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Einstein Noah cuts hours, raises prices

LAKEWOOD Colo. Menu price increases and operating hour cutbacks are expected to help drive sales and profitability at Einstein Noah Restaurant Group Inc., officials said Wednesday.


Einstein Noah, based here, owns or franchises 623 restaurants operating under the brand names Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagels. To reduce ever-escalating costs, the company began closing stores an hour early during the second quarter, officials said. Stores had been closing at 5 p.m. or 6 p.m. and now close at 4 p.m. or 5 p.m.



“[The loss of one hour] had no impact on operational profit of the restaurants,” chief financial officer Rick Dutkiewicz said in a conference call with analysts Wednesday.



It did, however, negatively affect same-store sales at certain restaurants by about 0.6 percent. Same-store sales for the quarter ended July 1 increased 1 percent. Those results also were adversely impacted by the housing market downturn in California, Nevada, Arizona and Florida, the company said. These markets reduced Einstein Noah’s same-store sales result by about 1 percent in the second quarter.



To help offset negative traffic trends and the reduced number of customers because of earlier restaurant closings, Einstein Noah said it raised menu prices 6.9 percent in July.



The cost savings from fewer operating hours and a significant year-to-year reduction in interest expense helped the company swing to a $6.9 million profit in the second quarter from a $250,000 net loss last year, the company reported. Per-share earnings totaled 42 cents in the latest quarter, compared with a loss of 2 cents per share a year ago.



In the latest quarter, Einstein Noah’s interest expense fell to $1.3 million from $4.1 million a year ago.



Revenue in the second quarter of this year totaled $105 million, a 4.3-percent increase from a year ago. The company added eight licensed locations, one franchised location and three corporate restaurants in the second quarter. The company also signed a license development agreement with on-site feeder, Aramark, as well as two franchise development agreements to open Einstein Bros. Bagels units in Texas.


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