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NEW YORK, NY - O'Charley's Inc. sought to reassure analysts in a presentation in a New York City investors conference this morning that the chain has been able to hunker down and contain costs during what it called "The Great Recession." While revenues shrunk, the chain was able to control costs so that its operating margin increased to 16.2% of restaurant sales from 15.3% in the prior year period.
The O'Charley's brand [NASDAQ: CHUX] of 10 franchises and 245 company-owned restaurants saw same-store sales shrink by 5.4%. And it saw a 6.9% drop for its Ninety Nine brand, a chain of family restaurants. Its steak house restaurants, Stoney River, a chain of 11 company-owned locations spread thinly through the Eastern half of the United States, saw the most significant same-store sales drop – a whopping 18.1%. The company repositioned Stoney River to a lower price point to meet the price resistance of its guests.
The company's new CEO, Jeff Warne, appointed in June, said, "This has been a very difficult consumer environment." He pointed out that in order to confront the shrinkage of customers, the company focused on reducing operating costs while enhancing the guest experience in a way that best differentiated the three brands. As a result, the chief officer was pleased to say that the three brands have seen a rise in guest scores of service, despite a thinning of staff.
It also has launched value meals to help bring in customers.
O'Charleys saw no expansion of restaurants in 2009. But the Ninety Nine and Stoney River brands each saw the addition of one company-owned restaurant. The chain did not grow in 2009 through franchising nor during the presentation was there any significant mention of its efforts with franchises.