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Bravo Brio Restaurant Group's Earnings: Fewer Customers Doesn't Bode Well For Shareholders

William Bias profile picture
William Bias


  • Bravo Brio Restaurant Group’s year-to-date revenue and net income fell due to fewer customers.
  • Bravo Brio Restaurant Group saw more free cash flow due to a rightful slowdown in expansion.
  • Bravo Brio wants to go in debt to buy back shares which will further compromise its balance sheet.

On Nov. 7, Italian restaurant chain Bravo Brio Restaurant Group (NASDAQ: NASDAQ:BBRG) came out with its Q3 2014 quarterly statement which followed up with more detail on its earnings announcement released Nov. 6. The company is not doing so well. Here's why.

Losing ground in a competitive marketplace

Bravo Brio Restaurant Group saw its year-to-date revenue decline 1% due to intense discounting by the company's competitors. The company saw its year-to-date comparable sales decline 5.3%. Guest count declined 6.8% which is a bad thing. Fewer customers means fewer opportunities for sales and to build rapport which enhances its brands over the long-term. The company operates under two brands-Bravo and Brio-which saw year-to-date same store sales declines of 6% and 5% respectively. This means the entire company is suffering which doesn't bode well for the investor. The decline in revenue filtered down to net income which has decreased 22% vs. the same time last year.

Free cash flow increased

Incredibly, Bravo Brio Restaurant Group saw its free cash flow increase 3,102% going from $225 thousand this time last year to $7.2 million this year. However, this mostly occurred from sources other than profitability such as favorable accruals within its assets and liabilities as well as lower capital expenditures due to lower expansion and the timing of spending on construction projects. The company has opened two restaurants this year vs. four the same time last year. This represents a wise move considering its customer traffic woes.

Balance sheet lacks cash

Last quarter Bravo Brio Restaurant Group's cash amounted to a scary $346 thousand which equated to a microscopic 0.34% of stockholder's equity. Personally, I like to see a company holding cash amounting to 20% or more of stockholder's equity to get it through tough times. Its cash balance represents a small amount compared to its $14.4 million in long-term

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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