Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=164292
Story Retrieval Date: 6/19/2013 1:45:54 PM CST
Chicago-based Morton’s earned $1.2 million, or 11 cents per diluted share, in the period ended April 4, up from a loss of $1.8 million, or 5 cents per diluted share, in the prior-year period.
Sales increased 5 percent to $75.3 million from $71.8 million during the same period last year, on par with the general upward trend for the restaurant industry as the economy comes out of recession. Sales at restaurants open at least a year increased 3.6 percent.
“They did well--sales are getting better, margins are rebounding, and if that can continue, I’m optimistic they can continue to outperform the market,” said analyst Bryan Elliott of Raymond James and Associates Inc.
Morton’s CEO Christopher Artinian attributed Morton’s improved revenues to the “slow but continuous improvement of business travel, conventions and entertaining.” Strengthening check averages and midweek business traffic in the dining room have had a direct positive effect on sales, Artinian said in a release. Historically, around 80 percent of the company’s sales have been attributed to corporate credit card transactions.
“Coming out of the recession, this is an advantage because business spending is coming back faster than consumer spending,” Elliott said.
In Wednesday’s conference call, Artinian stated the company has plans to expand the “Bar 12-21” concept, which has been gradually implemented in about two-thirds of Morton’s restaurants. Bar 12-21 signifies the date the first restaurant was opened in Chicago on Dec. 21, 1978. The concept, which includes a “bar bites” menu and specialty cocktails differing from the traditional drinks offered at Morton’s locations, is part of a strategy to “add a level of energy” to the restaurant, according to Roger Drake, a senior vice president.
“The bar used to be sort of a ‘holding area’ for guests,” Drake said. “Now it’s a destination.”
Introducing Bar 12-21 at selected restaurants has resulted in annual revenue increases of approximately $300,000 to $400,000 at each location, Artinian said.
Artinian, who began his career at Morton’s chopping onions in the kitchen and worked his way to the top, was named CEO on Feb. 1 following the resignation of CEO Thomas Baldwin. The company declined to comment on Baldwin’s exit. Since the transition, Morton’s stock has nearly doubled.
Despite posting positive figures for the first quarter, the company faces rising beef costs that could cut into profits., according to Elliott. Morton’s only has about 20 percent of its beef and lobster tail needs contracted for 2010 and has seen about a 3 percent increase in food costs so far, said Ron DiNella, chief financial officer, in the conference call.
DiNella said Morton’s believes it has the “flexibility” to offset these costs by passing along price increases to customers. In June, Morton’s implemented a 1 percent price increase in its menu and is looking to do the same this year in the second quarter.
Morton’s Restaurant Group, which has about 550 full-time employees, owns and operates 76 restaurants under the name Mortons The Steakhouse in the U.S., Canada, Hong Kong, China, Mexico and Singapore, as well as the Italian restaurant Trevi in Las Vegas.
The stock closed at $5.99 a share, up 1 cent.