News
Einstein Noah announces Q3 results
November 5, 2009
Einstein Noah Restaurant Group Inc., operating under the Einstein Bros. Bagels, Noah's New York Bagels, and Manhattan Bagel brands, has reported financial results for the third quarter ended Sept. 29, 2009.
For the third quarter of 2009, system-wide comparable-store sales decreased 2.7 percent while total revenues fell a modest 0.8 percent to $100.0 million, down from $100.9 million reported in the third quarter of 2008. Company-owned restaurant sales decreased 1.3 percent to $91.2 million, mostly as a result of a 3.1 percent decrease in comparable store sales, which was partially offset by a net increase of six company-owned restaurants since Oct. 1, 2008.
Net income was $60.9 million in the third quarter of 2009, or $3.65 per diluted share, compared to net income of $4.5 million, or $0.28 per diluted share, in the third quarter of 2008. Net income in the third quarter of 2008 included a $1.9 million charge related to two California wage and hour settlements for which there is no comparable in the current year.
Similar to the preceding quarter, the company continued to invest in marketing initiatives to build traffic and drive awareness of its brands. These efforts continued to improve the trend on transactions for the quarter to 1.5 percent versus declines of 8 percent to 9 percent at the beginning of the year.
Marketing initiatives and coupon-related discounts increased $0.6 million and $0.7 million, respectively, compared to the prior-year period. Company-owned restaurant gross profit was $16.0 million, or 17.5 percent in the third quarter of 2009, compared to $17.2 million, or 18.6 percent in the third quarter of 2008.
Labor costs, as a percentage of company-owned restaurant sales, rose 90 basis points in the third quarter of 2009 compared to the prior-year period due to an investment to increase our catering presence, an increase in health benefits costs and higher minimum wages.
"System-wide comparable store sales and transaction performance reflect substantial improvement from the beginning of the year when our current marketing and merchandising initiatives were implemented. These efforts are ongoing, and are intended to serve as a foundation for sustainable long-term growth as we've previously stated," Jeff O'Neill, CEO and president of Einstein Noah, said.
New units and development
The company also benefitted from a net increase of 29 license restaurants and four franchise restaurants since Oct. 1, 2008. The effect of the new locations helped drive franchise and license related revenues up 17 percent to $1.8 million.
Restaurant openings during the third quarter of 2009 consisted of 15 outlets, including two Einstein Bros. company-owned restaurants, two Einstein Bros. and one Manhattan Bagel franchise restaurants and 10 Einstein Bros. licensed restaurants. Three outlets were closed during the period (two company-owned locations and one licensed location).
In the fourth quarter of 2009, the company anticipates the opening of three new company-owned Einstein Bros. restaurants, one to three additional franchised restaurants and up to 13 additional Einstein Bros. licensed restaurants.
The company also maintained its franchise momentum, recently signing four new development agreements that will bring the total to date up to 12 agreements for the development of 56 Einstein Bros. restaurants. Six new franchise locations have already opened and 50 new franchise locations are scheduled to open in the coming years.
Conference Call
The company will host a conference call to discuss third quarter 2009 financial results today at 3 p.m. Mountain time (5 p.m. Eastern time). Hosting the call will be Jeff O'Neill and Richard Dutkiewicz, chief financial officer.
The dial-in numbers for the conference call are 1-877-407-0784 for domestic toll-free calls and 1-201-689-8560 for international. The conference ID is 335738. A telephone replay will be available through November 12, 2009, and may be accessed by dialing 1-877-660-6853 for domestic toll-free calls or 1-201-612-7415 for international. Participants must enter account 3055 and conference ID 335738.
To access a live webcast of the call, please visit Einstein Noah's Web site. A replay of the webcast will be available on the website for at least four weeks.
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