Ark experiences normal seasonal fluctuations. Winter is typically a slower season, because the company is heavily dependent on outdoor seating at many of its locations. In the summer, Ark's outdoor seating is a draw, especially for the company's large restaurants, like the Bryant Park Grill in New York and Sequoia in Washington, D.C. During winter, those places slow down significantly.
For this reason, it's best to compare Ark's results with the same quarter in the previous year. Ark reported $28.2 million in revenues this quarter, compared with $26 million last year -- 8.6% growth. This was primarily driven by company-wide same-store sales growth of 7%, which should please investors. This same-store sales growth is an important metric in the restaurant business, proving that Ark's concept is still fresh and appealing to consumers.
Net income was $6.6 million this quarter, compared with $916,000 last year. Not all of that growth is due to operations. The company booked $5.2 million (after accounting for taxes) in net income from the sale of two restaurants in Las Vegas. Therefore, to gauge the company's performance, let's look at operating income, which doesn't include taxes, interest income, or income from discontinued operations. By that measure, the company is continuing to improve -- this quarter's operating income was $2.4 million, compared with $1.7 million last year.
So the company's operations are reasonably sound, and management is giving money back to shareholders. Ark's quarterly dividend is $0.35 per share. At today's share price of around $32.50, that is a healthy 4.4% yield, and the company recently paid a special one-time dividend of $3 related to the sale of two Las Vegas restaurants.
My main concern is the company's potential for long-term growth. From 2002 through 2006, the company's revenue grew at less than 3% per year, with the exception of 2004. There isn't a surplus of premium locations where the company can open new restaurants, and the company rarely reuses its concepts. That means each new restaurant needs to develop its own brand identity and hope consumers jump on board. This model isn't as attractive to me as leveraging the existing company brand and business practices to rapidly open new stores and increase sales, which is the strategy employed by companies like Chipotle
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