Frisch's Restaurants reported revenue of $49,216,739 during its fiscal 2014 second quarter ended December 10, 2013 (consisting of 12 weeks), a 1.4 percent increase over the $48,522,512 reported in the prior year's second quarter.
Net earnings increased 18.2 percent in the second quarter to $2,364,019 ($0.46 diluted earnings per share (EPS)) up from $2,000,384 ($0.39 diluted EPS) in the comparable quarter last year. The increase in earnings was due to the benefits of lower administrative expense, lower interest expense and a lower effective tax rate offset partly by a lower gross profit margin. Year-to-date revenue was $110,453,360 versus $109,147,808 in the prior year, a 1.2 percent increase, and year-to-date net earnings grew 52.7 percent to $4,276,066 ($0.84 diluted EPS) from $2,800,672, ($0.56 diluted EPS) in the prior year. (Prior year earnings included a small charge against income tax from discontinued operations.)
Same store sales were essentially flat in the second quarter of fiscal 2014 while overall sales increased 1.4 percent over the second quarter of fiscal 2013 as a result of two new restaurant openings. Gross profit margin of 11.8 percent decreased from 12.3 percent in the prior year's second quarter, primarily as a result of higher new store opening costs and higher payroll costs offset partly by lower pension costs and improved efficiency in our commissary operations.
At the Corporate level, administrative expense decreased 6.3 percent in second quarter 2014 primarily as a result lower head-count, lower stock compensation expense, and lower pension expense than last year's second quarter. The effective tax rate decreased to 26.3 percent in the quarter compared to 34.7 percent in last year's second quarter due to changes in deferred taxes and last year's placement of a valuation allowance on certain deferred tax assets. Franchise fees and other revenue increased in second quarter 2014 versus second quarter 2013 due to the granting of a new license to a franchisee in the quarter.
Craig F. Maier, President and Chief Executive Officer, said, "Our second quarter showed good results despite lower customer counts. We continue to counter softness in customer counts with the introduction of new menu items combined with an emphasis on growing our drive-thru service with new equipment and fast service. The modest revenue increase combined with good cost control measures, including head-count reductions, drove our double-digit increase in earnings. Beginning in our third quarter, we are looking forward to offering an enhanced line of soft drinks with the introduction of Pepsi products in all of our units."
