Del Frisco’s reports higher profit but sales slow at existing restaurants

Del Frisco’s Restaurant Group will slow down openings of new restaurants in 2016 after reporting a decline in comparable-store sales in the fourth quarter, executives said Tuesday.

The Southlake-based steakhouse company, which operates 50 restaurants, said net income increased to $7.9 million in the fourth quarter from $5.5 million a year ago. But adjusted net income, a measure of pretax income, was flat at $8.3 million.

While total revenue grew by 7.8 percent to $114.1 million thanks to the addition of new restaurants, comparable-store sales — at restaurants open at least a year — fell at each of its three brands: off 1.6 percent at Del Frisco’s Double Eagle Steak House, 1.8 percent at Sullivan’s and 4.5 percent at Del Frisco’s Grille.

On a conference call with analysts, CEO Mark Mednansky said the falloff in sales at the Double Eagle Steak Houses was affected by four restaurants located in oil industry markets. Houston has been the most challenged market, he said, while there has been less of an impact from oil industry woes in Fort Worth and Dallas.

Del Frisco Grilles in Fort Worth’s Sundance Square and Southlake Town Square “have performed very well,” he said.

In 2016, the company will slow openings of new restaurants to two or three Grilles and one Double Eagle location. The company closed underperforming Grilles in Phoenix and Palm Beach, Fla., in the fourth quarter.

In Dallas, plans are moving forward to relocate the Double Eagle Steak House from north Dallas to a location at McKinney Avenue and Olive Street in Uptown later in the year, where it aims to become “the flagship steakhouse for the city of Dallas.” The company also plans to open a Double Eagle Steak House in Plano in 2017.

Shares of Del Frisco’s (ticker: DFRG) gained $1.04 a share, or more than 6 percent, to close at $16.48.

This story was originally published March 1, 2016 at 12:02 PM with the headline "Del Frisco’s reports higher profit but sales slow at existing restaurants."