Champps Entertainment Announces Closure of Underperforming Restaurants
May 03 2006 - 8:46AM
Business Wire
Champps Entertainment, Inc. (Nasdaq: CMPP) today announced the
closure of three restaurants as part of its ongoing restaurant
portfolio review and real estate rationalization efforts. Two
locations in Houston, Texas and one location in Toledo, Ohio closed
on May 1, 2006. The Toledo, Ohio location had only been open since
July 2005 while the two Houston locations have been open for
several years. None of the closure locations have ever been
profitable. This announcement follows the Company's January 10th,
2006 announcement that as many as five Champps locations were being
considered for closure. Decisions regarding the remaining two
locations have not been made. Mike O'Donnell, Chairman and Chief
Executive Officer, said, "The closure of these three restaurants
represents our ongoing commitment to improving the Company's
overall real estate mix and exiting locations not meeting our
operating cash flow objectives. We believe the underperformance at
these locations is a result of inefficient site selection." "We
very much regret closing these locations, but in light of their
poor performance the cost of continuing operations does not warrant
remaining open at these three sites. We are committed to serving
our existing markets including our remaining location in Houston."
Champps' has been evaluating its underperforming locations for
several months with the help of an outside consulting firm. The
ultimate decision to close these locations came after management
considered various factors including, without limitation, levels
and direction of revenues and cash flows, landlord negotiations,
and other exit cost considerations. Champps expects to recognize a
non-cash asset impairment charge in the third quarter of fiscal
2006 in connection with the closure of these restaurants.
Additionally, the Company expects to ultimately spend $3 to $4
million net cash to exit the closed locations. About Champps
Entertainment, Inc. Champps Entertainment, Inc. owns and operates
50 and franchises/licenses 13 Champps restaurants in 23 states.
Champps, which competes in the upscale casual dining segment,
offers an extensive menu consisting of freshly prepared food,
coupled with exceptional service. Champps creates an exciting
environment through the use of videos, music, sports and
promotions. Safe Harbor Statement Certain statements made in this
press release are forward-looking statements based on management's
current experience and expectations. These forward-looking
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such statements
involve certain risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements. Such forward-looking statements include statements
regarding possible closing of restaurants, write-down of assets,
and cash exit costs, among others. Among the factors that could
cause future results to differ materially from those provided in
this press release are: the ability of the Company to operate
restaurants profitably, the ability to successfully close or
renegotiate lease terms for restaurants, the ability of the Company
to successfully implement our strategic initiatives to improve
revenues and profitability, the ability of the Company's management
team to implement strategic initiatives successfully; the impact of
intense competition in the casual dining restaurant industry, the
Company's ability to control restaurant operating costs, which are
impacted by commodity prices, minimum wage and other employment
laws, fuel and energy costs, consumer perceptions of food safety,
changes in consumer tastes and trends, and general business and
economic conditions. Information on significant potential risks and
uncertainties that may also cause such differences include, but are
not limited to, those mentioned by the Company from time to time in
its filings with the SEC. The words "may," "believe," "estimate,"
"expect," "plan," "intend," "project," "anticipate," "should" and
similar expressions and variations thereof identify certain of such
forward-looking statements, which speak only as of the dates on
which they were made. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and
uncertainties, and, therefore, readers should not place undue
reliance on these forward-looking statements.
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