Bob Evans Farms Inc. revealed Wednesday plans to focus on value marketing and new menu positioning at both the family-dining Bob Evans chain and the casual-dining Mimi’s Café brand.
The moves come after the Columbus, Ohio-based company reported fiscal first-quarter earnings in which net income rose, but revenue dipped and same-store sales remained negative. For the quarter ended July 29, same-store sales fell 1.8 percent at Bob Evans and 4.8 percent at Mimi’s Café.
Bob Evans builds on remodel success, value positioning
Restaurant remodeling at Bob Evans Farms’ namesake family-dining chain has been accretive to the bottom line, officials said, adding that the chain has spruced up 90 units so far this year and plans to reimage 86 more locations in the current fiscal 2012. The Bob Evans chain totals 563 restaurants.
Executives said they would maintain the conservative pace of restaurant remodels and expand the program in contiguous markets from Dayton and Toledo, Ohio, and Michigan, where the refurbished locations are providing a sustained 5-percent same-store sales lift. Cincinnati will be the next market for remodeling.
Bob Evans aims to start opening about 20 new restaurants per year in the next few years, Davis said.
“We’re excited about the refreshes, and we always get asked why we’re not going faster,” he said. “We’re going to walk before we run, because you can always go faster. We have four stop lights — sales, margins, guest metrics and employee metrics — and those have all been green lights.”
Davis said a restaurant is closed an average five days for remodeling.
“It’s an investment in startup cost and lost days, but given the consumer research we’ve seen, this is hitting the mark with our guests,” he said. “They’re saying Bob Evans was starting to look tired and dated, and I can tell you nobody’s missing the retail [areas from the old stores], both from a brand perspective and a complexity perspective … We strongly believe it’s the right thing to do for the business, and so far we like what we see.”
Bob Evans held off on spending about $1 million in advertising in the first quarter and will shift that allocation to incremental media in the second quarter, when it will introduce a value program under the banner of “Farmhouse Value.” The menu will be a package of 10 menu items for $6, with 99-cent add-ons, Davis said. The Family Meals to Go menu, with 10 meals under $20, will now offer $3, $4 and $5 add-ons to build average check amounts, he added.
“Value is playing strong right now,” he said. “Our guest in family dining, a lot more of those people are on fixed incomes, so when supermarket prices spike, trade-offs are made and they look for the best value they can find. We said we have to buff up our game at both Mimi’s Café and Bob Evans, and this is the way we’re going to play.”
More new offers on menu at Mimi’s
Menu engineering, especially around value, would loom larger for Mimi’s Café in the near future, where sales and traffic have yet to turn around under new president Mark Mears. The 145-unit chain took a 4.2-percent menu price increase in the first quarter.
Mimi’s Café’s upcoming menu initiatives being proposed or currently in test include a $6.99 “café express” lunch combo, a $1.99 soup or salad bundled with a regular entrée at dinner, 10 meals under $25 for carryout, and wine flights to bolster business at the bar.
“The café express lunch came from research saying we were slow in speed of service,” Davis said. “Now it’s about speed and variety, with more than 40 combinations guests can put together at the $6.99 price point, which is consistent to what our competition is doing.”
The $1.99 soup or salad option was another way to compete in casual dining’s heavy discounting environment, he added.
“Our competitors give a set menu to get the 2 for $20 deal,” he said, “so we said let’s let them pick what entrée they want and give them the soup or salad to create value.”
For carryout meals, Mimi’s will borrow heavily from Bob Evans’ playbook that helped it grow takeout business from 4 percent of sales a few years ago to around 10 percent now.
“We’re playing with these 10 meals for under $25, but it’s also important just getting the restaurants set up to do carryout,” Davis said. “At Bob Evans, we had to put up signage just to tell everybody we were in the carryout business. Right now, Mimi’s [carryout] is at 4 percent [of sales], so we see the same upside.”
Davis said the wine flights at Mimi’s Café have driven incremental bar sales that should inch the chain’s alcohol mix from 4 percent of sales closer to the casual-dining average of 9 percent to 10 percent.
“Now when people are sampling the flights, they order a drink, so there’s been an uptick in our bar sales, which is very positive,” he said. “It’s encouraging that the sparkling-wine flight has led to a lot of mimosas sold in the brunch hour. This is a way to sustain wine sales at Mimi’s, and we’re creating an alcohol and bar culture in our restaurants.”