China's Country Style Cooking Restaurant Chain (NYSE: CCSC) First Quarter 2013 Revenues Up 7.7%

Country Style Cooking Restaurant Chain Co., Ltd. (NYSE: CCSC), a fast-growing quick service restaurant chain in China, today announced its unaudited financial results for the first quarter of 2013.

First Quarter 2013 Financial Highlights

• Revenues in the first quarter of 2013 were RMB307.2 million ($49.5 million), an increase of 7.7% from RMB285.2 million in the same quarter of 2012.


• Comparable restaurant sales decreased by 4.1% from the same quarter of 2012. There were 177 restaurants in the comparison.


• Restaurant level operating margin was 12.7%, an increase of 140 basis points from the same quarter of 2012.


• Adjusted EBITDA was RMB21.6 million ($3.5 million) in the first quarter of 2013, compared to RMB17.3 million in the same quarter of 2012.


• Net income for the first quarter of 2013 was RMB2.0 million ($0.3 million), a decrease of 89.1% from RMB18.3 million in the same quarter of 2012. Adjusted net income (non-GAAP), which excludes share-based compensation expenses and the one-time tax benefit in the first quarter of 2012, was RMB5.9 million ($0.9 million), an increase of 17.0% from RMB5.0 million in the same quarter of 2012.


• Diluted net income per American depositary share ("ADS") was RMB0.08 ($0.01). Adjusted diluted net income per ADS (non-GAAP), which excludes share-based compensation expenses, was RMB0.22 ($0.04). Each ADS represents four ordinary shares of the Company.


• Total number of restaurants increased by a net total of six in the first quarter of 2013 to 262 restaurants as of March 31, 2013, including 232 "Country Style Cooking" and 30 "Mr. Rice" branded restaurants, covering 29 cities and up from 212 restaurants as of March 31, 2012.

Ms. Hong Li, chairman and chief executive officer of Country Style Cooking, commented, "We are off to an encouraging start in 2013 with steady revenue growth and an expanded network of 262 restaurants. Our top line growth was in line with our guidance forecast and our adjusted net income showed improvement from the same year period in 2012. Comparable restaurant sales were negative as expected during the first quarter but continue to show signs of improvement. Comparable restaurant sales turned positive in March and we believe quarterly comparable restaurant sales will improve in the remaining three quarters of the year. Our operating margin in the first quarter was impacted by our decision to close nine non-productive restaurants, but we expect the exit from these select locations to improve our operating performance in future quarters. We continue to focus on implementing effective cost control measures and enhancing our marketing efforts to boost customer loyalty and brand recognition. We also managed to increase average selling prices by rolling out different products on our menu and introducing new combo meals in March, which has upheld our profitability in an inflationary environment. Maintaining high levels of food quality, product variety and customer service is critical to sustaining high levels of customer satisfaction and pricing power. For the remainder of 2013, we reiterate our plan to open around 60 new restaurants and expect low double digit revenue growth for the full year."

Mr. Adam Zhao, chief financial officer of Country Style Cooking, added, "We remain optimistic that our operations are making progress, particularly as we exit from underperforming store locations. As we conduct frequent and thorough evaluations of our new restaurants opened from the 2012 second quarter onward, we expect reduced store closures and significant decreases in our impairment charges in the second half of 2013. Our new restaurants are opened under more prudent expenditure schemes and our gradual roll out of 'Mr. Rice' branded restaurants has reduced the breakeven period for our new restaurant locations. Overall, we are well positioned to capture customer traffic in the upcoming busy summer months and achieve balanced growth in the long term."

First Quarter 2013 Financial Performances

Revenues in the first quarter of 2013 increased by 7.7% to RMB307.2 million ($49.5 million) from RMB285.2 million in the same quarter of 2012. Revenue growth was primarily supported by the Company's expanding restaurant network. During the first quarter of 2013, Country Style Cooking added a total of ten restaurants and closed four restaurants, bringing the total restaurant count to 262 as of March 31, 2013, compared to its total restaurant count of 212 as of March 31, 2012. Restaurants opened in the first quarter included six "Country Style Cooking" and four "Mr. Rice" restaurants. Comparable restaurant sales decreased by 4.1% compared with the same quarter of 2012. There were 177 restaurants in the comparison.

