Letter to Shareholders
Shareholder Letter 2009
Fiscal year 2008 posed many challenges for the economy, our customers, and the restaurant industry. We were not immune to those challenges, or to the impact of two hurricanes and two restaurant fires, resulting in approximately $2.05 million of lost restaurant revenue. However, despite a demanding year in which restaurant revenue decreased by 0.6% or $465,000 to $80.9 million, same-store sales increased 1.5% or $1.15 million. The sales decline would have been much greater were it not for the dedication of our leadership team and the hard work of our employees that enabled our Company to make dramatic and relatively quick recovery from the hurricanes. In fact, we actually experienced some record-breaking sales following the hurricanes during the final months of the fiscal year. This quick recovery from the hurricanes’ impact occurred because we have nurtured a culture of self-disciplined people who take action consistent with our operational standards, and who will go to extreme lengths to fulfill their responsibilities even in extremely challenging circumstances.
For the full fiscal year ended December 2008, reflecting the lost revenue from the hurricanes and fires and the $5.1 million impairment (non-cash) of goodwill, we experienced a net loss of $3,987,011 or $1.22 per diluted share compared with fiscal year 2007 net income of $348,744 or $.10 per diluted share.
Earnings were also impacted by increases in food cost, utility costs and health insurance costs. Commodity prices rose at a faster rate than the rate we felt we could increase our menu prices and still maintain our price value to the customer. Finally, the mandated increase in the Federal minimum wage on July 24, 2008, added approximately $2,000 per week to our payroll cost, requiring our management to make efforts to offset these labor cost increases through added labor efficiencies. General and administrative costs were also scaled back during fiscal year 2008.
For decades, restaurant industry leaders have relied on instinct, experience and intuition to help make strategic decisions that affect the consumer. In 2008 we realized that while those tactics worked well in the past, they were no longer fully relevant in today’s marketplace. So within MRI we initiated new strategies that are value-driven for each concept. The casual dining market has become fiercely competitive, and only the strong will survive the current economic environment. We believe we have the right people, the right price points, and the right processes in place to take full advantage of the value-driven customer.
We continue to be very excited about our Company’s growth plans for Mission Burrito, our fast casual entry into the high growth quick serve burrito category. During 2008, as we continued to develop the concept, we opened four and closed one Mission Burrito restaurant. In fiscal year 2009, we plan to open one company-owned location and work with a licensee to open our first Mission Burrito restaurant outside of Texas. Further, we will focus on the next phase of fine-tuning the Mission Burrito concept. Our goal is to enhance the value package for the marketplace that gives the best return on the investment for you, our shareholders.
Our ultimate goal is to enhance brand equity and build shareholder value by sharing best practices across our portfolio of concepts. With so much uncertainty in today’s world we look cautiously ahead to 2009. Our objectives are to be fiscally responsible by paying down debt, conserving capital, meeting our debt covenants, and operationally continuing to provide great value to our consumers.
Thank you for your continued support and thanks to our dedicated staff of over 2,500 employees for their continuing efforts to drive our future.
Curt Glowacki
President and Chief Executive Officer