Einstein Noah: Menu, marketing to drive sales

LAKEWOOD Colo. Bagel shop parent Einstein Noah Restaurant Group Inc. plans to roll out more new products and increase its advertising this year as it comes off a slow fourth quarter.

Same-store sales for the system fell 1 percent for the fourth quarter ended Dec. 31, following a third-quarter same-store sales drop of 1.7 percent. In both year-earlier quarters, same-store sales were positive.

At Einstein Noah’s corporate locations, same-store sales fell 3.3 percent, which company officials said was driven by the decision last year to reduce store operating hours to lower costs. At franchised and licensed locations, same-store sales rose 8.5 percent for the fourth quarter, a result aided by typically strong performances at stores now open two years.

“We are going to raise the bar on our promotional, merchandising and product innovation efforts to increase both trial and frequency of our brands,” said Jeff O’Neill, chief executive of the Lakewood-based company, which operates, franchises or licenses about 650 bagel locations under the brand names Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagels.

New marketing efforts will include direct mail coupons, limited time offers, local radio and outdoor advertising. New products were not detailed, other than the chain’s 400-calorie menu and pending hot food items. Competitor Bruegger’s introduced hot sandwiches early this year, which the company has said are performing very well.

O’Neill took over as Einstein’s chief executive in December, from Paul Murphy who resigned after 16 years with the company. O’Neill was a former chief executive and president of a Toronto-based master franchisee of Yum! Brands Inc.

Net income for Einstein Noah’s fourth quarter was $5.8 million, or 36 cents per share, down from $6.8 million, or 41 cents per share, for the fourth quarter a year earlier. The company booked $1.3 million in costs, or 8 cents per share, in the latest quarter for the management transition.

Fourth-quarter revenue totaled $103.9 million, down 1.3 percent from the same quarter a year earlier. New store openings and positive same-store sales drove franchise and license related revenues up 11.1 percent to $1.9 million in the fourth quarter.

Net income for the full year totaled $21.1 million, or $1.29 per share, compared with $12.6 million, or 88 cents per share, for fiscal 2007. Revenue for 2008 totaled $413.5 million, up 2.6 percent from 2007.

The company plans to open between six and eight restaurants this year, as do franchisees. Licenses are expected to open between 30 and 35 units. Einstein Noah also has locked in pricing for more than 90 percent of its agricultural commodities for 2009, the company said.

Contact Dina Berta at [email protected] [3].