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Mon, February 23, 2009 Meritage Hospitality Group Inc.: Meritage Reports Improved Fiscal 2008 Results; 2009 Positive Business Outlook
GRAND RAPIDS, MI--(Marketwire - February 23, 2009) - Meritage Hospitality Group Inc. (
The Company reported fiscal 2008 sales of $58.0 million, a 2.1% decrease compared to fiscal 2007. Fiscal 2007 included a favorable accounting period of 53 weeks compared to 52 weeks in 2008. The 2008 reported net loss of $696,000 represents an improvement of 35% compared to the net loss of $1,074,000 in 2007. The 2008 results improved, which included expenses of approximately $808,000 associated with the Company's restructuring and other fourth quarter charges. Management believes that restructuring and other implemented cost reduction initiatives will save an additional $1.5 million annually, returning the Company to profitability in 2009.
Robert E. Schermer, Jr., CEO of Meritage Hospitality Group, stated, "We believe the fundamentals in the quick-service restaurant industry remain positive, with the current economic and employment downturn driving consumers from higher offerings into lower price point options like our Wendy's restaurants."
In September 2008, the Wendy's brand went through a major transition, merging with Triarc Companies, Inc. (the franchisor of the Arby's restaurant system) to form a new entity, Wendy's/Arby's Group, Inc. "The positive news is that we feel we have a Wendy's management team focused on the brand, with a comprehensive multi-year plan to restore restaurant margins back to the historic 16%-17% levels. The new management team has put forth a business plan with margin improvement targets of +500 bps over the next 36 months, much of which applies to the franchise units as well as the corporate units," stated Mr. Schermer.
"It is early in the process, but I am very encouraged by the potential for the Wendy's brand, which has been considered by many analysts to be the great 'under-earner' for a number of years in the quick-service restaurant industry. The franchise system is finally working together to fix the supply chain system and address restaurant margin potential. Returning Wendy's margins back to the historical 16%-17% has profound positive implications to our business and the franchise system," added Mr. Schermer.
In other hospitality matters, the Company, along with its partners in a Bahamian investment, are planning to proceed with a capital raise in 2009 to fund phase one of a residential resort property.
Our goal is to return to positive net earnings in 2009. Additionally, the Company may realize financial benefits from other developments in 2009.
Meritage Hospitality Group Inc. is a hospitality management Company that has specialized in the operations and development of restaurants, hotels and leisure properties. Meritage is headquartered in Grand Rapids, Michigan and currently operates with approximately 1,800 employees.
SAFE HARBOR STATEMENT
Certain information in this new release, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, constitutes forward-looking statements. Factors set forth in our Safe Harbor Statement, in addition to other possible factors not listed, could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company's Safe Harbor Statement at [ http://www.meritagehospitality.com ].
