VICORP Restaurants, Inc.



	DENVER, CO – June 5, 2006 VICORP Restaurants, Inc. Announces Fiscal Second Quarter 2006 Results DENVER, CO (June 5, 2006) – VICORP Restaurants, Inc., today announced financial results for its fiscal 2006 second quarter ended April 20, 2006. Net revenues for the second quarter of 2006 were $106.3 million, a 9.0% increase from net revenues of $97.5 million reported in the second quarter of 2005. The increase in the net revenue resulted from sales at the 26 new restaurants, net of closures, opened since the end of the second quarter of fiscal 2005. Comparable restaurant sales for the second quarter of 2006 declined 2.2% versus the previous year’s second quarter. Comparable restaurant sales for Village Inn and Bakers Square decreased 2.6% and 1.7%, respectively. The net loss for the second quarter of 2006 was $1.3 million versus a net income of $0.5 million in the comparable period of 2005. Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA” – as calculated in the accompanying Consolidated Statements of Adjusted EBITDA and Adjusted EBITDAR and discussed further below under the caption entitled “Factors Affecting Comparability and Non-GAAP Financial Information”) for the second quarter of 2006 was $11.1 million versus $11.8 million for the second quarter of 2005. Operating profit was $4.8 million in the second quarter of 2006 versus $6.8 million in the second quarter of 2005, principally due to lower restaurant operating contribution, non-cash asset impairments recognized in the quarter and somewhat higher net manufacturing loss on outside sales at VICOM. Food cost as a percentage of restaurant sales declined 0.9 pt in the second quarter of 2006 versus the comparable period of 2005, as increased pricing more than offset increases in commodity costs on a percentage basis. Labor costs as a percentage of restaurant sales increased to 34.0% in the second quarter of 2006 versus 32.5% in the comparable quarter of 2005. Labor costs increased as a percentage of restaurant sales partially due to negative leverage associated with year-over-year store-level wage increases during a quarter of same store sales decline, as well as higher percentage labor costs in the significant number of restaurants opened over recent quarters. Other operating expenses increased by 1.7 pts as a percentage of restaurant sales primarily due to higher percentage pre-opening and occupancy costs incurred in the fiscal 2006 second quarter versus that of the comparable quarter of 2005. The increase in preopening costs was a result of increased new restaurant opening activity in the second quarter of 2006 and early in 2006 versus the comparable period of last year. The increase in percentage occupancy costs in the second quarter of 2006 versus the comparable period of 2005 was largely a result of negative leverage associated with normal increases in occupancy costs relative to the decline in comparable restaurant sales, as well as higher percentage occupancy costs associated with the immature newly opened restaurants. Debra Koenig, CEO, commented, “We are disappointed with the comparable sales declines in both of our concepts in the second quarter. The weakness is consistent with current casual dining trends, which are being impacted by lower consumer spending due to higher gas prices. Nonetheless, we are pleased with the overall results to date of our new store strategy. During the second quarter, we opened 6 new restaurants, bringing the total for fiscal 2006 to 12 new Village Inn restaurants. In addition, in the first half of fiscal 2006, we acquired 4 Village Inn franchise restaurants in the Tulsa, Oklahoma market. In fiscal 2006, we plan to open or acquire between 29 and 34 restaurants, predominantly under the Village Inn brand.” "To strengthen the focus on the Bakers Square and Village Inn brands, we made organizational changes in early 2006. We appointed Jeff Guido as President of the Village Inn brand and initiated a search for a Bakers Square President. I am pleased to report that Tim Casey has joined VICORP as President of the Bakers Square Restaurants. Tim's business credentials are primarily multi-unit retail, including Southland Corporation and, more recently, Starbucks. We look forward to Tim's infusion of energy combined with his business savvy in leading Bakers Square to capitalize on the future.” Year-to-date through the second quarter net revenues were $218.6 million in 2006, an increase of 2.7% over the $212.9 million reported in 2005, primarily due to the incremental sales at the 26 net newly opened restaurants since the end of the