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Zoës Kitchen develops snack boxes, ordering platforms, delivery

Fast-casual operator outlines sales-driving strategies

Zoe’s Kitchen Inc. is looking to new products like snack boxes, a revised web and mobile ordering platform, and the expansion of delivery to drive sales for the remainder of the year, executives said Thursday.

In late April, Zoës Kitchen rolled out several new items, including a quinoa salad and snack boxes, president and CEO Kevin Miles said in an earnings call on Thursday.

“Our snack boxes, at less than 445 calories each, address the growing demand for convenient, healthy, better-for-you snacking options between traditional dayparts,” Miles said. 

The three snack box offerings — Modern Mediterranean, Hummus Duo & Veggie and Balance Bites — fit busy schedules, he said.

“With only 30 days since the launch, our unit sales have outpaced our expectation,” Miles said.

Additionally, Zoës Kitchen will re-launch its web and mobile platforms later this year, Miles told analysts, the first major upgrade since they were introduced in 2012.

“The launch will enable us to bring forward a much improved guest experience and introduce new capabilities such as online ordering for catering, a revamped loyalty program and a more robust [customer relationship management] platform,” Miles said.

Online orders currently account for about 7 percent of sales mix, eclipsed by phone orders, which are close to 30 percent, he said, noting that online transactions yield a higher average check.

Zoës Kitchen is approaching delivery and might settle on a hybrid of third-party and in-house staffing, Miles said. At the end of the first quarter, the chain had expanded delivery to more than 100 restaurants.

“With little marketing around the initiative, we are pleased to have seen some locations benefit almost immediately from the offering, with both increases in average check size and transaction penetration,” he said. “We will continue to evaluate our delivery partners in terms of execution, marketing support for our brand and ultimately overall guest satisfaction with their service.”

Zoës Kitchen has tested delivery at lunch and dinner with in-house labor.

Fast casual operator Zoe’s Kitchen has had its share prices decline more than 40 percent since the August release of second-quarter earnings.

“While the test is only in one store, we are gaining valuable operational insight and believe a hybrid approach to delivery will be important,” Miles said.

The Plano, Texas-based fast-casual Mediterranean chain lowered its revenue guidance to between $314 million and $322 million for year, from an earlier forecast of $325 million to $327 million. The company said same-store sales would be flat to down 3 percent. 

For the first quarter ended April 17, same-store sales fell 3.3 percent, includind a 4.6-percent decline in transactions and product mix and a 1.3-percent increase in menu price.

Zoës Kitchen reported first-quarter net income of $19,000, with no per-share earnings, compared with $1.4 million, or 7 cents per share. Revenue rose 12.6 percent, to $90.6 million, from $80.4 million the previous year. 

Zoës Kitchen has 219 restaurants in 20 states.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless 

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