Carrols Restaurant Group Inc., parent company of Syracuse, N.Y.-based Carrols Corporation, operater of more than 300 Burger King restaurants, announced financial results for the fourth quarter and full year ended Jan. 2.
Additionally, Carrols, which also owns Pollo Tropical and Taco Cabana brands, announced its intention of splitting into two separate, publicly traded companies through the tax-free spin-off of its Hispanic brands to stockholders. The spin off will own and operate Pollo Tropical and Taco Cabana, which had combined revenues of $439.1 million in 2010.
Carrols Restaurant Group Inc. will continue to own and operate its Burger King Units.
“The separation of our Hispanic Brand and Burger King restaurant businesses is a natural evolution for Carrols. We believe the separation will enable each company to better focus on its respective opportunities as well as to pursue its own distinct plan and growth strategy,” said Alan Vituli, chairman and CEO of Carrols Restaurant Group Inc. “We also believe that a separation offers the potential for improving shareholder value as each publicly traded company will be better positioned to align its business with its respective shareholders' objectives.”
The company plans to refinance existing debt and to separately finance the businesses. Carrols is currently developing plans for the proposed spin-off, including transaction structure, timing, composition of senior management and board of directors, capital structure and more. The company expects the separation to be complete by the end of 2011.
Fourth quarter 2010 highlights
Meanwhile, total revenues for Q4 '10 were $194.9 million, compared to $209.7 million for Q4 '09, which included an extra week of revenue generation.
Also for the fourth quarter, comparable restaurant sales were up 10.7 percent at Pollo Tropical, and 2.3 percent at Taco Cabana, but decreased 6.1 percent at Burger King.
“We were pleased with the continued momentum at both Pollo Tropical and Taco Cabana during the fourth quarter. We are clearly benefitting from the success of new menu additions along with our promotional activity. We are also gaining traction from the remodeling and elevation of more than 40 Hispanic Brand restaurants in certain markets,” Vituli said.
Net income for the fourth quarter of 2010 was $2.6 million, or $0.12 per diluted share, compared to net income of $4.1 million, or $0.19 per diluted share in the prior year.
Year-end highlights
For the 52-week full year 2010 versus the 53-week full year 2009, total revenues were $796.1 million compared to $816.1 million.
Comparable restaurant sales (on a comparable 52 week basis) increased 7.4 percent at Pollo Tropical and 0.3 percent at Taco Cabana, but decreased 4.3 percent at Burger King.
"Burger King was negatively impacted by aggressive competition, discounting, harsh winter weather, and higher beef costs, which led to both lower sales and restaurant-level profitability compared to last year,” he said. “In 2011, Burger King Corporation, under new ownership, will be employing a ‘back to basics’ approach to regain lost market share, with a focus on core products and less discounting activity. We hope these efforts help customers reconnect with the brand and favorably impact sales, margins and operating profits.”
Net income for 2010 was $11.9 million, or $0.55 per diluted share, compared to net income of $21.8 million, or $1.00 per diluted share in 2009.
Total outstanding indebtedness was reduced $19.6 million to $263.5 million as of Jan. 2, 2011.
Also as of Jan. 2, the company owned and operated 551 restaurants, including 305 Burger King, 91 Pollo Tropical and 155 Taco Cabana restaurants, and franchised 34 restaurants.
