News
Einstein Noah comps, revenue and net decrease
May 7, 2009
LAKEWOOD, Colo. — Einstein Noah Restaurant Group, operating under the Einstein Bros. Bagels, Noah's New York Bagels, and Manhattan Bagel brands, has reported financial results for the first quarter ended March 31.
For the first quarter of 2009, systemwide same-store sales decreased 3.7 percent while total revenues decreased 2.8 percent to $100.4 million compared to the prior year. Company-owned restaurant sales fell 3.4 percent to $90.5 million as a result of a 5.7 percent decrease in comparable store sales.
In the fourth quarter last year, the company experienced a 7.6 percent decline in transactions, which was partially offset by a 4.6 percent increase in the average check due to pricing. As the company commenced the first quarter, transactions continued to decline approximately 8 percent to 9 percent due to the weakening economic environment.
Net income was $1.9 million in the first quarter of 2009, or 11 cents per diluted share, compared to net income of $3.8 million, or 23 cents per diluted share, in the same quarter last year.
"Ultimately, our financial performance for the quarter reflected the underlying economic pressure on our customers and the beginning of our deliberate transition to a new approach to building shareholder value over the long term. To that point, we increased marketing investments during the period with the intention of building awareness, trial, and frequency," said Jeff O'Neill, CEO and president of Einstein Noah.
New units and development
Franchise and license locations continued a trend of positive comparable store sales in the first quarter of 2009, posting a 3.7 percent increase. The company also benefitted from a net increase of 29 additional license restaurants and a net increase of one franchise restaurant, partially offset by a decrease of three non-core franchise restaurants since April 1, 2008. The effect of the new locations and comparable store sales helped drive franchise and license related revenues up 17.6 percent to $1.8 million in the first quarter of 2009 compared to the first quarter of 2008.
During the first quarter, the company opened one franchised Einstein Bros. location as well as five Einstein Bros. licensed locations. In addition, the company entered into two new Einstein Bros. development agreements for a total of 11 locations.
For the remainder of the year, the company anticipates the opening of six new company-owned stores, five to seven additional franchised locations, and 25 to 30 additional licensed locations.
The company will host a conference call today to discuss first quarter 2009 financial results. The call is scheduled to occur at 3 p.m. Mountain time (5 p.m. Eastern time). Hosting the call will be Jeff O'Neill and chief financial officer Richard Dutkiewicz.
The dial-in numbers for the conference call are 1-800-762-8779 for domestic toll-free calls and 1-480-248-5081 for international. A telephone replay will be available through May 12 and may be accessed by dialing 1-800-406-7325 for domestic toll-free calls or 1-303-590-3030 for international. The conference replay access code is 4048350#.
To access a live webcast of the call, please visit Einstein Noah's Web site. A replay of the webcast will be available for at least four weeks.
Cost of goods sold
Cost of goods sold decreased $0.6 million for the company, predominantly due to a reduction in the volume of products sold partially offset by increased operating costs associated with nine net additional stores that have opened over the last 12 months.
Compared to 2008, most of its commodity-based food costs were anticipated to be relatively flat or decline in 2009. To mitigate the risk of increasing market prices, the company uses a third party to manage wheat purchases for its company-owned production facility. Einstein Noah also has secured wheat requirements and established the price for wheat for virtually all of its needs for the remainder of 2009, and have locked in approximately 88 percent of its major commodity requirements for the remainder of fiscal 2009.
Labor expenses
Labor expenses, which includes general managers and restaurant-level labor costs and associated employee benefits, decreased $0.3 million for the thirteen weeks ended March 31, compared to the same period in 2008. This was primarily related to a decrease in incentive compensation expense, partially offset by an increase in minimum wage and payroll benefits.
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