VAUGHAN, Ont. — Recipe Unlimited Corp. saw sales fall in its most recent quarter as it invested in renovating a record number of restaurants and decided to close dozens of others.
The Vaughan, Ont.-based company, which owns Swiss Chalet, Harvey's, New York Fries and other restaurant chains, reported a net loss of $1.9 million or three cents per share for the fourth quarter. That's down from net earnings of $9 million or 15 cents per share for the same period the previous year.
System sales for the 13 weeks ended Dec. 29 fell 1.1 per cent to $895.8 million from $905.4 in the fourth quarter of 2018.
That drop came as same-store sales, a key retail metric, fell 2.6 per cent in the quarter as the full-service restaurant industry continued to face headwinds.
The company also attributed the sales decrease to temporary restaurant closures due to renovations that resulted in lost sales of $1.7 million during the quarter.
"We continue to invest in our business and our brands continue to make progress in improving the overall guest experience," said chief executive Frank Hennessey during a conference call with analysts Friday — the morning after the company released its fourth-quarter and full-year results.
He called 2019 "a record year for renovations" as Recipe completed 109 major renovations that had an estimated $10 million impact on sales.
In December, Recipe completed a strategic review of its 1,373 corporate, franchise and joint venture locations, he said.
"As a result, we have made the decision to close certain locations and we will continue to partner with franchise locations that are under performing to help them achieve sustainable success," Hennessey said.
Recipe plans to close or sublet 29 restaurants of various brands over the next year to 18 months.
For the full 2019 financial year, Recipe earned $60.8 million or 74 cents per share compared with $104.6 million or $1.20 per share in 2018.
System sales for the year totalled roughly $3.49 billion, up from $3.41 billion in 2018. That bump came mostly from the addition of The Keg chain in February 2018, the company said.
Meanwhile, same-store sales fell 2.3 for the year.
The company announced it increased its dividend five per cent to 11.77 cents per share starting April 15.
Recipe's shares lot 68 cents or 4.5 per cent at $14.56 in afternoon trading on the Toronto Stock Exchange.
This report by The Canadian Press was first published March 6, 2020.
Companies in this story: (TSX:RECP)
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