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Einstein Noah plans for potential ownership change

Einstein Noah plans for potential ownership change

Company to give bonuses to top executives who stay through possible merger or sale

Innovation and everyday value will continue to be the focus at Einstein Noah Restaurant Group Inc. brands as the bagel company attempts to leverage momentum after a strong first quarter.

The Lakewood, Colo.-based parent to the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagel brands said Thursday it is exploring strategic alternatives, including a possible merger or sale.

EARLIER: Einstein Noah to explore merger or sale possibilities

Jeff O’Neill, the company’s president and chief executive, told analysts during a conference call following the first-quarter report that the time was right to explore options that might increase shareholder value.

“The liquidity of our stock has been a topic of conversation for years. While I don’t believe it has held back growth, given the momentum … the timing seems good,” O'Neill said in regard to exploring strategic alternatives.

In filings with the U.S. Securities and Exchange Commission, the company said it has signed agreements with Einstein Noah’s top executives promising a “transaction success bonus” to ensure they stay through the completion of a potential change in ownership.

Under the agreements, O’Neill will receive a bonus ranging from $100,000 to $500,000.

Manny Hilario, Einstein Noah’s chief financial officer would receive between $75,000 and $300,000 as a transition bonus. And both Brian Unger, chief restaurant officer, and Rhonda Parish, chief legal, people and risk officer, would each receive between $60,000 to $275,000.

Beyond any potential transaction, O’Neill promised that 2012 would be an exciting year for Einstein Noah, which has been attempting to position its brands as the more healthful, “fresh baked” bagel chains. Other upcoming initiatives announced during the call include:

New menu items: Earlier this month, the chain announced the launch of a Smart Choices menu featuring 14 items with less than 350 calories.

The company has moved away from discounts, such as the “Free Bagel Friday” promotions of last year, and shifted instead to more use of combination deals and bundling, O’Neill said.

Catering push: The company grew its catering sales by 19 percent during the first quarter, which followed double-digit growth in catering sales during 2011. O’Neill said catering now represents 7 percent of the menu mix.

Cost savings: The company completed the first phase of ongoing cost savings initiatives in the fourth quarter, cutting about $2.7 million over the course of the year.

Now Einstein Noah moves on to phase two of the plan. O’Neill said the company expects to find $3 million in savings in fiscal 2012.

Loyalty program: The company will roll out a new point-of-sale system this year, which will facilitate a new loyalty program designed to boost frequency and foster greater connectivity with guests, O’Neill said.

Drive-thrus: Einstein Noah is testing enhancements to the drive thru in the Denver area. Only about 40 units have drive thrus, but O’Neill said there is an opportunity for more.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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