Frisch's Posts 40% Profit-Drop

The Cincinnati-based restaurant owner said the drop in same-store sales was most dramatic at its Golden Corral Restaurants where sales fell 10.7% for the quarter ending Dec. 11, marking the ninth consecutive quarter of sales declines. For the first six months of the fiscal year, sales at the firm's 34 buffet-style restaurants fell 10.5%.

The company said higher energy costs and a softening economy in the Midwest also cramped sales at its Big Boy Restaurants where sales declined 1.8% for the quarter, the third consecutive quarter of decline. Big Boy Restaurants also logged a 1.2% drop in sales for the first half of the fiscal year.

Total sales throughout the firm, which operates 89 Big Boy and 34 Golden Corral Restaurants, rose slightly by 0.3% to $66.9 million from $66.7 million year earlier. Company officials said the increase was largely due to the opening of five Golden Corral Restaurants which sent sales up 6%.

"While we achieved record revenues, the sales volume was disappointing," Frisch's Restaurants' chief executive officer Craig Maier said in a conference call announcing the quarterly results. Maier said the company was moving to improve operations at its Golden Corral chain, which posted the most severe drop in sales, by cutting back on work hours and instructing restaurant manager to focus on business fundamentals. Maier said the firm also has hired a marketing research group to delve into the cause of the sales decline and has implemented a marketing strategy to highlight different dinner themes each night of the week.

The company also reported that a software flaw in a program that calculated its pension costs, resulting in the understatement of nearly $2 million in company assets during the past 10 years.