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Einstein Noah cuts jobs, locks down wheat prices to control costs

LAKEWOOD Colo. Facing escalated operating costs and a huge surge in wheat prices, Einstein Noah Restaurant Group Inc. said it has eliminated certain jobs and locked in its wheat costs for the year in order to help the company achieve the positive results it booked at the end of last year.

Einstein, which posted a 12.4-percent increase in fourth-quarter net income and a 6.1-percent jump in revenues, has let go six people in its support center. In addition, 15 district manager positions were eliminated as part of a field reorganization, said Mike Serchia, vice president of human resources. Three of the eliminated district managers took general manager positions, he added.

The company now has a team of managers who are each responsible for 20 to 25 stores. The teams consist of an area hospitality manager and an area systems manager. Regional human resource managers and recruiters also work with the teams, Serchia said.

Einstein also said it eliminated certain positions in its dough production facility.

In another move to help stem increased costs, Einstein contracted a set price for wheat this year. The company will pay $6.1 million more for wheat this year than it did last year, but if it hadn’t negotiated a set price it would have paid about $15 million more than last year, said Rick Dutkiewicz, chief financial officer.

New menu rollouts throughout the Einstein system, which includes 600 restaurants under the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagel brands, also will allow the company to implement price increases of about 4.9 percent, the company said.

For the fourth quarter ended Jan. 1, Einstein reported net income of $6.8 million, or 41 cents per share, compared with a year-earlier profit of $6 million, or 54 cents per share. The drop in per-share income was attributed to a larger number of outstanding shares in the latest quarter, stemming from the company’s secondary offering in June 2007. Revenues for the latest quarter totaled $105.2 million and same-store sales increased 3.2 percent.

Net income for 2007 totaled $12.6 million, or 88 cents per share, compared with a net loss in 2006 of $6.9 million, or 66 cents per share. Latest-year revenues rose 3.3 percent to $402.9 million.

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