Hooters turns profit in second quarter

By Liz Benston

Friday, Aug. 15, 2008 | 10:39 a.m.

Cost cutting moves, including cutting staff in restaurants, helped shore up losses at the Hooters Casino Hotel, where performance has suffered as the company's brand has fizzled with gamblers and business travelers.

The company, 155 East Tropicana LLC, reported a profit of $2.4 million in the second quarter compared to a loss of $4.2 million the same period a year ago. Management said cost reductions, which began in the fourth quarter of last year, are expected to continue into future quarters.

Management said the company, which has publicly traded bonds, has enough cash to operate comfortably and make debt payments for at least the next 12 months. The company received $5.5 million in deposits and extension fees after a prospective buyer, Hedwigs Las Vegas Top Tier, terminated a purchase agreement to buy the property.

Earnings before interest, taxes, depreciation and amortization rose 68 percent to $2.3 million in the second quarter but operating revenue fell 6 percent, primarily because of falling room rates.

Food, beverage and entertainment revenue fell $500,000, partly because of a 5 percent decline in average check.

Hotel and related revenue fell $700,000 as average room rates fell to $69 in the second quarter. Occupancy rates increased to 98 percent from 95 percent a year ago, primarily because of improved sales through wholesalers, Internet providers and hotel group sales.

Casino revenue rose $400,000 because of promotions that brought in more customers.