second quarter of fiscal 2005. Comparable restaurant sales for fiscal 2006 declined 1.1% versus fiscal 2005. Comparable restaurant sales for Village Inn decreased 1.2%, while Bakers Square comparable restaurant sales decreased 1.0%. Net loss for the year-to-date through the second quarter 2006 was $1.2 million versus net income in the comparable period in 2005 of $2.7million. Adjusted EBITDA was $23.7 million for the first half of 2006, versus $27.0 million in the first half of 2005. Factors Affecting Comparability and Non-GAAP Financial Information Our fiscal year is comprised of 52 or 53 weeks divided into four fiscal quarters of 12 or 13, 12, 12, and 16 weeks. Our second quarter of both fiscal 2006 and fiscal 2005 was comprised of 12 weeks, or 84 days. Fiscal 2006 will consist of 52 weeks, or 364 total days, while fiscal 2005 consisted of 53 weeks, or 371 total days. We believe that, in addition to other financial measures, earnings before interest, taxes, depreciation and amortization, “EBITDA”, “Adjusted EBITDA” and “Adjusted EBITDAR” are appropriate indicators to assist in the evaluation of our operating performance because they provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital needs and are used by securities analysts and others in evaluating companies in our industry. However, “EBITDA”, “Adjusted EBITDA” and “Adjusted EBITDAR” are not prescribed terms under accounting principles generally accepted in the United States, do not directly correlate to cash provided by or used in operating activities and should not be considered in isolation, nor as an alternative to more meaningful measures of performance determined in accordance with accounting principles generally accepted in the United States. Because “EBITDA”, “Adjusted EBITDA” and “Adjusted EBITDAR” are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures of other companies. Refer to the accompanying Consolidated Statements of Adjusted EBITDA and Adjusted EBITDAR for a reconciliation of these non-GAAP financial performance measures to the GAAP measures and other information. Conference Call Information VICORP will conduct a conference call on Tuesday, June 6, 2006, at 1:00 p.m. Eastern Standard Time. The conference call can be accessed by dialing 1-800-967-7144, Conference I.D. Number 8547508. A recording of the conference call will be available after 7:00 p.m. Eastern Standard Time on June 6, 2006, and can be accessed by dialing 1-888-203-1112, Conference I.D. Number 8547508. About VICORP Restaurants, Inc. VICORP Restaurants, Inc. operates family-dining restaurants under two proven and well-recognized brands, Village Inn and Bakers Square. As of April 20, 2006, VICORP, founded in 1958, has 396 restaurants in 26 states, consisting of 300 company-operated restaurants and 96 franchised restaurants. Village Inn is known for serving fresh breakfast items throughout the day, and we have also successfully leveraged its strong breakfast heritage to offer traditional American fare for lunch and dinner. Bakers Square offers delicious food for breakfast, lunch and dinner complimented by its signature pies, including dozens of varieties of multi-layer specialty pies made from premium ingredients. Our headquarters are located at 400 West 48th Avenue, Denver, Colorado 80216. Safe Harbor Statement This announcement includes statements that are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. See the "Risk Factors" section of our Annual Report on Form 10-K for the year ended November 3, 2005, filed with the Securities and Exchange Commission, for a discussion of some of the factors that may affect the Company and its operations. Such factors include the following: competitive pressures within the restaurant industry; changes in consumer preferences; the level of success of our operating strategy and growth initiatives; the level of our indebtedness and the terms and availability of capital; fluctuations in commodity prices; changes in economic conditions; government regulation; litigation; and seasonality and weather conditions. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Any forward-looking statements which we make in this announcement speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. # # # VICORP Restaurants, Inc., Village Inn and Bakers Square are either registered trademarks or trademarks of VICORP Restaurants, Inc., or its subsidiaries in the United States and/or other countries. Contact: Anthony J. Carroll Chief Financial Officer VICORP Restaurants, Inc. Direct: (303) 672-2266 Email: tony.carroll@vicorpinc.com View the complete financial statement online.