Quality Dining posts 2nd-Q loss after bite of Grady's write-down

Nation's Restaurant News, June 23, 2003

MISHAWAKA, IND. -- Quality Dining Inc. reported a loss of $280,000, or 2 cents per diluted share, for the second quarter ended May 11 after a $4.4 million charge related to the write-down of its Grady's American Grill restaurants bit into the company's bottom line.

In the year-ago quarter, Quality Dining posted earnings of $1.2 million, or 11 cents per share.

Revenue in the second quarter declined 14 percent to $52.3 million from $60.6 million in the same quarter a year ago.

The six-month loss was $101,000, or 1 cent per share, compared with net income of $2.2 million, or 19 cents, in the comparable year-ago period.

Revenue in the first half of the fiscal year declined 13 percent to $121.3 million versus $139.1 million a year ago.

The company said its Chili's Grill & Bar business continued to turn in a "solid performance," but its Burger King units still were weighed down with "disappointing sales."

"During the second quarter our operating results remained consistent with those in the first quarter," said Daniel B. Fitzpatrick, chairman, president and chief executive of Quality Dining.

The company said it recorded the asset write-down related to Grady's following the sale of three of the remaining 16 restaurants and the continued decline in sales and cash flow at the division.

The charge was offset partially by a cash payment of $3.75 million that the company received from the settlement of a lawsuit related to its 1997 divestiture of the Bruegger's Corp. bagel business.

Quality Dining Inc. operates 118 Burger Kings, 34 Chili's, 13 Grady's American Grills, six Papa Vino's Italian Kitchens and three Spageddies Italian Kitchens.