Bob Evans Farms Inc. eliminated 60 positions in May, as part of $14 million in cost cuts, as the New Albany, Ohio-based family-dining operator continues to make changes under its new board.
The company made the cuts during the same month it closed 18 locations, as part of a pre-announced plan to shutter 20 underperforming restaurants. Two locations have yet to close. The cost cuts are part of a long-term plan to trim $35 million.
“During the fourth quarter and into early fiscal 2016, we continued to intensify our focus on execution and efficiency in all aspects of our operations at Bob Evans,” Bob Evans chief financial officer Mark Hood said in a statement. “We made several decisions during the fourth quarter and in the first quarter of the new fiscal year to better position our business for sustainable profit growth in the years ahead.”
Bob Evans expects the $14 million in savings to be realized over the course of the current fiscal year.
The company continues to search for a new CEO to replace Steve Davis, Hood said. The search committee of the board is “balancing a sense of urgency with a mandate for identifying the right leader of Bob Evans for the long term,” he said.
Activist investor Sandell Asset Management won four seats to Bob Evans’ board last year, and several other members of the board are new to the company, igniting a host of changes.
For instance, last week Bob Evans said it would pursue a sale-leaseback or spinoff of as much as 60 percent of its 460 owned properties. It is currently planning a sale-leaseback of its company headquarters and facilities for its BEF Foods packaged foods division in Ohio and Texas.
Hood’s comments Tuesday came as the company released earnings for the fourth quarter ended April 24. Bob Evans’ net income fell 57 percent, to $5.6 million, or 24 cents per share, from $13 million, or 53 cents per share the previous year.
The decline came despite a record quarterly operating profit increase of 14.9 percent at BEF Foods, attributed to a combination of plant efficiencies and low pork prices.
However, Bob Evans Restaurants reported an operating loss of $9.2 million, compared with an operating profit of $2.2 million the previous year. The company attributed the decline to higher labor costs and depreciation expenses.
Same-store sales rose 2.1 percent. Total restaurant sales increased $7.2 million, to $238.2 million, from $231 million the previous year. Customers used 25 percent fewer discounts during the quarter, the company said. Bob Evans’ menu redesign and increased focus on breakfast helped boost sales, Hood said.
“We are pleased with the early results of our actions to turn around the business,” Hood said. “Our objectives are to achieve profitable same-store sales growth with a significantly lower guest discount rate than the company employed for the last two years; to reduce our food costs while increasing the quality of our offerings, and to decrease our labor costs by better managing our scheduling and hourly rates.”
For the full year, Bob Evans’ restaurant sales rose 1.4 percent, to $969.9 million, from $956.6 million. Same-store sales rose 0.9 percent for the full year. The company also reported a $2.8 million operating loss, compared with a $27.1 million operating profit. The company attributed the operating loss to rising food and labor costs.
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