Long Road to Profitability
Shells can't catch a break. The 23-restaurant casual seafood chain hasn't registered a profitable year since 2002, posting a net loss of $4.4 million in 2007. The Tampa, Fla., company says it's working to reduce its expenses and upgrade its image. But the Sunshine State's not-so-sunny economic forecast will make it even harder for the ailing company to reach profitability this year.
About 1.5 million fewer tourists visited Florida last year, the stateâ??s first drop-off in visitors since after Sept. 11, 2001, the stateâ??s public-private tourism agency, Visit Florida, reported early this month. Whatâ??s more, a stagnant real estate market and tightening credit market are forcing Floridians, and all Americans, to curb their dining-out habits.
It's a tough environment for any casual seafood chain, let alone a struggling one, to operate in.
Shells - which debuted in Tampa in 1985 and peaked at 50 restaurants, 32 in Florida and 18 in the Midwest, in 1999 - was hinting at a turnaround. In 2005, the company opened its first new restaurant since 1999 in Clearwater Beach, Fla. In 2006, Shells' same-restaurant sales increased 3.8 percent. And last December, Food & Entertainment Co. of Saudi Arabia paid $1.75 million for the exclusive rights to the Shells brand in 10 to 12 Middle East countries.
But late last month, Shells parted ways with President and CEO Leslie Christon after four-plus years at the helm, a sign that a turnaround isn't, in fact, near.
Interim President Warren Nelson is hopeful Shells is on the road to profitability. But the impending economic downturn in Florida and throughout the country will make the road appear even longer.