AFC Enterprises, Inc. (Nasdaq: AFCE) today announced limited operating data for the third quarter ended October 6, 2002. The company had announced earlier in the day that it was withholding complete financial data for third quarter pending the resolution of accounting issues related to its Seattle Coffee Company brand.
Third quarter of 2002 versus third quarter of 2001 highlights include:
Domestic Comps by Brand for Third Quarter 2002
AFC said Church’s and Popeyes were affected by increased competition within the QSR sector, the impact of a slowing economic environment and strong prior year comparable store sales. Cinnabon and Seattle Coffee Company were down as a result of lower volume in captive venues, which consist primarily of airport venues where increased security has reduced foot traffic, and lower traffic and spending in mall locations.
The AFC system opened 104 restaurants, bakeries and cafes, including 4 company-operated units, during the third quarter of 2002, compared to 95 total system-wide openings in the third quarter of 2001.
Full financial results have been delayed due to accounting issues related to Seattle Coffee Company. In a “we want to get it right” statement, AFC said accounting adjustments were related to a write down of inventory and an impairment of its leasehold improvements. The total amount is expected to range from $1.2 million to $2.1 million after tax, with $1.2 million of the anticipated adjustment related to the write-down of inventory, and any remaining amount attributable to the possible impairment of leasehold improvements.
The delay in announcing full results raised a lot of concern among analysts. The fact that this is the second such delay in reporting this year does little to support investor confidence.
AFC Enterprises, Inc. is the franchisor and operator of 3,970 restaurants, bakeries and cafes in the United States, Puerto Rico and 30 foreign countries under the brand names Church’s Chicken(TM), Popeyes® Chicken & Biscuits, Cinnabon®, Seattle’s Best Coffee® and Torrefazione Italia® Coffee.