SYRACUSE, N.Y. — Carrols Restaurant Group, Inc. (NASDAQ: TAST), the largest Burger King franchisee in the U.S., on Thursday reported a net loss of $6.8 million, or 15 cents a share, in the third quarter.
That compares to net income of $3.6 million, or 8 cents per share, in the prior-year quarter, Syracuse–based Carrols said.
Carrols realized it had been combining the sales discounts for separate Whopper value-meal promotions between June 3 and Aug. 26, which resulted in “significant” additional sales discounts relative to the advertised promotions that reduced restaurant sales by about $8.3 million. The company removed these excess sales discounts from the pricing of its Whopper value meals in late August and that action decreased significantly the level of Carrols’ promotional sales discounts and increased restaurant sales, the earnings report stated.
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Excluding the impact of the “excess sales discounts,” comparable (or same-store) restaurant sales for the third quarter would have increased about 7.4 percent.
But, as reported, same-store restaurant sales for Carrols’ Burger King restaurants increased 4.5 percent compared to a 1.6 percent rise in the prior-year quarter.
The company’s adjusted EBITDA was $25.6 million compared to $26.5 million in the prior-year quarter. EBITDA is short for earnings before interest, taxes, depreciation, and amortization.
The impact of the excess sales discounts reduced adjusted EBITDA in the third quarter by about $7.3 million. Excluding the impact of the excess sales discounts, adjusted EBITDA in the third quarter of 2019 would have been about $32.9 million.
Carrols’ adjusted quarterly net loss was 9 cents per share. That was better than the consensus analyst estimate of a loss of 10 cents, according to Zacks Research.
CEO reaction
Comparable restaurant-sales growth during the third quarter included the “successful” introduction of the Impossible Whopper, which has contributed “incremental” restaurant sales since its launch in August and Carrols believes will “continue to positively impact our restaurant sales,” Daniel Accordino, chairman and CEO of Carrols, said in the firm’s earnings report.
The 2 for $6 Mix & Match sandwich platform has also performed “consistently well” while the $1 Crispy Taco provided a “new value offering” to the Burger King menu.
Carrols is one of the largest restaurant franchisees in the U.S. and currently operates 1,093 restaurants. It is the largest Burger King franchisee in the U.S., currently operating 1,032 Burger King restaurants. It also runs 61 Popeyes restaurants.
Contact Reinhardt at ereinhardt@cnybj.com
