The company, which operates 73 restaurants, has leases signedfor 60% of the restaurants planned for 2008. Its plans for theremainder of 2007 include finishing the year with 11 new McCormick& Schmick's Seafood Restaurants and one Boathouse. It openedone new restaurant in Santa Ana, CA during the second quarter andplans to open five in the third quarter. The new locations in thethird quarter will be in the Chicago suburbs of Schaumburg and OakBrook, IL, as well as in Dayton, Cleveland and Austin.

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Doug Schmick, chairman and CEO, pointed out during theconference call that the second quarter results marked the 16thconsecutive quarter of comparable restaurant sales growth. Hecredited "a more favorable mix of premium seafood offerings" andother factors, including daily printed menus that "enabled us todrive performance in a difficult cost environment."

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"Over the last six quarters, I think it's fair to characterizethe commodities environment as tough," he said. Seafood prices, inparticular, have gone up about 5% to 7%, Schmick said. "We werehoping for a little relief in the second quarter, but it did notmaterialize."

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Despite commodity price increases, the company was able torealize cost improvements on a year-over-year basis, according toSchmick. As the company continues to grow, it is benefiting frombetter purchasing leverage, which helps to mitigate the risingcosts, he said.

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Compared with the 13-week quarter from last year, this year's13-week second quarter produced a 16.8% increase in revenues to$89.6 million and a gain in net income of 27.6% to $4.5 million, anincrease to 31 cents per share versus 24 cents last year.

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The company attributed the growth in revenues to a 2.3% increasein comparable restaurant sales and additional revenues from the 16restaurants not in the comparable base, including five Boathouserestaurants that it acquired in March. The 2.3% increase incomparable restaurant sales resulted primarily from higher menupricing.

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