Costs of food and paper increased by 7.6% to RMB144.6 million ($23.3 million) in the first quarter of 2013 from RMB134.3 million in the same quarter of 2012, primarily due to the expansion of the Company's restaurant network and increased price level of raw material. As a percentage of revenues, cost of food and paper was 47.1% in the first quarter of 2013, similar to the prior year period.

Restaurant wages and related expenses increased by 5.4% to RMB60.9 million ($9.8 million) in the first quarter of 2013 from RMB57.8 million in the same quarter of 2012. The increase was primarily due to increased wage levels and the Company's overall expansion of its employee base. As a percentage of revenues, restaurant wages and related expenses decreased slightly to 19.8% in the first quarter of 2013 from 20.2% in the same quarter of 2012.

Restaurant rent expenses increased by 5.6% to RMB32.4 million ($5.2 million) in the first quarter of 2013 from RMB30.6 million in the same quarter of 2012. The increase was primarily due to the expansion of the Company's restaurant network. As a percentage of revenues, restaurant rental expenses dropped slightly to 10.5% in the first quarter of 2013 from 10.7% in the first quarter of 2012.

Restaurant utility expenses decreased by 2.0% to RMB18.3 million ($3.0 million) in the first quarter of 2013 from RMB18.7 million in the same quarter of 2012. As a percentage of revenues, restaurant utility expenses were 6.0% in the first quarter of 2013, down from 6.6% in the first quarter of 2012. The decrease of restaurant utility expenses as a percentage of revenue was primarily due to effective cost control.

Other restaurant operating expenses increased by 1.4% to RMB11.9 million ($1.9 million) in the first quarter of 2013 from RMB11.7 million in the same quarter of 2012. As a percentage of revenues, other restaurant operating expenses decreased to 3.9% in the first quarter of 2013 from 4.1% in the first quarter of 2012.

Restaurant-level operating margin was 12.7% in the first quarter of 2013, an increase of 140 basis points over the same quarter of 2012. The improvement in restaurant-level operating margin was primarily due to effective cost control measures.

Selling, general and administrative (SG&A) expenses increased by 20.9% to RMB19.3 million ($3.1 million) in the first quarter of 2013 from RMB16.0 million in the same quarter of 2012. The increase was primarily due to RMB2.1million of disposal loss on leasehold improvements and equipments of closed stores, followed by increased administrative staff compensation. Share-based compensation expenses included in SG&A was RMB2.8 million ($0.5 million) in the first quarter of 2013, compared to RMB3.6 million in the first quarter of 2012. As a percentage of revenues, SG&A expenses were 6.3% in the first quarter of 2013, up from 5.6% in the first quarter of 2012.

Pre-opening expense for the first quarter of 2013 was RMB2.1 million ($0.3 million), representing a decrease of 36.4% as compared to RMB3.3 million in the same quarter of 2012, primarily because of less new store openings compared to the prior year period and more prudent expenditures in the first quarter of 2013. As a percentage of revenues, pre-opening expense decreased to 0.7% in the first quarter of 2013 from 1.2% in the same quarter of 2012.

Depreciation expense for the first quarter of 2013 was RMB16.8 million ($2.7 million), representing an increase of 23.7% as compared to RMB13.6 million in the same quarter of 2012, primarily because of the increase in total fixed assets as a result of restaurant network expansion. As a percentage of revenues, depreciation expense increased to 5.5% in the first quarter of 2013 from 4.8% in the same quarter of 2012.

Property and equipment impairment charges were RMB4.0 million ($0.6 million) in the first quarter of 2013, representing costs related to asset impairment with seven underperforming restaurants, five of which the Company plans to close in the second quarter of 2013.

Loss from operations for the first quarter of 2013 was RMB3.1 million ($0.5 million), compared to a loss of RMB3.3 million in the same quarter of 2012.

Interest income for the first quarter of 2013 was RMB6.1 million ($1.0 million), representing an increase of 16.5% as compared to RMB5.2 million in the same quarter of 2012.

