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Brazil Fast Food Announces Fourth Quarter and Fiscal Year 2009 Results

System-wide sales totaled R$ 709.0 million, up 27,58% from 2008

Brazil Fast Food Corp. (OTC Bulletin Board: BOBS.OB) the second largest restaurant chain with 707 points of sale, operating under the Bob’s, KFC, Pizza Hut, In Bocca al Lupo Café, and Doggis brands in Brazil, today announced financial results for the fourth quarter and fiscal year ended on December 31, 2009.

“We currently operate five convenience restaurant brands, including Bob’s, KFC, Pizza Hut, In Bocca al Lupo Café and Doggis. We have strategic plans to expand the Bob’s brand in the years ahead and to develop the “coffee”

Fiscal Year 2009 Highlights

Fourth Quarter 2009 Highlights

“We are very pleased with our results for 2009 as we were able to deliver strong top- and bottom-line growth as well as improvements in operating and net margins, despite a challenging economic environment. Our exceptional results for 2009 reflect the solid execution of our multi-brand business strategy and the successful integration of the Pizza-Hut (IRB) acquisition,” said Mr. Ricardo Bomeny, President and CEO of Brazil Fast Food. “We were also honored to receive in 2009 the Quality Seal of the Brazilian Franchise Association for the eleventh consecutive year, underlying the strength of our relationship with our franchisees. This award evaluates marketing performance, business support and training offered by the franchisor, and is granted after consultation with franchisees.”
Fourth Quarter 2009 Results
System-wide sales grew 15,43% in the fourth quarter to R$ 208,5 million, driven by an increase in the number of franchised points of sale as well as the consolidation of Internacional Restaurantes do Brasil (“IRB”), Brazil Fast Food’s Pizza Hut subsidiary.
Total revenue for the fourth quarter 2009 increased by 35.3% to R$52.2 million from R$38.6 million in the fourth quarter 2008. Revenue growth was driven by the continued expansion of Brazil Fast Food’s Bob’s and KFC restaurant network as well as the consolidation of IRB.
Net revenue for company-owned and operated outlets was up 41.9% to R$41.6 million due to the increase in the number of stores the Company owns and operates to 86, up from 71 at the end of 2008 (excluding Pizza Hut stores operated by us only in December 2008), as well as the expansion of its KFC points of sale and the consolidation of its Pizza Hut results for the month of December. Same own-store sales, which measure the performance of stores open for more than a year, were up 8,61% year over year driven by the Company’s successful marketing campaigns.
Net revenue from franchisees increased 13.4% year-over-year to R$7.5 million driven by an increase in number of franchised retail outlets to 622, up from 580 in the same period a year ago. Other revenue and income totaled R$3.1 million.
Operating expenses were up 27.4% to R$47.0 million driven by higher franchisee costs associated with the growth in the number of franchised network stores, higher administrative as well as higher store costs as a result of and increase in wages negotiated with the union and higher raw material prices.
Operating income for the fourth quarter of 2009 was R$5.2 million, compared to an operating income of R$1.7 million in the fourth quarter of 2008. Operating margin in the fourth quarter of 2009 was 10.0% compared to 4.4% in the comparable period of 2008.
EBITDA in the fourth quarter of 2009 was R$7.6 million, compared to R$2.7 million in the fourth quarter of 2008. EBITDA margin was 14.6% in the fourth quarter of 2009, compared to 7.0% in the comparable period of 2008. A table reconciling EBITDA to its nearest GAAP equivalent is provided elsewhere in this press release.
Interest expense was R$4.9 million which is mostly associated with debt incurred to finance the IRB acquisition.
Net income for the fourth quarter of 2009 was R$3.3 million or R$0.41 per basic and diluted share, compared to net loss and loss per share of R$7.8 million and R$0.96 in the same period of 2008, respectively.
Fiscal Year 2009 Results
