For WSJ subscribers, here's a link to the article referred to by Sargent:
interactive.wsj.com
Excerpts:
The company, which doesn't provide figures, concedes that same-store sales have fallen, but only slightly. Landry's Chairman and Chief Executive Tilman Fertitta attributes that softness to expected cannibalization caused by new store openings, and to a new business model whereby the company opens stores that only serve dinner. That plan, modeled on Outback Steakhouse, is designed to improve a restaurant's margins and profitability. But it also trims sales.
Paul West, Landry's chief financial officer, says sales at its Joe's Crab Shack locations that opened this year under the new model are tallying weekly volumes of about $25,000 less than older Joe's that cater to both lunch and dinner crowds. But, since the new stores require one less manager and fewer employees, overhead is down as well.
.....
Ms. Collier thinks the troubles already are apparent in Landry's numbers, although they're masked to some degree by the rapid pace of new-store openings. An example: When 1997 began, Ms. Collier was projecting the company would open 25 new stores and that it's per-share earnings would hit $1.02.
But Landry's far exceeded Ms. Collier's new-store estimates, opening 45 outlets. Such a dramatic increase should have pushed the company's reported earnings higher than the estimates, but it didn't. Landry's for 1997 posted net income of $27.4 million, or $1.03 a diluted share.
Executives Speak Up
Landry's executives dismiss the bearishness. They say that wait times haven't tailed off to any dramatic degree and that besides, surveys such as Ms. Collier's are far from scientific. "You're talking about dealing with a hostess who is an hourly employee," says Mr. Fertitta. Accuracy isn't guaranteed, he says, and hostesses have been known to underestimate waits. |