Foreign currency exchange loss for the first quarter of 2013 was RMB0.4 million ($57,000), as compared to a loss of RMB0.1 million in the same quarter of 2012.

Other income/(loss) for the first quarter of 2013 was RMB0.1 million ($22,000), compared to a loss of RMB0.7 million in the same quarter of 2012.

Income tax expense in the first quarter of 2013 was RMB0.8 million ($0.1 million), compared to a gain of RMB17.2 million in the same quarter of 2012. In the first quarter of 2012, the Company was granted a retroactive preferential change in its tax rate and as a result, the Company reversed its income tax liability of RMB11.4 million previously accrued in connection with income tax rate change for 2008 and 2010 and received a refund of RMB6.4 million in income taxes paid for 2009.

Net income was RMB2.0 million ($0.3 million), compared to RMB18.3 million in the first quarter of 2012. Adjusted net income (non-GAAP), which excludes share-based compensation expenses and the one-time tax benefit in the first quarter of 2012, was RMB5.9 million ($0.9 million) in the first quarter of 2013, compared to RMB5.0 million in the first quarter of 2012.

Diluted net income per ADS in the first quarter of 2013 was RMB0.08 ($0.01), compared to RMB0.69 in the first quarter of 2012. Adjusted diluted net income per ADS (non-GAAP), which excludes share-based compensation expenses and the one-time tax benefit in the first quarter of 2012, was RMB0.22 ($0.04) in the first quarter of 2013, compared to RMB0.19 in the first quarter of 2012. The Company had approximately 26.4 million diluted weighted average ADSs outstanding during the quarter ended March 31, 2013.

EBITDA (non-GAAP), defined as net income before interest, income tax (benefit)/expense, depreciation and amortization,was RMB13.5 million ($2.2 million) in the first quarter of 2013, compared to RMB9.4 million from the same quarter of 2012. Adjusted EBITDA (non-GAAP), defined as EBITDA excluding foreign exchange loss, other income/(loss), property and equipment impairment charges, and share-based compensation expenses, was RMB21.6 million ($3.5 million) in the first quarter of 2013, compared to RMB17.3 million in the same quarter of 2012.

As of March 31, 2013, the Company had cash, cash equivalents and short-term investments of RMB559.9 million ($90.1 million), compared to RMB550.1 million as of December 31, 2012.

Net cash provided by operating activities was RMB28.3 million ($4.6 million) for the three months ended March 31, 2013, up from RMB27.3 million in the same period of 2012.

Outlook

For the second quarter of 2013, the Company currently estimates that revenues will be between 307 million ($49.3 million) and RMB317 million ($51.0 million), representing a year-over-year growth of between approximately 9.6% and 13.2%.

These forecasts reflect the Company's current and preliminary view, which are subject to change.

Definitions

The following definitions apply to these terms used throughout this release:

Comparable restaurants are defined as restaurants that were open throughout the periods under comparison. A restaurant is included in the comparison once it has been in operation for 12 full months before the start of the quarter. Comparable restaurants exclude (i) restaurants whose operational area has increased or decreased by more than 5% during the periods under comparison (ii) restaurants that were closed for more than 5% of total days in any period under comparison.

Restaurant level operating margin represents total revenue less restaurant operating costs (including food and paper, restaurant wages and related expenses, restaurant rent expenses, restaurant utilities expenses and other restaurant operating expenses), expressed as a percentage of total revenues.

Exchange Rate

This announcement contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars in this announcement were made at the noon buying rate of RMB6.2108 to US$1.00 on March 31, 2013 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.

About Country Style Cooking Restaurant Chain Co., Ltd.

Country Style Cooking Restaurant Chain Co., Ltd. (NYSE: CCSC) ("Country Style Cooking") is a fast-growing quick service restaurant chain in China, offering delicious, everyday Chinese food to customers who desire fast and affordable quality meals. Country Style Cooking directly operates all of its restaurants and is the largest quick service restaurant chain in Chongqing municipality, home to Sichuan cuisine, one of the best-known Chinese regional cuisines.