In response, the company cut expenses, opened fewer stores and recently added to its menu such value combinations as two meals for $14.99 at the company's O'Charley's restaurants.
The strategy has shown modest results. O'Charley's saw a slight increase in the number of diners in the fourth quarter. But same-store sales for October, November and December were down more than 7 percent, and diners spent 7.5 percent less on average when they came to eat.
Revenue for the whole company — which includes a struggling Stoney River Legendary Steaks concept and the Ninety Nine Restaurants chain — fell
6.9 percent to $188.9 million in the fourth quarter, indicating there's going to be tough sledding ahead.
Warne, a former concept president of O'Charley's flagship restaurants, discussed the company's strategy and the challenges of being CEO with Tennessean reporter Wendy Lee.
You started as CEO in the midst of this downturn. What has been your greatest challenge?
I think sales have got to be the No. 1 focus. When you're running a company that is dependent on discretionary spending in this environment, that's obviously a big challenge. To drive profitable sales has been our main objective. It's a very delicate line that we try to walk … (in) trying to drive guest counts and making sure we have profit.
What do you think of the level of discounting in the restaurant business these days?
We really characterize the discount environment in several big buckets. One is "same-for-less," taking the existing menu items and selling them at a lower price point or bundling appetizers and desserts with entrees and selling them at a discount. Same-for-less is a transfer of value literally from the shareholders to your guests … coming at the expense of the shareholders.
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