Restaurant Chains and Ike

Breaking News

Restaurant chains tally damage from Ike
HOUSTON (Sept. 17, 2008) Restaurant companies with a presence in south Texas are alerting investors to the damage done last weekend by Hurricane Ike, with several chains reporting that stores are still closed and could be boarded up for some time.
Among the chains most affected by the Category 2 hurricane were P.F. Chang’s, Sonic Drive In, BJ’s, Chili’s Grill and Bar, and Kona Grill, said Lynne Collier, the restaurant analyst for Keybanc Capital Markets. In a communication to investment customers, Collier reportedly said restaurants in the Houston area suffered “very little major damage,” and that most would be open within a week.
Some restaurateurs, however, were not as optimistic. Landry’s Restaurants Inc., a restaurant and amusement park operator with significant holdings in the areas hit by Ike, said Wednesday that many of its restaurants and its 40-acre Kemah Boardwalk entertainment complex remained closed, and that certain locations could take months to reopen.
The company had not yet finalized the damages or the earnings impact, it said.
As of Tuesday, Cracker Barrel Old Country Stores still had 12 stores closed, parent CBRL Group Inc. told investors during a conference call. P. Doug Couvillion, senior vice president of finance, said 50 stores had been affected by Ike and other recent storms, costing the chain 80 sales days.
Luby’s Inc., the Houston-based cafeteria operator, did not disclose how many stores had been closed because of Ike, but it announced the reopening of 18 units on Tuesday.
Collier of Keybanc Capital Markets was quoted in news reports as saying the Ike-related closings could cost most of the affected companies between 0.1 and 0.5 percentage points of their same-store sales. She reportedly said the dent in comparable sales could be as high as 0.8 of a percentage point for Sonic, since the drive-in chain has 150 stores in the Houston area.
Landry’s said 14 restaurants remain closed in Houston, but should reopen when power is restored. All of Landry’s restaurants in Kemah and Galveston are closed, and three locations suffered significant damage, as did the infrastructure to Landry’s Kemah Boardwalk, a complex that includes company restaurants, hotels and amusement rides. Landry’s developed the Kemah Boardwalk in 1997.
Some of the restaurants at Kemah may reopen in 45 to 60 days, with others opening in the months after, Landry’s said. In Galveston, an island community south of Houston, the majority of restaurants are expected to reopen when power and water is restored.
“While the final effect of the property damage and earnings impact resulting from the storm has not yet been finally determined, we are comfortable that the majority of our property losses and cash flow are expected to be covered by property and business interruption insurance," said Rick Liem, Landry’s chief financial officer.
Landry’s also reported that revenues for July and August totaled $215.0 million, up from $213.0 million for the same months a year ago.
Landry’s, which is based in Houston, operates restaurants under the Landry’s Seafood House, Chart House, Rainforest Cafe and Saltgrass Steak House brands, among others. Its other businesses include hotels, marinas, amusement parks and the Golden Nugget Hotels and Casinos in Las Vegas and Laughlin, Nevada.