Einstein Noah names chief restaurant officer, outlines growth plans

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During a March 2 conference call with analysts, O’Neill and Manny Hilario, the company’s chief financial officer, provided additional color and detail about recent and ongoing developments. Among them:

• After raising menu prices 3.9 percent in 2011, “I still believe there is a little over 1.5 percent in pricing [available] throughout the year,” O’Neill remarked.

“We’re looking at it separate from margins” and will “take pricing where we feel there is an opportunity from a competitive point of view,” O’Neill said, explaining that the company will try a “high-low” strategy in which it lowers prices for its “every day value” proposition to build traffic, while increasing prices in areas where it believes it might be below the market, such as in catering sales.

• Catering sales grew 17 percent in 2011 to represent “north of 6 percent” of the menu mix, O’Neill said, noting that the company was “confident this momentum can continue driving 15 percent to 20 percent growth over the near term.”

• After rolling out a new coffee products platform in November, same-store coffee sales rose 9 percent in the fourth quarter, O’Neill said, which pushed the category beyond the 10-percent mark in terms of menu mix.

• The deployment of a new point-of-sale system means Einstein Noah can begin in the second quarter to test a new loyalty program to reward existing customers and garner insights to help drive frequency and traffic.

• The Einstein Bros. Bagels brand recently was awarded a location at the Dallas-Fort Worth airport and two sites at the airport in San Diego, with possible opening dates in the fourth quarter.

“Airport units generate average volumes of $1.9 million and had 12-percent comp sales growth in 2011, so you can see why we’re excited about adding to our airport presence,” O’Neill said.

• O’Neill said that, to date, in the first quarter of fiscal 2012, Einstein Noah has not seen a clear negative impact on business from rising gasoline prices and added that he believes restaurant spending and traffic are challenged more by employment trends than by fluctuations in gasoline prices, though that could change if prices hit $5 a gallon.

“If employment continues to be positive, again, from my perspective, I think that will offset any impact we might get on gas prices,” he said.

• Lunch business “was a little softer last year,” O’Neill said, so one of the company’s ongoing initiatives is to “get the lunch business back on track.”

• Of the company’s 20 or so active franchisees, it added eight in 2011 and should better that performance in 2012, O’Neill said.

Marcella Veneziale contributed to this report.

Contact Alan Liddle at alan.liddle@penton.com.
Follow him on Twitter: @AJ_NRN