Kentucky Fried Chicken (Bermuda) sold $1.69 million worth of fast food in the first six months of 2000 -- but made just $148,936 in profits during the period.

The figures for the Queen Street fast food store were up from the same period last year, with net income up by 7.4 percent or $10,255 from $138,681 for the first six months of 1999.

Sales at KFC were up by just over eight percent from $1.56 million to $1.69 million for the first six months ended July 31, 2000, compared to the same period in 1999.

But operating expenses soared by more than 13 percent to over $1 million, cutting into the company's bottom line.

The increase was attributed to a rise in the cost of labour and advertising.

In a release yesterday, the company said: "Operating expenses have also increased by an amount of $125,071 largely due to an $86,286 or 21 percent increase in employment costs and an additional $66,351 in advertising expenses.

"Salaries and wages are, as we pointed out, the most difficult to control. On the one hand there is customer resistance to price increases to cover this cost and there is, on the other, an unrelenting demand for increased salaries which will increase the cost of payroll taxes, pension plans and other levies such as health insurance and social insurance.'' The company plans to spend $150,000 later this year upgrading the Queen Street premises.

In May the company reported that a fall in sales and a rise in costs contributed to the net income of the company falling by 18.5 percent in the first quarter of the year.

And the company pledged it would increase sales and profits this year, which it is on course to do.

In the release yesterday, the company said of the first four months of the fiscal year: "While we viewed with disappointment the lower level of earnings in the first four months of this year, which was largely due to increases in the costs of salaries and supplies, we pointed out that included in this year's expenses are costs which we hoped would be non-recurring -- such as repairs to the water tank which raised maintenance costs to $31,000 compared with $21,000 a year ago. We also had, as a result of the water tank problems, an increase in the cost of water from $5,400 to $8,600 in the first four months.'' The release added: "We are pleased to report that despite indications of a reduction in net income when compared with last year, noted in July, earnings are higher than earnings in the first half of the year due to an increase in sales, which are up 8.1 percent over last year.'' But costs will continue to rise with more one-off expenses to be carried out later in the year through a $150,000 refurbishment.

These include "some fairly major repairs to the facilities'' which "were largely ignored in the period leading up to the recapitalisation of the company in 1998''.

There are also plans to relocate the office into the area occupied by the store room and to upgrade the office facilities that are in "desperate'' need of renovation.