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Investors Should Stay Away From Bravo Brio Restaurant Group

William Bias profile picture
William Bias


  • Bravo Brio experienced fundamental degradation in 2014.
  • Bravo Brio has a frighteningly low amount of cash on its latest balance sheet.
  • Bravo Brio is losing customers in a highly competitive environment.

On Feb. 24, Italian restaurant chain Bravo Brio Restaurant Group (NASDAQ: NASDAQ:BBRG) came out with its 2014 earnings announcement. The company didn't do so well. However, it did beat the Wall Street expectations game. The company's stock was up roughly 3% the day after the earnings announcement. Let's take a look to see how well Bravo Brio Restaurant Group fared.

Lousy numbers

In FY 2014, Bravo Brio saw its revenue decline 0.7% year-over-year. Its net income increased due to the absence of impairment charges; however, when this gets backed out net income actually declined 26%.

Bravo Brio sits on a scary balance sheet. Its $427 thousand in cash equated to a meager 0.8% of stockholder's equity at the end of FY 2014. This compares unfavorably to the $7.6 million in cash it had at the end of FY 2013 which equated to 7% of stockholder's equity. Both fell short of my personal threshold of 20% or more. Moreover, Bravo Brio tripled its long-term debt in 2014 going to 104% vs. 13% in 2013. I like to see companies with long-term debt to equity ratios of 50% or less. However, in fairness to the company times interest earned expanded to 11.5 in 2014 vs. 7.4 in 2013.

Customers are shying away

The numbers in the earnings announcement indicate that customers aren't frequenting Bravo Brio's locations as much. Same store sales declined 6% at Bravo and 5% at Brio in 2014. This is partially attributable to a decline in customer traffic which dropped by 4% in its 4th quarter. This gives indication that customers aren't happy with their experiences and are going elsewhere. Also, the company location count declined by three in 2014.

Management makes moves to improve

The restaurant industry is highly competitive with many choices for the consumer. Specifically, consumers are showing

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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