IMVESCOR RESTAURANT GROUP REPORTS SECOND QUARTER 2011 RESULTS

MONCTON, NB, June 8, 2011 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), reported financial results today for the 13 weeks ending May 1, 2011 (or "second quarter"), and for the 26 weeks ending May 1, 2011. The 2010 results are for the 27 weeks ended May 2, 2010 and are therefore not directly comparable.

Year to date Highlights

  • Four new restaurants were opened: 2 Pizza Delights, 1 Mikes and 1 Scores restaurant, while renovating 2 Pizza Delights and 1 Mikes.

  • Total system sales were flat with a slight decrease of 0.3% for the 26 weeks ended May 1, 2011 compared to the same 26 weeks in the prior year.

  • The Company continues to focus on the restructuring of operations and optimizing its capital structure.  The Company has commenced actions towards exiting certain underperforming locations and unfavourable lease terms. These strategic actions have been identified as a priority to improve future earnings as well as enhance the Company's ability to raise financing. The pursuit of these strategic actions together with other cost cutting measures will result in the reduction of expenses in the future.

  • Through these measures, the Company is targeting the generation of an additional $2.0 million in annual cash flows from operations. There is no certainty as to whether the Company can achieve this objective given the number of factors outside its control, such as the availability of sublease opportunities and/or the willingness of property owners to release the Company from its lease guarantee obligations. Please refer to "Cautionary Note Regarding Forward-Looking Statements" below.

  • The refinancing of the Convertible Debentures is a priority for 2011. The Company continues to evaluate various financing options for the convertible debentures that are likely to be composed of a mix of debt and equity in order to reduce the Company's indebtedness while seeking to minimize dilution to existing shareholders. The Company is currently in discussions with various parties and hopeful to be in a position to announce a financing plan within the next few months if these discussions prove successful.

Second Quarter 2011 Financial and Operating Results

The following table provides selected financial information for the 13 week and 26 week periods ending May 1, 2011, along with results for the comparative periods of the prior year, which were calculated for the 13 weeks and 27 weeks ended May 2, 2010.

(in thousands of dollars except per share items) 2011
(13 weeks
ended
May 1, 2011)
2010
(13 weeks
ended
May 2, 2010)
2011
(26 weeks
ended
May 1, 2011)
2010
(27 weeks
ended
May 2, 2010)
System sales 99,626 99,771 198,786 206,620
Royalties and other revenue 9,917 9,581 20,160 20,019
Sales less cost of sales 841 1,007 1,674 2,060
Advertising and administrative expenses 7,673 7,218 16,043 16,269
Net earnings from continuing operations 709 714 852 1,097
Net loss from discontinued operations (1,263) (181) (1,407) (397)
Net earnings (loss) (554) 533 (555) 700
EPS from continuing operations 0.075 0.076 0.090 0.116
EPS (loss) from discontinued operations (0.134) (0.020) (0.149) (0.042)
Net basic and diluted earnings (loss) per share (0.059) 0.056 (0.059) 0.074

IRG derives its revenues primarily from royalties based on system sales from each of its four brands: Pizza Delight™, Mikes™, Scores™ and Bâton Rouge™.

Total system sales for the 26 weeks ended May 1, 2011 were $198.8 million as compared to $199.4 million for the same 26 week period in 2010, a decrease of 0.3%.  Total system sales for the second quarter were flat at $99.6 million as compared to $99.8 million for the 13 weeks in 2010, a decrease of 0.2%.

Royalties, advertising fees and other revenue for the second quarter were $9.9 million and $20.2 million for the 26 weeks ended May 1, 2011 as compared to $9.6 million and $20.0 million in 2010.  The increases over 2010 are mainly attributed to growth in retail revenues of branded products in grocery and other retail outlets.

Same store sales ("SSS") were down 2.0% during the second quarter. SSS at Pizza Delight were -0.7%; Mikes SSS were -2.1%; Scores SSS were -5.4%; and Bâton Rouge SSS were +0.8% for the second quarter. During the quarter, the Company changed advertising agency and will be re-focussing its marketing to increase sales.

The Company recorded a net loss for the second quarter of $554 thousand or $0.059 loss per share compared to net earnings of $533 thousand or $0.056 per share for the 13 weeks ended May 2, 2010.  The decrease is mainly a result of the restructuring costs of $680 thousand and costs related to the closure of the two Company-owned Scores restaurants of $1.4 million consisting of operating losses, impairment charge on assets and estimated costs to exit leases.

The Company recorded an expense of $256 thousand as the cost to exit certain leases in relation to non performing locations. The costs to exit non performing locations will be settled over a period of 18-24 months and are expected to add future cash flows to the Company.

Total long-term debt at May 1, 2011 decreased to $41.7 million as compared to $43.7 million at October 31, 2010, a result of principal payments. Debt repayment remains a priority of the Company.

