After two years of lackluster performance and a stock price that is 80 percent below what it was in the mid-1990s with little chance of recovering, Jerry’s Famous Deli is buying back its stock with plans to return to being a privately controlled company. “We always felt that the value of our shares was much lower than what we felt was the actual value of the company,” said Jerry’s CFO Christine Sterling. The company is nearing the end of a buyback program begun in September that, by this point, has left only 86,000 of its shares in the hands of public investors. Since September, the company has purchased 719,325 of 4.7 million outstanding shares for $5.30 a share at a total cost of $3.8 million. Nearly 4 million shares were already owned by founder Isaac Starkman and his family. Earlier this month, Nasdaq informed the firm that it would be delisted for failing to maintain the minimum $2.5 million public float, which is the value of shares owned by people who don’t have a significant stake in the company. Sterling would not say when the company would buy the remaining 86,000 shares, but said going private would give the company a chance to enhance its overall value. Sterling said Jerry’s is more likely to attract capital investment if it removes itself from a sometimes volatile stock market. Jerry’s stock has remained in the range of $5 for several months. Before it was delisted on Oct. 10, Jerry’s stock was trading at $5.10 per share, with a 52-week high of $5.34 and a 52-week low of $1.16. Doug Christopher, an analyst with Crowell, Weedon & Co., said the company’s move is in response to the slowing economy and its own struggle to maintain market share in a competitive restaurant market. “They probably feel that they’ll have better control of the company and possibly enhance its value. But it’s more a reflection of the overall bad economy,” he said. Sterling admitted business has been slow in recent months for the company. “Things are a little slow now, but we expect it to get better as we near December,” she said. Several former Jerry’s investors contacted by the Business Journal would not comment on the record. While the company’s initial public offering in 1995 allowed it to expand and increase revenues by nearly 70 percent in two years, its stock price has been dismal in recent years and has attracted little interest, Christopher said. Moreover, despite a slight jump in revenue in 1999 $70.8 million compared to $66.6 million in 1998 figures for this year are flat and only slightly ahead of last year, he added. In the company’s most recent quarter ending June 30, it reported $242,147 in net income on revenue of $16.6 million, compared to $79,706 net income on revenue of $16.3 million for the same period last year. For 2000, the company reported $1.4 million in net income on revenue of $69.6 million, compared to $910,000 in net income on revenue of $70.7 million in 1999. The company’s growth has slowed since the period immediately following its IPO when revenue jumped from $40 million in 1996 to $66.6 million in 1998. Christopher said the company’s flat numbers underscore the crowded and competitive restaurant business where much bigger chains have the advantage. Comparing Jerry’s to chains like Blimpie and Subway, which he considers its competition, he said, “A lot of people are not going to spend 10 bucks on a sandwich anymore, and that’s what it comes down to.” Christopher said Jerry’s stock never lived up to expectations, hovering in the $3 to $5 range since mid-1998, never returning to the $20 to $25 range of 1997. “I think they expected more from the stock than what it did,” he said. Analyst Robert Robotti of Robotti & Co. said Jerry’s net income and revenue remained steady in recent years despite a declining economy and the costs related to the company’s acquisition of Solley’s Restaurant in Sherman Oaks and the remodeling of its two Florida restaurants. Sterling said the company has been hurt by the stock market’s volatility in the past year, further depressing the value of the company’s stock. “So with this tender offer, we are maximizing the value of our company and in turn strengthening our company,” she said, referring to the $5.30-per-share offer to its public stockholders. Jerry’s Famous Deli was founded in Studio City in 1978 by Starkman and Jerry Seidman. Starkman purchased Seidman’s interest in 1984. In October of 1995, when the company had grown to five restaurants, Jerry’s went public with a $6-per-share IPO. Now a 10-restaurant chain with most stores in the Los Angeles area, the company has slowed its expansion by putting off plans to build a New York City restaurant and another in Las Vegas. One restaurant is under construction in the South Beach area of Miami Beach, but it is not scheduled to open until sometime next year, officials said.