The leaders of J. Alexander’s Holdings say they can save more than $500,000 in staff and real estate expenses after combing through their operations during the COVID-19 pandemic.
Providing perspective on the second-quarter results of J. Alexander’s, President and CEO Mark Parkey said his team in late June laid off six people at its West End headquarters. Those cuts — out of a total headquarters team of 53 at the end of last year — have led the J. Alexander’s team to reassess their options for office space. J. Alexander’s has long leased space on the second floor of the building at 3401 West End Ave.
Parker noted his team’s cost-cutting efforts on the heels of J. Alexander’s reporting a second-quarter net loss of nearly $7 million on sales of $27.6 million. In the second quarter of last year, those numbers were a profit of $2.2 million and $62.2 million, respectively. The company was able to reopen all its 46 restaurants by the second week of June and saw sales rebound nicely to about 70 percent of 2019 levels during June after cratering to about 20 percent of prior-year numbers in April.
And while Father’s Day weekend produced sales that were 88 percent of 2019’s corresponding numbers, the measures taken by a number of states and cities to pause or even rollback reopening strategies in the face of continued COVID spread has hobbled J. Alexander’s continued rebound. July came in down nearly 26 percent versus the mark of July 2019, only a slight improvement from June’s 28 percent.
Still, the sales that have returned along with the cost savings being generated have reduced J. Alexander’s weekly cash burn rate to between $325,000 and $375,000 from $577,000 in the second quarter. Parker and his team are forecasting that number to be lower still in Q4 and say J. Alexander’s — which has negotiated six months of loan principal deferrals as well as up to $15 million in revolving credit — has enough liquidity for the rest of the year.
“We’ve acknowledged from the beginning that there will be winners and losers on the other side of the pandemic and our goal is to be among the winners,” Parkey said. “Barring a major reversal of the progress achieved in reopening the economies of the markets we serve, I am confident we are on track to achieve that goal.”
Shares of J. Alexander’s (Ticker: JAX) were up slightly to $4.32 midday Wednesday. They began the year around $10 and bottomed out in March at about $3.