LAKEWOOD Colo. Despite spending more on marketing and new promotions for bite-size Bagel Poppers and free bagel Fridays, Einstein Noah Restaurant Group Inc. saw a decline in same-store sales and profit in the first quarter.
Net income for the quarter ended March 31 totaled $1.9 million, or 11 cents per share, down from earnings of $3.8 million, 23 cents per share, in the same quarter last year.
Total revenue for the latest quarter fell 2.8 percent to $100.4 million. Systemwide same-store sales decreased 3.7 percent.
“Ultimately, our financial performance for the quarter reflected the underlying economic pressure on our customers and the beginning of our deliberate transition to a new approach to building shareholder value over the long term,” said Jeff O’Neill, chief executive and president.
ENRG is the owner or franchisor of more than 600 bagel shops, operating under the brand names Einstein Bros Bagels, Noah’s New York Bagels and Manhattan Bagels. The company plans to continue pursuing more franchising and licensing deals, especially as those units tend to perform better. Franchised and licensed locations posted a 3.7 percent increase in same-store sales for the first quarter
Despite the sluggish first-quarter corporate performance, ENRG said a price increase of between 1.5 percent and 2 percent, as well as other initiatives, like better controls over labor and food costs, may help improve margins in the coming months, O’Neill said.
In addition, while agricultural commodities costs were flat year-to-year in the first quarter they are expected to decrease between $1.2 million and $1.5 million later this year.
ENRG also plans to invest in store remodels and upgrades this year. Up to 45 stores will be remodeled at a cost of about $80,000 per store.
The company added one franchised Einstein Bros. location and five licensed units in the first quarter. ENRG expects to open six corporate stores this year, between five and seven franchised locations and up to 30 additional licensed locations.
Contact Dina Berta at [email protected].
