SOURCE: Meritage Hospitality Group Inc.

February 09, 2007 08:41 ET

Meritage Reports Settlement of O'Charley's Litigation

GRAND RAPIDS, MI -- (MARKET WIRE) -- February 9, 2007 -- Meritage Hospitality Group Inc. (PINKSHEETS: MHGP), one of the nation's premier hospitality companies and only publicly traded Wendy's & O'Charley's restaurant franchisee, today announced it settled the lawsuit filed last year against O'Charley's Inc., the franchisor of the Company's O'Charley's of Michigan business segment. Under terms of the agreement, which are confidential, Meritage will continue operating its O'Charley's restaurants in Michigan and will also continue to evaluate expansion of the brand at new locations that have solid demographic profiles and population growth.

Robert E. Schermer Jr., the Company's CEO, stated, "We believe this settlement is a 'win-win' for Meritage, O'Charley's Inc. and all stakeholders in the O'Charley's restaurant system. One of Meritage's main focuses is to strengthen the O'Charley's brand presence in Michigan so that more people can discover O'Charley's high-quality food and customer service at casual dining prices."

O'Charley's Inc. is a leading multi-concept restaurant company that operates or franchises a total of 362 restaurants under three brands: O'Charley's, Ninety Nine Restaurants and Stoney River Legendary Steaks. The O'Charley's concept includes 238 restaurants in 18 states in the Southeast and Midwest, including the five franchised restaurants in Michigan. O'Charley's is best known for the freshness and homemade quality of its food, including several specialty items such as hand-cut and aged steaks, a variety of seafood and chicken, freshly baked yeast rolls, and fresh salads with special-recipe salad dressings.

Meritage is one of the nation's premier franchise operators, currently operating 53 restaurants in two brands; Wendy's in the QSR Segment and O'Charley's in the Casual Dining Segment. Headquartered in Grand Rapids, Michigan, Meritage has approximately 2,000 employees. In addition, the Company has announced plans to engage in the development of waterfront hospitality development opportunities on the island of Eleuthera, Bahamas. The development is subject to permits, the economic feasibility of the project and various conditions.


Certain statements contained in this news release that are not historical facts constitute forward-looking statements which may be identified by words such as "estimates," "anticipates," "projects," "plans," "expects," "believes," "should," and similar expressions, and by the context in which they are used. Such statements are based only upon current expectations of the Company. Any forward-looking statement speaks only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Meritage undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made.

Statements concerning expected financial performance, business strategies and action which Meritage intends to pursue to achieve its strategic objectives, constitute forward-looking information. Implementation of these strategies and achievement of such financial performance are subject to numerous conditions, uncertainties and risk factors, which could cause actual performance to differ materially from the forward-looking statements. These include, without limitation: competition; changes in the national or local economy; changes in consumer tastes and eating habits; concerns about the nutritional quality of our restaurant menu items; concerns about consumption of beef or other menu items due to diseases including E. coli, hepatitis, and mad cow; promotions and price discounting by competitors; severe weather; changes in travel patterns; road construction; demographic trends; the cost of food, labor and energy; the availability and cost of suitable restaurant sites; the ability to finance expansion; interest rates; insurance costs; the availability of adequate managers and hourly-paid employees; directives issued by the franchisor regarding operations and menu pricing; the general reputation of Meritage's and its franchisors' restaurants; the relationship between Meritage and its franchisors; legal claims; and the recurring need for renovation and capital improvements. In addition, Meritage's expansion into the casual dining restaurant segment as a franchisee of O'Charley's will subject Meritage to additional risks including, without limitation, unanticipated expenses or difficulties in securing market acceptance of the O'Charley's restaurant brand, the ability of our management and infrastructure to successfully implement the O'Charley's development plan in Michigan, and our limited experience in the casual dining segment. Also, Meritage is subject to extensive government regulations relating to, among other things, zoning, public health, sanitation, alcoholic beverage control, environment, food preparation, minimum and overtime wages and tips, employment of minors, citizenship requirements, working conditions, and the operation of its restaurants. Because Meritage's operations are concentrated in certain areas of Michigan, a marked decline in Michigan's economy, or in the local economies where our restaurants are located, could adversely affect our operations.

Contact Information

    James R. Saalfeld
    Vice President & Chief Administration Officer
    Meritage Hospitality Group Inc.
    616/776-2600 x 1020