Einstein Noah CEO on possible sale, future plans
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We also have licensed restaurants, through players like Sodexo and Aramark. Think about college campuses, airports, healthcare facilities and hospitals. These are a great area of growth for us, and we’ve got over 250 restaurants in the licensed area right now.
With plans to open 10 to 15 company units a year, we’re on track to open 60 to 80 units in 2012. The emphasis is on existing markets and a good balance between franchised, licensed and corporate units.
How is your drive-thru testing going?
It started with franchisees. About 70 percent of franchisees of the Einstein Bros. brand opened with new restaurants with drive thrus. They’re doing [average unit volumes] close to $1 million, and that payout is very strong for us — especially at breakfast, when consumers are time-starved.
If we’re going to be in QSR, drive thrus need to be a bigger part of our business going forward. A little more than a year ago, I hired as a chief restaurant officer Brian Unger from McDonald’s. He has in the last year established a very tight focus on how to execute speed and quality through a drive thru. So, with that expertise, I’m now really excited about the opportunity we have with drive thrus.
How many have drive thrus do you have now?
A little over 30 units company wide and other 15 or so franchised units have drive thrus. It’s still considered in test because we’re still growing it and learning. But we plan to add a good percentage of drive thrus into new restaurants going forward.
You’ve talked a lot about cost savings, and said you cut $2.7 million last year and plan to cut another $3 million this year. How do you plan to do that?
We pulled together cross-functional team with marketing, operations, purchasing and distribution. We wanted to look at things that either add to the customer experience or are invisible to customer experience.
So, for example, historically, when we cooked eggs, we would put them in an egg boat. That was a one-use kind of item; we used it once and threw it out. That was the only way we could get them. So we went to our supplier to ask for reusable egg boats. It took eight months and they designed an egg boat with multiple uses. Now we clean as we go along and reuse them. It makes a ton of sense from an environment point of view, but, as importantly, we saved over $750,000 by not having to repurchase egg boats for every restaurant.
We redesigned our grab-and-go bagel buckets with a cream cheese holster that replaced two bags, and that saved us about $400,000 to $500,000 in packaging.
We also closed our commissary. We looked at what commissary was doing for us in system, and it was largely cutting and pre-portioning meat and cheese. That was 80 percent of what they were doing. So we looked at outsourcing. Our suppliers said, 'We can do that for you.' We’re now getting pre-portioned meat and cheese through our suppliers and that saved more than $1 million. The other 20 percent of tasks that used to be handled by commissary is now done in restaurants, like making our chicken and tuna salads. We’re saving a little money there on waste.
These are some of the things. As we look at getting the right team together, we can come up with great initiatives for ongoing savings. That’s how we managed to save almost $3 million last year and another $3 million this year. You can see it by looking at the cost of goods and the cost of labor, which have come down. It’s part of the reason we’ve had such a great increase in our bottom line.