Shares of Buca were trading 8% lower this morning after posting disappointing first-quarter results. The company behind the 92 Buca di Beppo eateries posted a loss of $0.13 a share from continuing operations. Sales dipped 3% lower to $62.8 million.
The deep deficit is disheartening for a couple of reasons. Wall Street was only looking for a loss of $0.01 per share. The company also warmed up investors with a profit during last year's fourth quarter.
Yes, Buca had already said that it would post a loss for all of 2007. It also hinted at internal weakness by singling out weak comps at rival Italian chains during its March conference call.
However, let me tell you why this report stinks like moldy parmesan.
CEO Wallace Doolin faults rising staffing costs as margin crushers, as the company began opening for lunch at 52 of its restaurants. "On a positive note," he adds, "I am pleased that we were able to deliver positive comparable restaurant sales for the quarter."
Doolin? Dude! You added an entire daypart to more than half of your restaurants and you are "pleased" to be growing comps by a measly 0.2% for the period? Wasn't there a 2% menu price hike back in January?
Sure, there is weakness everywhere. Bellwether chains like Brinker International
If Buca is opening for lunch and growing its curbside takeout business, how bleak is the scene come dinnertime?
It's not pretty, and those marinara stains on the necktie aren't very becoming.
For more on the places where we love to dine, check out:
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Longtime Fool contributor Rick Munarriz is about a half-hour away from his nearest Buca but he has made that trek twice in the past. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.