Brazil Fast Food Announces Fourth Quarter and Fiscal Year 2008 Results

Business Wire, April 09, 2009

RIO DE JANEIRO -- Brazil Fast Food Corp. (OTC Bulletin Board: BOBS.OB) (“Brazil Fast Food”, or the “the Company”) the second largest fast-food restaurant chain with 664 points of sale, operating under the Bob’s, KFC, Pizza Hut, In Bocca al Lupo Café, and Doggis brands in Brazil, reported today financial results for the fourth quarter and fiscal year ended on December 31, 2008.

Fiscal Year 2008 Highlights

• System-wide sales totaled R$ 577 million, up 17% from 2007
• Revenue totaled R$ 123.4 million, up 7.8% from 2007
• Same own-store sales were up 8.4% compared to 2007
• Points of sale totaled 664 at the end of 2008, up from 580 at the end of 2007
• EBITDA was R$ 9.4 million, down from R$ 13.1 million in 2007
• Operating income was R$5.9 million
• Net loss was R$3.9 million, or $0.48 per basic and diluted share
• Net income for 2008 includes a financing cost and foreign currency exchange loss of R$6.7 million, and includes a one-time charge of R$2.7 million associated with recalculation of interest on fiscal debt that was added to the principal owed to the Federal government, absent those charges net income for 2008 would be R$5.5 million.

Fourth Quarter 2008 Highlights

• System-wide sales totaled R$ 172.9 million, up 19% from the fourth quarter of 2007
• Revenue totaled R$ 38.6 million, up 34.2% from the fourth quarter of 2007
• Same own-store sales were up 8.2% compared to the fourth quarter of 2007
• EBITDA was R$ 2.7 million, down from R$ 3.6 million in the fourth quarter of 2007
• Operating income was R$1.7 million
• Net loss was R$7.8 million, or $0.96 per basic and diluted share

“We are disappointed with our results for the quarter which were impacted by unexpected losses associated with the sharp depreciation of the Brazilian currency against the US Dollar as well as an adverse judgment in a tax dispute with the Brazilian federal government. We are pleased to note however, that the current economic slowdown has not impacted our sales for the quarter and absent the above mentioned one time charges we would have been profitable for the quarter as well as for the fiscal year 2008,” said Mr. Ricardo Bomeny, President and CEO of Brazil Fast Food. “From an operating perspective our business is on track and our balance sheet remains strong with R$ 10.4 million of cash on hand. We are also encouraged by our progress in pursuing our multi-brand strategy as evidenced by our strong top-line growth for the fourth quarter which should continue into the first quarter of 2009, as only one month of our Pizza Hut’s business unit results have been consolidated into our fourth quarter results.”

Fourth Quarter 2008 Results

System-wide sales grew 19% in the fourth quarter to R$ 172.9 million, driven by an increase in the number of franchised points of sale as well as the consolidation of Internacional Restaurantes do Brasil (“IRB”), Brazil Fast Food’s Pizza Hut subsidiary.

Total revenue for the fourth quarter 2008 increased by 34.2% to R$38.6 million from R$28.8 million in the fourth quarter of 2007. Revenue growth was driven by the continued expansion of Brazil Fast Food’s Bob’s and KFC restaurant network as well as the consolidation of IRB’s December sales which amounted to R$ 4.3 million.

Net revenue for company-owned and operated outlets was up 34.3% to R$29.3 million from the comparable period in 2007 due to the increase in the number of stores the Company owns and operates to 62, up from 58 at the end of 2007, as well as the expansion of its KFC points of sale and the consolidation of its Pizza Hut results for the month of December. Same own-store sales, which measure the performance of stores open for more than a year, were up 8.2% year over year driven by the Company’s successful marketing campaigns.

Net revenue from franchisees increased 13.5% year-over-year to R$6.6 million driven by an increase in number of franchised retail outlets to 580, up from 522 in the same period a year ago. Other income totaled R$0.5 million.

Operating expenses were up 42% to R$36.9 million driven by higher franchisee costs associated with the growth in the number of franchised network stores, higher administrative as well as higher store costs as a result of and increase in wages negotiated with the union and higher raw material prices.

Operating income for the fourth quarter of 2008 was R$1.7 million, compared to an operating income of R$2.7 million in the fourth quarter of 2007. Operating margin in the fourth quarter of 2008 was 4.4% compared to 9.6% in the comparable period of 2007.