Chanticleer Holdings Inc (NASDAQ:BURG), an operator of multiple regional burger chains, posted second-quarter results after the bell Wednesday that showed growing revenue but widening losses as it closed underperforming units and positioned for a second half improvement.
The company brought in revenue of $10.7 million, up $400,000 year over year albeit lower than the consensus estimate of $11.2 million. Its operating loss was $3 million, or $0.83 per share, versus $420,000, $0.23 per share, a year ago. Analysts were calling for a decline of $0.26 per share.
One reason for the operating loss, the company said, was costs related to the closing of underperforming units. Chanticleer invested strongly in streamlining the delivery process, bolstering employee benefits, defeating a union vote and beefing up marketing — decisions it expects to pay off over the second half of 2019.
The positive shift may already be underway, as same-store sales of its Little Big Burger chain increased 3% in July.
The same month, Chanticleer trimmed the fat that was two underperforming LBB restaurants and opened one new location.
The Charlotte-based company also completed a $6.1 million equity rights agreement in the quarter, including the conversion of $3.1 million in debt to equity.
“With the recent successful strengthening of our balance sheets including a $3.1 million reduction in debt while adding nearly $3 million of cash in July, we are positioned well for the balance of the year,” Chanticleer CEO Mike Pruitt said in a statement.
“Successfully winning the recent union vote in Oregon took considerable time and resources. With that now behind us and numerous initiatives taken earlier this year focused on delivery, technology, loyalty and our employees, we are starting to see early return on investment.”
Chanticleer stock was 5.4% lower in after-hours trading Wednesday.
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