For the twelve months ended in December 31, 2009, net revenue was R$184.9 million, up 49.9% from R$123.4 million in 2008. Operating income for fiscal year 2009 was R$12.0 million, up 104.9% from R$5.9 million in 2008. Operating margin was 6.5% for 2009 compared to 4.7% in 2008. EBITDA for 2009 was R$17.8 million compared to R$9.7 million in 2008. Net income for 2009 was R$6.9 million compared to net loss of R$3.9 million in 2008. Basic and diluted net income per share was R$0.85 for 2009 compared to basic and diluted loss per share of R$0.48 for 2008.
Financial Condition
As of the balance sheet date on December 31, 2009 the Company had R$13.2 million in cash. Cash flow from operations for 2009 totaled R$11.1 million, compared to R$5.6 million in 2008. Capital expenditures totaled R$12.6 million in 2009 mostly for expanding the KFC restaurant network. Shareholders’ equity was R$25.1 million at the end of the fourth quarter of 2009, compared to R$18.5 million at the end of 2008.
Business Outlook
“We currently operate five convenience restaurant brands, including Bob’s, KFC, Pizza Hut, In Bocca al Lupo Café and Doggis. We have strategic plans to expand the Bob’s brand in the years ahead and to develop the “coffee” concept with the brand In Bocca al Lupo Café or with another name we are discussing for this activity and we have contractual agreements with Yum! Brands to expand the KFC chain in Brazil and Pizza Hut stores in the metropolitan area of São Paulo as well as with Grupo de Empresas Doggis to expand the Bob’s and Doggis brands in Chile and Brazil, respectively,” said Mr. Ricardo Bomeny, President and CEO of Brazil Fast Food. “As we look to the future, our primary goal is to expand our existing brands in the Brazilian market. We will, however, continue to look for opportunities to add new restaurant concepts and to acquire new businesses that can strengthen our relationship with suppliers, improve our economies of scale and pre-empt the expansion of competitors in our markets. In addition, we will continue to selectively evaluate opportunities to expand our Bob’s brand in Latin America, leveraging our experience in Chile, where we currently have three restaurants,” concluded Mr. Bomeny. “
The Company currently plans to have 830 points of sale by the end of 2010 up from 673 in 2009. The company expects to add 157 Bob’s stores, including 4 stores in Chile, 4 KFC, 2 Pizza Hut restaurants and 4 Pizza Hut delivery stations, and 6 Doggis and 6 Coffee stations with or without the brand In Bocca al Lupo Café points of sale. The Company plans to expand the Bob’s brand through franchising by targeting cities with 150,000 to 250,000 inhabitants where the competitive environment is more favorable, and income levels are adequate to support the Company’s lower cost store designs. Pizza Hut expansion in 2010 will be driven by Company owned stores and delivery stations, while KFC and Doggis expansion will be driven by franchising.
In addition to expanding its restaurant network Brazil Fast Food is working hard to develop innovative concepts and products to improve its competitive position in the market place. In this regards the Company is currently focused on the BExpress concept, Pizza Hut Delivery Stations as well as Medium Size stores. In addition the Company is evaluating new equipment that can enhance operations, lower cost and reduce initial investment requirement for franchisees.
About Brazil Fast Food Corp.
Brazil Fast Food Corp. owns and operates, both directly or through franchisees, the second largest fast-food restaurant chain in Brazil. The Bob’s trade name is used by Venbo Comércio de Alimentos Ltda., a subsidiary of Brazil Fast Food holding company, BFFC do Brasil Participações Ltda (formerly 22N Participações Ltda.). The “KFC” trade name is used by CFK Comércio de Alimentos Ltda. (formerly Clematis Indústria e Comércio de alimentos e Participações Ltda.), also a holding company subsidiary. The “Pizza Hut” trade name is used by Internacional Restaurantes do Brasil (“IRB”), also a 60% subsidiary of Brazil Fast Food holding company, BFFC do Brasil Participações Ltda. Recently, the Company entered into an agreement with Grupo de Empresas Doggis S.A (“GED”) to cross-franchise the Bob’s and Doggis brands in Chile and Brazil, respectively. Brazil Fast Food will control the Doggis master franchise in Brazil and GED will control the Bob’s master franchise in Chile.

Posted by on April 1, 2010.

Categories: Financial

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