Diversified Restaurants (DFRH) stock tumbles following financial report

Posted on: Thursday, April 14th, 2011
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Shares of restaurant franchiser Diversified Restaurant Holdings, Inc. (OTCBB: DFRH) took a tumble in early afternoon trading on Thursday, losing 92.4 percent, after announcing financial results for its fiscal year, which ended December 26, 2010. Share prices dissolved $4.85 to come in at forty cents, just off its 52-week low of twenty-five cents, set in late May 2010.

The Company reported revenue for its 2010 year of $45.2 million, 8.4 percent above prior-year revenue of $41.8 million. Net income came in at $535,035, down 55.2 percent from the prior year’s net income of nearly $1.2 million.

Diversified President and CEO Michael Ansley commented on the financials news, stating, “2010 was a very successful year for our Company. With the acquisition of nine restaurants, opening of four new restaurants, and development of three which opened in early 2011, we continue to prove our ability to increase our top line and generate the cash needed to help with the continued expansion of both our Bagger Dave’s and BWW concepts.”

The 55.2 percent decline in net income was primarily due to new restaurant development expenses of $654,764, mainly pre-opening costs, required to open seven new restaurants, four of which opened in 2010 and three of which opened in February of 2011.

Ansley continued, “Despite adverse economic conditions, we were confident to push forward with our growth plan based on our belief in the brands, our choice of current locations, and our opportunity to take advantage of a favorable real estate market for new locations.”

Southfield, Michigan-based Diversified owns and operates its own unique, full-service, ultra-casual restaurant and bar concept, Bagger Dave’s Legendary Burger Tavern®, which was launched in January 2008. Currently, there are four locations in the state of Michigan. DRH is approved to franchise Bagger Dave’s in the states of Michigan, Indiana, Ohio, and Illinois and plans to file for rights to franchise in the states of Wisconsin and Kentucky.

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Category: OTCBB, Penny Stocks
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