Bob Evans Farms Inc. reported a 31-percent improvement in net income for the third quarter of fiscal 2012, due in large part to cost-saving and sales-building initiatives that helped its Bob Evans and Mimi’s Café brands improve food and labor costs.
For the Jan. 27-ended quarter, Bob Evans Farms had a net income of $20.26 million, compared with $15.47 million a year earlier. Restaurant sales for the quarter totaled $337.3 million, down slightly from $337.7 million a year earlier.
Same-store sales at Bob Evans restaurants rose 1.6 percent for quarter, while Mimi’s Café reported a 3.4-percent decline in same-store sales.
The company’s namesake family-dining chain, which has 564 locations in 18 states, led the way with growing carryout sales and a reimaging program that allows remodeled restaurants to increase carryout volume and add a new sales layer with on-site bakeries. Its sibling casual-dining brand, Mimi’s Café, with 145 units in 24 states, has adopted similar menu strategies over the past few quarters.
Steve Davis, chief executive of Columbus, Ohio-based Bob Evans Farms, said both chains would continue collective cost-cutting efforts and stay committed to barbell menu strategies that also emphasize carryout to grow profits.
“Commodities typically go up, labor over time will go up, and we’re in an economic environment where pricing actions are limited,” Davis said. “Our strategy is to push productivity hard across the enterprise to minimize the price increases we’d have to take. To turn around and start discounting at a time like this is a failed strategy.”
Rebuilds and barbells for Bob Evans
Remodels at the namesake system are an ongoing effort not only to drive guest counts but also to incorporate new sales layers like bakeries and to emphasize the chain’s carryout and catering business.
Bob Evans completed 30 Farm Fresh Refresh remodels in fiscal 2011 and is on pace to finish 90 in fiscal 2012. For fiscal 2013, the brand would accelerate the pace of reimaging to include between 150 and 160 locations. Chief financial officer Paul DeSantis said the cost to remodel locations would range from $200,000 to as much as $350,000 for older units in established markets, where the restaurants’ size and center entrances make remodeling more expensive.
“As we expand beyond core markets, that top range will come down a little bit,” DeSantis said. “In terms of the sales lift, we’re still seeing that 5-percent-plus lift as we move forward. We’re also seeing a nice lift in the profitability of those restaurants, from the additional sales layers.”
The new design has spread one trading area at a time, in contiguous markets, executives said. The program began in Dayton, Ohio, then spread north to Toledo, Ohio, and Detroit. South of Dayton, the Cincinnati market will be completely refreshed by the end of the fourth quarter, and Columbus, Ohio, to the east will wrap up reimaging in the first quarter of 2013. Then it’s on to Cleveland, Davis said.
“When we did the Farm Fresh Refresh we went to one location at a time to get the economies of scale for training, marketing and construction,” Davis said. “When we cluster around a market, it works so much better than pin-dotting and chasing numbers.”