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Non-Tech : Lone Star Steakhouse (STAR)
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To: David Semoreson who wrote (35)6/27/1997 1:38:00 AM
From: Ignite44   of 175
 
David...I'm curious to see what management says about same store sales in the 10Q. The earnings report didn't seem to hurt any as the stock price was up today. One of the things I like about the income statement is the fat net margin of 13.9% this quarter. A year ago the net margin was 12.99% after adding back the 5.9 million (after-tax) writeoff to net earnings. The same store sales decline is being offset by something...they planned on having 5-6 Del Frisco restaurants and 6-8 Sullivans restaurants open by the end of this year. These are 'upscale' and the avg check is $60 and $40 respectively compared to $19.50 for dinner at Lonestar Steakhouse. Maybe these are helping? They started 1997 with just over 200 Lonestars with plans to build about 60 more this year. It doesn't seem like there are enough 'upscales' to make too much of a difference. Maybe more restaurants enables them to generate more revenue without increasing central administrative costs???

The business plan seems to be to increase revenues by investing earnings in new, profitable restaurants....as long as they can grow revenues and earnings at 20% or better per year without borrowing money or issuing more stock it's good news for us. Eventually the p/e will move towards the growth rate.
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