Bob Evans Farms Inc. said on Monday that it is closing 27 poorly performing locations in a move expected to increase the chain’s operating income by $1 million a year.
All but six of the restaurants are on property the company owns, and were closed over the weekend. But the six leased locations will be closed some time in the company’s current fiscal year.
The closures follow a comprehensive evaluation of the struggling New Albany, Ohio-based chain’s unit-level portfolio.
“Decisions to close restaurant locations are always difficult,” CEO Saed Mohseni said in a statement. “Performance at each of these locations, despite the loyalty of valued guests and the efforts of our dedicated employees, was not meeting expectations.”
He said that employees impacted by the closures have been offered positions at nearby restaurants where possible, while severance payments have been offered to full- and part-time workers where relocation isn’t possible.
Bob Evans is a family-dining chain with 548 restaurants in 18 states, primarily in the Midwest. The chain’s sales have been struggling for some time, including a 3.6 percent decline in the quarter ended Jan. 22, and the company has overhauled management and authorized a sale-leaseback of many of the chain’s locations.
The restaurants affected by the weekend closures generate $30 million in annual revenue but were a drain on operating income. Bob Evans plans to sell the 21 owned locations for an expected sum of $20 million.
The closures will also cost the company $7.5 million to $8 million, most of it non-cash charges.