operating efficiency to deliver profitable growth for our investors in the years ahead”

Fiscal Year 2010 Highlights

• System-wide sales totaled R$ 795.9 million, up 12.3% from 2009
• Revenue totaled R$ 206.3 million, up 11.6% from 2009
• Points of sale totaled 789 at the end of 2010, up from 681 at the end of 2009
• EBITDA was R$26.1 million compared to R$ 17.8 million in 2009
• Operating income was R$19.2 million, up 60.1% from 2009
• Net income was R$11.7 million, or R$1.43 per basic and diluted share

Fourth Quarter 2010 Highlights

• System-wide sales totaled R$ 234.5 million, up 12.5% from the fourth quarter 2009
• Revenue totaled R$ 56.2 million, up 7.8% from the fourth quarter 2009
• EBITDA was R$8.1 million compared to R$ 7.6 million in the fourth quarter 2009
• Operating income was R$6.1 million, up 17.0% from the fourth quarter 2009
• Net income was R$4.2 million, or R$0.52 per basic and diluted share

“We are very pleased with our results for the quarter and for the fiscal year 2010 as we continued to grow at a solid pace while improving our operating and net margins. Clearly, our multi-brand strategy is paying off as we now have three industry leading brands, and a more balanced revenue base, which gives us strategic flexibility to continue to evaluate and invest in new concepts to accelerate our profitable growth,” said Mr. Ricardo Bomeny, President and CEO of Brazil Fast Food.

Fourth Quarter 2010 Results

System-wide sales grew 12.5% in the fourth quarter to R$ 234.5 million, driven by an increase in the number of franchised points of sale as well as higher sales from company-owned stores.

Total revenue for the fourth quarter 2010 increased by 7.8% to R$56.2 million compared to R$52.2 million in the fourth quarter 2009. Revenue growth was primarily driven by the continued expansion of Brazil Fast Food’s franchisee network as well as gains from economies of scale and the associated increase in the Company’s purchasing power.

Net revenue for company-owned and operated outlets was up 1.5% to R$42.2 million. The small increase in revenue during this quarter was primarily due to the reduction in the number of stores the Company owns and operates to 77 compared to 86 in the same period of last year, which was offset by higher same store sales, and by strong contribution from the Company’s Pizza Hut brand.

Net revenue from franchisees increased 15.2% year-over-year to R$8.6 million driven primarily by an increase in number of franchised retail outlets to 712, up from 622 in the same period a year ago. Other revenue and income totaled R$5.4 million.

Operating expenses were up 6.7% to R$50.2 million driven primarily by higher administrative as well as higher marketing expenses to support the growth of the business.

Operating income for the fourth quarter of 2010 was R$6.1 million, compared to an operating income of R$5.2 million in the fourth quarter of 2009. Operating margin in the fourth quarter of 2010 was 10.8% compared to 10.0% in the comparable period of 2009.

EBITDA in the fourth quarter of 2010 was R$8.1 million, compared to R$7.6 million in the fourth quarter of 2009. EBITDA margin was 14.4% in the fourth quarter of 2010, compared to 14.6% in the comparable period of 2009. A table reconciling EBITDA to its nearest GAAP equivalent is provided elsewhere in this press release.

Interest expense in the fourth quarter 2010 was R$0.3 million compared to R$1.7 in the same period of last year as the Company took advantage of asset sales earlier in the year to reduce debt.

Net income for the fourth quarter of 2010 was R$4.2 million or R$0.52 per basic and diluted share, compared to net income of R$3.3 million or R$0.41 per basic and diluted share in the same period of 2009.

Fiscal Year 2010 Results

For the twelve months ended in December 31, 2010, net revenue was R$206.3 million, up 11.6% from R$184.9 million in 2009. Same own-store sales, which measure the performance of stores open for more than a year, were up 4.3% for Bob’s, 3.7% for KFC and 13.2% for Pizza Hut for the twelve months ended on December 31, 2010, compared to the same period in 2009, driven by the Company’s successful marketing campaigns. Operating income for fiscal year 2010 was R$19.2 million, up 60.1% from R$12.0 million in 2009. Operating margin was 9.3% for 2010 compared to 6.5% in 2009. EBITDA for 2010 was R$26.1 million compared to R$17.8 million in 2009. Net income for 2010 was R$11.6 million compared to net income of R$6.9 million in 2009. Basic and diluted net income per share was R$1.43 for 2010 compared to basic and diluted loss per share of R$0.85 for 2009.

Financial Condition

As of the balance sheet date on December 31, 2010 the Company had R$16.7 million in cash. Cash flow from operations for 2010 totaled R$16.4 million, compared to R$11.1 million in 2009. Capital expenditures totaled R$5.1 million in 2010. Shareholders' equity was R$33.2 million at the end of the fourth quarter of 2010, compared to R$25.1 million at the end of 2009.

Business Outlook

“The outlook for our business remains positive. The recently elected new President, Mrs. Dilma Rousseff, is widely expected to follow the same successful economic policies of her predecessor, which we expect, will create a favorable environment for the continued growth of our business. In addition, we expect to benefit from spending associated with the infrastructure build-out to support the World Cup and the Olympics which will be hosted in Brazil in 2014 and 2016, respectively” said Mr. Ricardo Bomeny, President and CEO of Brazil Fast Food. “Looking ahead, we plan to continue to pursue our multi-brand strategy with a focus on improving our operating efficiency to deliver profitable growth for our investors in the years ahead,” concluded Mr. Bomeny.

About Brazil Fast Food Corp.

Brazil Fast Food Corp. owns and operates, both directly and through franchisees, the second largest fast-food restaurant chain in Brazil. The Bob’s trade name is used by Venbo Comércio de Alimentos Ltda., a subsidiary of Brazil Fast Food holding company, BFFC do Brasil Participações Ltda (formerly 22N Participações Ltda.). The “KFC” trade name is used by CFK Comércio de Alimentos Ltda. (formerly Clematis Indústria e Comércio de alimentos e Participações Ltda.), also a holding company subsidiary. The “Pizza Hut” trade name is used by Internacional Restaurantes do Brasil (“IRB”), also a 60% subsidiary of Brazil Fast Food holding company, BFFC do Brasil Participações Ltda. Recently, the Company entered into an agreement with Grupo de Empresas Doggis S.A (“GED”) to cross-franchise the Bob’s and Doggis brands in Chile and Brazil, respectively. Brazil Fast Food will control the Doggis master franchise in Brazil and GED will control the Bob’s master franchise in Chile.

Logos, product and company names mentioned are the property of their respective owners.

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