Einstein Bros 2005 Annual Report Download - page 4

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Our New World Coffee brand is operated in the northeastern United States. The locations offer up to 30 varieties and blends of fresh roasted
coffee, in brewed and whole bean format, a broad range of Italian-style beverages, along with a variety of menu items to complement the beverage
offerings.
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Business Focus
We have developed a focused growth strategy that positions us to continue to enhance our competitive position and results of operations over
the near term. The salient features of this strategy include:
Renewed Focus on the Guest Experience Using a Three-Pronged Approach. We believe that we can expand upon our leadership position in
the breakfast day-part by selling the finest bagels and coffee and by providing our guest a unique experience that is “anything but routine.” Our
approach will focus on:
· People—Establish a baseline on the level of training and service expectations. We recognize the needs of “Generation Y” associates and we
are developing programs for motivating and retaining these associates to ensure a superior guest experience;
· Product—We are developing new menu items that solidify our breakfast daypart, increase speed of service and address the “on the go”
lifestyles of our guests. We will utilize our catering program to grow awareness and trial for our lunch business; and
· Place—We are developing operational improvements to enhance the speed of service while maintaining our heritage of guest interaction
with our associates. We plan to continue to refresh and/or remodel our stores to standardize our trade dress while maintaining our
neighborhood feel.
Significantly upgrade our Management and Field Associate Training Programs. In early 2006, we completed Leadership summits for our
Einstein Bros. and Noah’ s General Managers and our Manhattan Bagel Franchisees. These summits focused on the key operational initiatives we
plan to deploy in 2006 along with specific training on associate motivation, suggestive selling techniques, and other methods aimed at enhancing
the guest experience. We have initiated a program that provides economic incentives for our training stores and General Managers to provide a
consistent training experience for our new General Managers and Assistant Managers. Finally, we have developed training programs for our store
level associates that ensure each associate is assigned a mentor during their orientation period.
Leverage Core Competencies into New Revenue Streams. We believe that we have a number of opportunities to develop multiple channels
outside of our traditional retail locations. These alternatives can generate incremental revenues, enhance the brands’ visibility and improve
customer convenience. In particular, grocery and warehouse club channels are increasingly seeking strong customer brands to help drive their sales
of bagels, breads and salads. We have established various supplier relationships with Costco Wholesale Corporation, Target Corporation and HEB,
a leading independently owned food retailer with stores throughout Texas and Mexico. These products are sold either through a private label
program or under the Einstein Bros. or Noah’ s brand. We hope to attract alternative retail customers based on Einstein Bros. substantial brand
equity and superior food quality and freshness.
Brand Growth through Franchising. Through store franchising to qualified area developer candidates, we believe that we can increase our
geographic footprint and customer recognition while enjoying a valuable royalty stream with minimal incremental capital expenditures. In
December 2005, we filed a Uniform Franchise Offering Circular (UFOC) for the Einstein Bros. brand. We intend to commence offering franchise
area development agreements to qualified parties beginning in the second half of 2006. The area development agreements grant the right to operate
an agreed-upon number of Einstein Bros. restaurants in a defined geographic region for a specified period of time.
We currently have a franchise base primarily in our Manhattan brand that generates a recurring revenue stream through royalty payments. We
look for franchisee candidates with appropriate operational experience and financial stability, including specific net worth and liquidity
requirements. We typically receive continuing royalties on sales from each franchise store location. Our Manhattan franchisees are not required to
buy all of their non-proprietary products directly from us, but rather their product sources must
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be approved by us. We believe that active involvement in and management of restaurant operations by franchisees will result in a successful
franchise strategy.
Focus on Site Selection Process. We consider our site selection process critical to our long-term success. Our site selection process focuses
on identifying markets, trade areas and specific sites based on several factors, including visibility, ready accessibility (particularly for morning and