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Carrols Restaurant posts loss on acquisition costs

SYRACUSE, N.Y. (AP) -- Restaurant operator Carrols Restaurant Group Inc. said Tuesday that it posted a loss in the second quarter as a result of one-time costs, including charges related to its acquisition of 278 Burger King restaurants.

The Syracuse, N.Y.-based company, which is Burger King's biggest franchisee, said it lost $250,000, or 1 cent per share, for the three months ended July 1. That's compared with a profit of $5.5 million, or 25 cents per share, in the year-ago period.

Excluding discontinued operations — the company spun off its Fiesta Restaurant Group in May — Carrols said it lost 4 cents per share from continuing operations.

Carrols in March announced a $15.8 million deal to buy Burger King restaurants in Ohio, Indiana, Kentucky, Pennsylvania, North Carolina, South Carolina and Virginia. The company noted Tuesday that its operating performance should improve once its new Burger King locations are fully integrated.

As of July 1, Carrols owned 574 Burger King restaurants.

Sales at restaurants open at least a year rose 8.8 percent during the period, the company said. The metric is a key gauge because it strips out the impact of newly acquired or sold locations.

The boost was driven by a combination of higher customer traffic as well as higher prices that led customers to spend more per visit. Carrols noted that Burger King's menu enhancements and an advertising campaign launched in April seem to be resonating with customers.

Total sales for the quarter rose to $122.1 million from $88.6 million in the year-ago period, helped by the acquisition.

Carrols said sales at restaurants open at least a year are expected to increase 4 percent to 6 percent this year, while commodity costs are expected to increase 3 percent to 4 percent.

Shares of Carrols were up 6 cents at $5.61 in afternoon trading.