Einstein Noah: Catering, Coffee Fuel 2Q Sales

Increased catering sales, an enhanced coffee program and an expanded reduced-calorie menu helped drive a fifth consecutive quarter of same-store sales increases for the Einstein Noah Restaurant Group during the second quarter, the company said Thursday.

The Lakewood, Colo.-based parent to the Einstein Bros. Bagels, Noah's New York Bagels and Manhattan Bagel brands said there was no update on plans to explore strategic alternatives, which could include a possible merger or sale. The company announced its review earlier this year.

The company said its ongoing strategy of expanding through franchising and licensing, cutting costs and reducing debt have helped fuel bottom-line improvement.

For the quarter ended July 2, Einstein Noah net income fell about 4 percent to $3 million, or 17 cents per share, compared with $3.1 million, or 18 cents per share, in the same quarter a year ago.

This year's quarter, however, included about $400,000, or 2 cents per share, in expenses related to the strategic review process, and last year's quarter included a gain of $900,000, or 3 cents per share, from the sale of two restaurants and the receipt of insurance proceeds after a fire damaged one company-owned location.

Second-quarter revenue rose 2.2 percent to $106 million. Same-store sales rose 1.3 percent systemwide, driven by a 3.9-percent increase in average check from menu mix, pricing and a jump in catering sales that was partially offset by fewer transactions. At company-owned locations, same-store sales increased 1.2 percent.

Jeff O'Neill, Einstein Noah's president and chief executive, said efforts to build catering sales are taking hold. Catering grew by 17 percent during the quarter.

He also touted the success of the company's recently enhanced coffee platform and the addition of specialty beverages, like low-fat smoothies.

Earlier this year, Einstein Noah expanded its Smart Choices menu of reduced-calorie options that center on the chain's Bagel Thins, a thinner, lighter version of traditional bagels. The company hopes to build on momentum with new "everyday value" options being tested in Dallas and Denver, as well as a limited-time bundling offer called "Pick Two," which combines a half sandwich with soup or salad.

Meanwhile, the company has improved margins by cutting costs, including the closure of commissaries. The company has a goal of cutting $3 million in costs this year. The company is continuing plans to accelerate growth through franchising and licensing, focusing on existing top-tier markets where brand awareness is already strong, O'Neill said.

Einstein Noah ended the second quarter with 783 locations among its three brands, including 448 company-owned, 95 franchised and 240 licensed units. For the year, the company expects to open between 60 and 80 locations, including eight to 12 company-owned units, 12 to 14 franchised and 40 to 54 licensed restaurants.

Contact Lisa Jennings at lisa.jennings@penton.com.
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