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Einstein Noah names chief restaurant officer, outlines growth plans

Einstein Noah Restaurant Group Inc. said Monday it has named Brian L. Unger, its former executive vice president of operations, to the new post of chief restaurant officer.

Unger will continue to focus on all restaurant operations, including expanding the catering business and Einstein Bros. Bagels franchisee base, the company said.

Most recently, Unger served as executive vice president of operations, a position he held since March 2011. He will continue to report to Einstein Noah president and chief executive Jeff O’Neill.

“His appointment as our chief restaurant officer reflects recognition for the outstanding accomplishments since joining our team last year, and our confidence in him as we continue to accelerate revenue and unit growth, while delivering consistent and reliable growth in corporate earnings,” O’Neill said in a statement. “In addition to his extensive restaurant experience, Brian brings a high level of energy and commitment to our company culture that is apparent to all of us. He is a passionate leader, and we look forward to his continued contributions.”

Lakewood, Colo.-based Einstein Noah Restaurant Group has more than 770 restaurants in 39 states and the District of Columbia. Its restaurants operate under the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagels brands.

Einstein’s latest results: Profit, revenue increase

Earlier this month, the company reported higher revenue and net income for the fourth quarter and year ended Jan. 3, and said it expects to build its store base and specialty beverage, catering and better-for-you product sales in 2012.

The Lakewood, Colo.-based company that operated 440 bakery-café restaurants and franchised and licensed another 333 at the end of the quarter, primarily under the Einstein Bros. Bagels brand, booked net income of $6.1 million, or 36 cents per share, up 69.4 percent from $3.6 million, or 21 cents per share, in the same quarter a year earlier.

It noted that the latest quarter net income figure reflected a 3-cents-per-share charge for restructuring, and benefitted by 3 cents per share from an additional week of operations in the fourth quarter of fiscal 2011. In the same quarter a year ago, the company booked a 1-cent-per-share reduction for restructuring expenses.

Fourth-quarter revenue rose 8.6 percent to $115.1 million, including $7.3 million from the additional week of operation.

Einstein Noah officials said systemwide same-store sales rose 1.2 percent in the fourth quarter, as an increase in average check of about 6 percent was partially offset by lower traffic.

The systemwide same-store sales growth reflected a 0.8-percent and a 2.4-percent improvement at company operated and franchised locations, respectively.

For the year ended Jan. 3, Einstein Noah reported net income of $13.2 million, or 78 cents per share, compared with fiscal 2010 earnings of $11.3 million, or 67 cents a share. Revenue rose 2.9 percent to $423.6 million, including a $7.3-million gain from a 53rd week in the fourth quarter.

Full-year systemwide same-store sales increased 0.4 percent.

A look at 2012: New menu items, value pricing

In offering 2012 guidance, Einstein Noah said it expects to open 60 to 80 units systemwide, including between eight and 12 company-owned restaurants, 12 to 14 franchise locations and 40 to 54 licensed sites. In all, 55 units opened systemwide in 2011, including nine company locations.

Einstein Noah also said that it expects commodity price inflation of between 2 percent and 3 percent in 2012, and had “secured price protection” on 88 percent and 93 percent of its wheat and coffee requirements, respectively.

“In 2012, we intend to solidify our leadership position in fresh baked goodness and healthy choices by introducing a new smart choices menu of bagel thin sandwiches, salads and soups, and augmenting our specialty beverage platform with real fruit smoothies and new blended coffees and teas,” O’Neill said in a statement.

“We will also redesign our everyday value layer for breakfast and lunch and capitalize on our momentum in catering sales,” he said.

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During a March 2 conference call with analysts, O’Neill and Manny Hilario, the company’s chief financial officer, provided additional color and detail about recent and ongoing developments. Among them:

• After raising menu prices 3.9 percent in 2011, “I still believe there is a little over 1.5 percent in pricing [available] throughout the year,” O’Neill remarked.

“We’re looking at it separate from margins” and will “take pricing where we feel there is an opportunity from a competitive point of view,” O’Neill said, explaining that the company will try a “high-low” strategy in which it lowers prices for its “every day value” proposition to build traffic, while increasing prices in areas where it believes it might be below the market, such as in catering sales.

• Catering sales grew 17 percent in 2011 to represent “north of 6 percent” of the menu mix, O’Neill said, noting that the company was “confident this momentum can continue driving 15 percent to 20 percent growth over the near term.”

• After rolling out a new coffee products platform in November, same-store coffee sales rose 9 percent in the fourth quarter, O’Neill said, which pushed the category beyond the 10-percent mark in terms of menu mix.

• The deployment of a new point-of-sale system means Einstein Noah can begin in the second quarter to test a new loyalty program to reward existing customers and garner insights to help drive frequency and traffic.

• The Einstein Bros. Bagels brand recently was awarded a location at the Dallas-Fort Worth airport and two sites at the airport in San Diego, with possible opening dates in the fourth quarter.

“Airport units generate average volumes of $1.9 million and had 12-percent comp sales growth in 2011, so you can see why we’re excited about adding to our airport presence,” O’Neill said.

• O’Neill said that, to date, in the first quarter of fiscal 2012, Einstein Noah has not seen a clear negative impact on business from rising gasoline prices and added that he believes restaurant spending and traffic are challenged more by employment trends than by fluctuations in gasoline prices, though that could change if prices hit $5 a gallon.

“If employment continues to be positive, again, from my perspective, I think that will offset any impact we might get on gas prices,” he said.

• Lunch business “was a little softer last year,” O’Neill said, so one of the company’s ongoing initiatives is to “get the lunch business back on track.”

• Of the company’s 20 or so active franchisees, it added eight in 2011 and should better that performance in 2012, O’Neill said.

Marcella Veneziale contributed to this report.

Contact Alan Liddle at [email protected].
Follow him on Twitter: @AJ_NRN

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