990747 Rally's Announces Second Quarter Results

Clearwater, FL - Rally's Hamburgers, Inc. announced results for the twelve weeks ended June 14, 1999.

Net income for the second quarter was $355,000 or $0.01 per share compared to a net loss of $1.6 million or $0.06 per share during the second quarter of the prior year. The prior year net loss included loss provisions related to the closure of certain restaurants in the amount of $854,000. Total revenues were $36.4 million compared to $34.5 million during the prior year. Sales at comparable stores increased by 5.8% during the quarter compared to the second quarter of the prior year. Restaurant level margins were 20.4% of sales compared to 18.1% of sales during the same quarter of the prior year due primarily to the sales increase experienced during the quarter. During the quarter, Rally's recorded a loss on its investment in Checkers Drive-In Restaurants, Inc. in the amount of $450,000 compared to a loss of $198,000 during the prior year.

Year-to-date results for the 24-week period ended June 14, 1999 are as follows:

The net loss for the first two quarters was $1.2 million compared to a net loss of $2.7 million during the same period of the prior year. The prior-year results also include loss provisions of $854,000 related to the closure of certain restaurants. Total revenues were $66.5 million compared with $66.6 million during the same period of the prior year. Comparable store sales were flat during the first two quarters with the second quarter sales increase offsetting the sales decrease realized during the first quarter. Restaurant level margins increased to 18.7% compared with 17.7% during the prior year. The company has experienced reduced food and paper costs due to the transition to a two-patty platform that has enabled the company to increase its margins on lower priced menu items. During the current year, Rally's has recorded a loss on its investment in Checkers Drive-In Restaurants, Inc. in the amount of $884,000 compared to a loss of $240,000 during the prior year.

Jay Gillespie, chief executive officer, commented, “We are pleased to report the first quarterly profit since the second quarter of 1997. We believe that the strong comparable store sales increase during the quarter was the result of our promotion of a double cheeseburger and an advertising message focusing on the freshness of our menu items. During the third quarter, we plan to initiate a test of a limited breakfast menu that we anticipate will lead to our opening during the morning hours in several of our markets.”

The company previously announced the execution of an Agreement and Plan of Merger with Checkers Drive-In Restaurants, Inc. The merger will be voted upon by the shareholders at the annual meeting to be held on August 5, 1999.

Rally's Hamburgers, Inc., along with its franchisees, operates approximately 468 double drive-thru hamburger restaurants primarily in the Midwestern United States.

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