VAUGHAN, Ont. — The parent company of Swiss Chalet and other chains saw a more than $100-million drop in sales in its most recent quarter due to the COVID-19 pandemic, which prompted Recipe Unlimited Corp. to suspend its quarterly dividend for the year.
The temporary suspension includes the first-quarter dividend payment, which was scheduled to be paid June 15, the company said in a statement released late Thursday.
In early March, Recipe raised its dividend five per cent to 11.77 cents per share, but now feels it is prudent to conserve cash flow until it can better understand the medium- and long-term business impacts of the coronavirus shutdown.
In Canada, 42 per cent of the company’s restaurants were completely closed mid-March, the company said in a separate statement along with its first-quarter financial results released after markets closed Thursday.
The remaining 58 per cent are open, but serving takeout and delivery only.
In the 13 weeks ending March 29, Recipe saw system sales fall by $103.5 million, or 12.2 per cent, to $747.2 million with $109.5 million due to the impact of COVID-19.
Recipe saw a slowdown in sales in the first half of March before governments mandated restaurant closures in the latter half of the month, it said.
Its gross revenue fell to $269.9 million, with $37.5 million as a result of the coronavirus, compared to $304.6 million in the same quarter the previous year.
The Vaughan, Ont.-based company saw a net loss of $41.2 million for the quarter ended March 29 with $71.5 million as a result of COVID-19 — that’s down from net earnings of $22.7 in the same period the previous year.
Adjusted earnings were $7.3 million or 13 cents per diluted share, down from $18.3 million or 29 cents per share a year earlier.
Recipe was expected to earn 29 cents per share in adjusted profits on $271 million of revenues, according to financial markets data firm Refinitiv.
Recipe opened a so-called Ultimate Kitchen in Toronto during the quarter. The concept delivers meals from six of Recipe’s brands, including Swiss Chalet and New York Fries, and allows customers to select items from various chains on one order. The company plans to open four more of these this year across Toronto, Calgary and Montreal.
The impact of COVID-19 is material to the company, said Frank Hennessey, chief executive, during the company’s annual general meeting of shareholders Friday.
The company continues to find ways to reduce costs and eliminate discretionary spending, he said, but “the best way back is to reopen our dining rooms.”
Recipe realizes the ramp-up to reopening will be slow at first, he said, noting the importance of having consumer trust.
The company has adjusted menus and floor plans in anticipation of new restrictions for reopening, he said.
Recipe’s shares lost 63 cents or 5.25 per cent at $11.37 in afternoon trading on the Toronto Stock Exchange.
This report by The Canadian Press was first published May 8, 2020.
Companies in this story: (TSX:RECP)
The Canadian Press