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Aug 9, 2019

Recipe Unlimited's Q2 sales hit by slow start to patio season, rivals' discounts

Recipe Unlimited Corp.

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VAUGHAN, Ont. -- Shares of Recipe Unlimited Corp. (RECP.TO) are down in response to weaker quarterly results despite management committing to pursue more strategic acquisitions and return more capital to its shareholders through stock buybacks and dividends.

The company -- which owns a wide range of restaurant brands including Swiss Chalet, Harvey's, East Side Mario's, Kelseys and Milestones -- made the commitment as it reported lower second-quarter sales and profit.

Total system sales at all locations dropped to $871.3 million from $874.2 million in last year's second quarter -- despite having five additional restaurants -- due to a slow start to the patio season and competitor discounting.

Recipe Unlimited's gross revenue, generated by sales at its own restaurants and fees received for services provided to franchise restaurants, increased to $311.9 million from $309.5 million as five locations were added to its portfolio.

Net income was $16.6 million (26 cents per diluted share), down from $19.5 million (30 cents), while adjusted net earnings fell to $23.5 million (37 cents per diluted share) from $24.4 million (38 cents).

Analysts had estimated $337.98 million of revenue and 35 cents per share of adjusted earnings, according to financial markets data firm Refinitiv.

Recipe's shares were down $1.54 or 5.7 per cent at $25.31 in morning trading on the Toronto Stock Exchange.