VICORP Restaurants, Inc.



	DENVER, CO – August 23, 2006 VICORP Restaurants, Inc. (“the Company”), today announced financial results for its Fiscal 2006 third quarter ended July 13, 2006. DENVER, CO (August 23, 2006) – VICORP Restaurants, Inc., today announced financial results for its fiscal 2006 third quarter ended July 13, 2006. Net revenues for the third quarter of 2006 were $105.6 million, a 9.0% increase from net revenues of $96.9 million reported in the third quarter of 2005. The increase in the net revenue resulted from sales at the 26 new restaurants, net of closures, opened or acquired since the end of the third quarter of fiscal 2005. Comparable restaurant sales for the third quarter of 2006 declined 3.1% versus the previous year’s third quarter. Comparable restaurant sales for Village Inn and Bakers Square decreased 2.8% and 3.4%, respectively. The net loss for the third quarter of 2006 was $0.6 million versus net income of $1.3 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 third quarter of 2006 was $11.3 million versus $12.7 million for the third quarter of 2005. Operating profit was $5.4 million in the third quarter of 2006 versus $7.7 million in the third quarter of 2005, principally due to lower restaurant operating contribution and to the reduction of a litigation settlement reserve in the third quarter of 2005. Food cost as a percentage of restaurant sales declined 0.6 pt in the third 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 .7 pt. to 33.4% in the third quarter of 2006 versus 32.7% in the comparable quarter of 2005. Percentage labor costs increased partially due to negative leverage associated with year-over-year store-level wage increases during a quarter of same store sales decline, including higher average hourly wage in certain regions with increased minimum wage. Other operating expenses increased by 2.7 pts as a percentage of restaurant sales primarily due to higher percentage occupancy, utility and pre-opening costs incurred in the fiscal 2006 third quarter versus that of the comparable quarter of 2005. The utility cost increase was predominately rate-related, whereas the increase in preopening costs of $0.1 million versus the previous year’s third quarter was a result of increased new restaurant opening activity in the second and third quarters of 2006 versus the comparable period of last year. The increase in percentage occupancy costs in the third 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 third quarter. Our same store sales results are consistent with many other restaurant companies in the family and casual dining segments, which are being impacted by fewer visits by customers due to higher gas prices, climbing interest rates, higher credit card payments and a weakening real estate market. We are focused on various efforts to drive traffic in this environment including new feature menu offerings, various value initiatives and a strong emphasis on store level execution. “Nonetheless, we are pleased with the overall results to date of our new store strategy. During the third quarter we opened 5 new restaurants, bringing the total for fiscal 2006 to 17 new Village Inn restaurants. In addition, in the first three quarters of fiscal 2006, we acquired 5 Village Inn franchise restaurants in the Tulsa, Oklahoma market. In fiscal 2006, we plan to open or acquire between 26 and 28 restaurants, exclusively in the Village Inn brand.” Year-to-date through the third quarter net revenues were $324.2 million in 2006, an increase of 4.6% over the $309.8 million reported in 2005, primarily due to the incremental sales at the 26 net newly opened or acquired restaurants since the end of the third quarter of fiscal 2005 as well as higher VICOM third-party pie sales, partially offset by the impact of having seven fewer operating days in the 2006 year-to-date period versus that of the 2005 period. Comparable restaurant sales for fiscal 2006 declined 1.8% versus fiscal 2005. Comparable restaurant sales for Village Inn decreased 1.8%, while Bakers Square comparable restaurant sales decreased 1.7%. The net loss year-to-date through the third quarter 2006 was $1.8 million versus net income in the comparable period in 2005 of $4.0 million due principally to lower operating margin and the seven fewer operating days in the 2006 year-to-date period. Adjusted EBITDA was $35.0 million for the first three quarters of 2006, versus $39.7 million in the first three quarters 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 third 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 Wednesday, August 23, 2006 at 1:00 p.m. Eastern Standard Time. The conference call can be accessed by dialing 1-800-289-0517, Conference I.D. number 9630343. A recording of the conference call will be available after 7:00 p.m. Eastern Standard Time on August 23, 2006 and can be accessed by dialing 1-888-203-1112 and entering Passcode 9630343. 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 July 13, 2006, VICORP, founded in 1958, has 400 restaurants in 25 states, consisting of 305 company-operated restaurants and 95 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.