TO OUR STOCKHOLDERS
I would like to welcome the many new stockholders who have
joined us during 1964. Their expression oi confidence and
continuing support of Hot Shoppes will mean much to our
Our sales have reached a record high of $84,726,000 in the
fiscal year ended July 26, 1964. The increase of $10,129,000
or 13.6 percent over the previous year, represents an 84 percent growth in the last Eve years. Net income after taxes foi
1964 increased $731,000, or 31 percent, to a record $3,110,000,
which represents a 68 percent growth in the last five years.
Profit margins improved significantly on our higher sales, and
the return on stockholders' net worth has also increased.
Earnings per share are $1.48 in 1964 versus $1.13 last year,
computed on the 2,099,920 shares presently outstanding. Our
annual 4 percent stock dividend was equivalent to $.96 per
share on the record date, April 17, 1964.
Net working capital of $10.2 million exceeds last year by over
a million dollars. We have maintained substantial cash reserves in order to finance our expansion program on a current
basis. Cash flow from earnings, depreciation and deferred
taxes was $6.1 million, equivalent to $2.91 per share. Stockholders' investment increased $3.1 million for the year and at
year-end is $21.8 million, equivalent to $10.40 per share. We
purchased 895 common shares for the treasury to be held for
deferred stock bonus awards. Additional shares will be purchased next year for the same purpose.
The 17 units opened in 1964, which brought the number of
units in operation to 120, include
Cafeterias Newport News, Virginia
Cleveland Heights, Ohio
New Smithsonian Building, Washington, D.C.
Restaurants Cleveland Heights, Ohio-Sirloin & Saddle
Salt Lake City, Utah-Char-Broilers
Hyattsville, Maryland- Char-Broilers
Sunshine Parkway Four Restaurants
Delaware Turnpike One cafeteria
One coffee shop
Institutional Feeding General Electric
Pan American Airways
Two luxury apartments in Washington, D.C.
Holton Arms Girls School, Bethesda, Md.
Airline Right kitchen, O'Hare Field, Chicago
We support an aggressive real estate and development department which is pushing our expansion on a very selective basis.
Leases have been signed on ten new locations for 1964-65 and
we are in the process of finalizing others. During the month of
August, which is in the new fiscal year, we opened a cafeteria
in Arlington, Virginia, and one in Washington and a Sirloin
& Saddle restaurant in Washington, D.C.
The rapid growth enjoyed by Hot Shoppes requires a strong
and capable management. In the past year, our procurement
department has been further strengthened by the appointment of a new director, General Merrill L. Tribe (ret.), former
procurement head of the Quartermaster Corps, Department
of the Army, and more recently head of the Army's food
research center at Natick, Massachusetts. Our institutional
feeding department has been reorganized under the management of G. Michael Hostage, and we anticipate considerable
expansion in this area during the next Eve years. Rapid development is also expected in our motor hotel business under
the able leadership of James E. Durbin, executive vice president of our Marriott Motor Hotel Division. We are building
a magnificent 500-room motor hotel in Atlanta, Georgia, and
starting another motor hotel in Saddle Brook, New Jersey, at
the intersection of Interstate 80 and the Garden State Parkway. Many inquiries are being received by us for management
of motor hotel operations on a fee basis as well as for new
motor hotel sites.
General H. H. Shaller, head of our Hot Shoppes Caterers
(airline feeding division), is developing new outlets and adding
new airline customers in the growing and dynamic airline business. Under Charles Baker, our Cafeteria Division continues to
render a real service in new shopping centers, and this, we
anticipate, will be one of our important areas for profitable
expansion in the future. With the increased tourist traffic
through the Washington area as a result of the World's Fair,
our Service Restaurant Division under the able leadership of
T. Lawson Combs has had a record year.
In the coming year, Woodrow Marriott's Restaurant Division
is opening a new pilot model Hot Shoppe Carry-Out Service
to cater to the family business now patronizing 150 hamburger restaurants. Ours will be somewhat of a different approach with a new menu for this type of operation. The
several different operating divisions of Hot Shoppes, as outlined in this report, enable your company to pursue an active
diversiEed expansion program. We know of no other company in the restaurant-motor hotel industry that can claim
such a wide diversification.
Expansion of our business as well as growth in our sales of
existing operations will require very special attention to economies in our operations, better equipment, and automation
for more production per employee.
Our young team of executives under the able leadership of
J. Willard Marriott, Jr., is extremely enthusiastic about the
future and is now planning for ten years of continued growth
and improvement in all areas of our operations.
I am extremely grateful for the loyal support of our management team, our stockholders, our employees, and our customers, which has made our progress possible.
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