Outlook

The information contained in "Outlook" is forward-looking information.  Please refer to "Cautionary Note Regarding Forward-Looking Statements" for a discussion of the risks and uncertainties in connection with forward-looking information.

Pizza Delight, Mikes and Scores provide quality food and good value to consumers in the family/mid-scale category. Mikes and Scores operate primarily in Quebec and have been challenged with weak SSS performance in the last two years. Their respective management teams are currently evaluating marketing efforts to enable both brands to change this trend. Bâton Rouge provides a premium level dining experience with quality food and service coupled with ongoing new product innovations to position itself to benefit when consumers' disposable income increases.

The Company intends to continue its focus on growing existing restaurant sales.  This will be accomplished through a combination of re-focused marketing efforts, new restaurant designs, menu enhancements, brand awareness and regular renovations to modernize older existing restaurants.

Management expects same store sales growth from renovations to the Mikes and Pizza Delight restaurants in its current markets while new restaurant concepts will provide a solid platform in the new markets where the Company plans to expand. Scores is focusing on marketing efforts and its restaurant concept to position itself as a leader in the Quebec family/mid-scale dinning experience. Bâton Rouge is currently focusing on its marketing efforts, as well as on enhancing its cocktail menu and dinning experience.

Management is working closely with the Pizza Delight and Mikes franchisees in the ongoing renovations of existing restaurants to these new concepts over the next few years. The Company will also continue to seek opportunities to open new restaurants for all four brands.

About Imvescor Restaurant Group

Headquartered in Moncton, New Brunswick, Imvescor Restaurant Group owns franchised and corporate stores throughout Canada, under four brands:  Pizza Delight® operates primarily in Atlantic Canada, where it dominates the family/mid-scale segment.  Mikes® and Scores® restaurants operate primarily in Quebec in the family and casual dining segments and the take-out and delivery segments.  Bâton Rouge® operates in Quebec, Ontario, and Alberta in the casual dining segment.

Cautionary Note Regarding Forward-Looking Statements

Certain information in this press release regarding the Company, including, but not limited to, the Company's business objectives, strategies and priorities, the generation of cash flows, the refinancing of the Convertible Debentures, the growth of the same store sales, and other statements that are not historical facts, are "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements can generally be identified by words such as "may", "should", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "outlook" and similar expressions. All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable securities laws. These statements are based on information currently available to the Company's management and on the current assumptions, intentions, plans, expectations and estimates of the management regarding the Company's future growth, results of operations, performance and opportunities as well as the economic environment in which it operates. Forward-looking statements involve known and unknown risks, uncertainties and other factors outside the Company's control. A number of factors could cause actual results of the Company to differ materially from the results discussed in the forward-looking statements, including, but not limited to: market conditions for financing, competitive conditions, whether related to new competitors or current competitors; change in the Company's or its competitors current pricing strategies; changes in demographic trends; changes in consumer preferences and discretionary spending patterns; changes in national and local business and economic conditions; risks associated with the closure of restaurants, costs associated with strategically exiting locations, the ability of the Company to pay dividends, the Company successfully offers new and innovative products and executes its strategies as planned; legislation and governmental regulation; changes in accounting policies, practices and standards; and the results of operations and financial condition of the Company and other factors referenced in the Company's continuous disclosure filings which are available on SEDAR at www.sedar.com. Although the forward-looking statements contained herein are based upon what the Company believes to be reasonable assumptions on the date of this press release, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. Certain assumptions underlying the forward-looking statements contained herein include assumptions related to the Company's ability to obtain financing on conditions favorable to the Company, future cash flows, market conditions, sales estimates, estimates relating to the Company's ability to settle and exit leases. Readers should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this press release and, accordingly, are subject to change after such date. Forward-looking statements are provided herein for the purpose of giving information about the Company's current strategic priorities, expectations and plans, allowing investors and others to get a better understanding of the Company's business outlook and operating environment. Readers are cautioned, however, that such information may not be appropriate for other purposes. The Company assumes no obligation to update such forward-looking statements to reflect new information, future events or otherwise, except as required by applicable securities laws. Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any transactions that may be announced or that may occur after the date of this press release. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. The Company therefore cannot describe the expected impact in a meaningful way or in the same way it presents known risks affecting the business. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.

SOURCE IMVESCOR RESTAURANT GROUP

For further information:

Denis Richard
President & CEO
Imvescor Restaurant Group Inc.
http://www.imvescor.ca
514-341-5544

For more information about our brands:

Pizza Delight®: http://www.pizzadelight.com
Mikes®:    http://www.mikes.ca
Scores®:    http://www.scores.ca
Bâton Rouge®:   http://www.batonrougerestaurants.com

Profil de l'entreprise

IMVESCOR RESTAURANT GROUP

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