News

Zoes Kitchen reports revenue increases, $2.2 million decrease in taxes

February 23, 2018

Zoe's Kitchen reported Thursday that revenues were not only up during Q4 of 2017, but for the entire year as well. Total revenue increased 15.2 percent to $71.4 million and comparable restaurant sales increased 0.3 percent during Q4. For the year — 52 weeks ending Dec. 25, 2017, as compared to the 52 weeks ending Dec. 26, 2016 — total revenue increased 13.8 percent to $314.1 million, according to a company press release.

The year's comparable restaurant sales, however, decreased 2 percent, and income from operations also decreased 80.9 percent to $1.2 million.

"I continue to be very pleased with our team's focus and discipline toward executing our initiatives, which resulted in improved operations and guest experience throughout the year, including our fourth quarter," Kevin Miles, president and CEO, said in the press release. "Seeing the positive impact of these initiatives on our business, I am confident that our strategy is on firm footing and that we are continuing to build a strong brand for long-term success."

Looking ahead to 2018, Miles said the company is focused on several growth drivers that include new menu items and beverage innovation to extend the chain's  leadership position in the Mediterranean category as well as drive growth in the dinner day part. He also plans to invest in its digital platform and marketing to build deeper guest relationships via off-premise catering and delivery channels. 

"We believe these initiatives, along with reducing our development to 25 new locations and leveraging our expense management efficiencies, are the right steps to drive long-term shareholder value," Miles said.

Q4 highlights

• Total revenue increased 15.2 percent to $71.4 million.
• Comparable restaurant sales increased 0.3 percent.
• Five company-owned restaurants opened.
• Loss from operations increased 123.6 percent to $2.8 million
• Net loss was $2.9 million, or $0.15 per basic and diluted share, compared to net loss of $0.5 million, or $0.03 per basic and diluted share. Net loss for the twelve weeks ended December 25, 2017, included a $1.1 million benefit for income taxes inclusive of a $2.2 million benefit related to tax reform. Net loss for the 12 weeks ended Dec. 26, 2016, included a $1.7 million benefit for income taxes.
• Adjusted net loss* was $2.4 million, or $0.12 per diluted share, compared to adjusted net loss of $1.4 million or $0.07 per diluted share.

Adjusted EBITDA* decreased 3.8 percent to $2.9 million.

Highlights for the 52 weeks ended Dec. 25, 2017, as compared to the 52 weeks ended Dec. 26, 2016

• Total revenue increased 13.8 percent to $314.1 million.
• Comparable restaurant sales decreased 2 percent.
• 39 company-owned restaurants opened.
• Income from operations decreased 80.9 percent to $1.2 million
• Net loss was $2 million, or $0.10 per basic diluted share, compared to net income of $1.8 million, or $0.09 per basic and diluted share. Net loss for the 52 weeks ended Dec.25, 2017 included a $1.3 million benefit for income taxes inclusive of a $2.2 million benefit related to tax reform.
• Adjusted net loss* was $1.9 million, or $0.10 per diluted share, compared to adjusted net income of $1.7 million or $0.08 per diluted share.

Adjusted EBITDA* decreased 0.4 percent to $25 million.

Impact of tax reform
The Tax Cuts and Jobs Act passed by Congress in December 2017, included a number of changes to existing U.S. tax laws that impacted the company, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent for tax years beginning after Dec. 31, 2017, according to the release, which said the company will see a $2.2 million decrease in income tax expense for the year ended Dec. 25, 2017, and a corresponding $2.2 million decrease in net deferred tax liabilities as of Dec. 25, 2017.

2018 outlook
The company expects the following

• Total revenue between $358 million and $368 million.
• Comparable restaurant sales growth of flat to 2.0 percent on a comparable 52-week basis.
• 25 company-owned restaurant openings.
• Restaurant contribution margin between 17.3 percent and 18.4 percent.
• General and administrative expenses between 10.6 percent and 10.8 percent of total revenue, inclusive of $3.7 million of non-cash equity-based compensation expense.