Einstein Bros 2013 Annual Report Download - page 22

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
dividend of $68.1 million, as well as our ongoing quarterly dividends, working capital needs, capital expenditures, and other general corporate
purposes.
On June 27, 2013, the Facility was further amended and restated to lower its applicable interest rate and extend its maturity date without
increasing its borrowing capacity. The Senior Credit Facility matures on June 6, 2018. We have also entered into two cash flow hedges in an effort
to mitigate our variable interest rate risk. For a complete description of the terms for the Senior Credit Facility and our cash flow hedges, see Note
8 and Note 9, respectively, to our consolidated financial statements set forth in Item 8 of this Form 10-K.
Secondary Offering
As of December 31, 2013, Greenlight beneficially owned approximately 38% of our common stock. This represents a decrease from
Greenlight’ s beneficial ownership of approximately 63% as of January 1, 2013. In August 2013, Greenlight sold 1.5 million shares of our stock in
a secondary offering. In November 2013, Greenlight sold an additional 2.5 million shares of our stock in another secondary offering. As a result of
these transactions, we are no longer a controlled company. We did not receive any proceeds from these sales of shares and all costs associated with
this transaction were charged to Greenlight.
2014 Outlook
Our execution plan to grow comparable store sales includes:
• Building traffic by:
• Promoting innovative and effective value
• Enhance our healthy options
• Focusing on fresh baked bagels and beverage innovation
• Delivering relevant, reliable and valuable guest experiences
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• Building average check through bulk bagels, and accelerating catering growth
• Increasing media and brand awareness with a balanced approach of local (“grass roots”) and mass marketing:
• Local brand activation
• Directional outdoor and radio support
• Digital marketing/social media
We expect that our catering channel will benefit from new initiatives in fiscal 2014 that include an enhanced call center, expanded search
engine marketing, utilization of sales coordinators in smaller markets and database activation.
Our plan is to improve corporate margins by focusing on strategic contract renegotiations, distribution optimization, improving packaging
quality and costs, and improving marketing and construction materials purchases.
Our emphasis on acceleration of unit growth includes the opening of 75 to 85 units in 2014. We will seek to accomplish this objective by
continuing to focus on a franchise first growth model, asset light unit economics, penetration into new key channels and opportunistic refranchising
and acquisition efforts. We see refranchising our units as an opportunity to attract high quality franchisees that will support our accelerated growth
initiatives.
The airport channel currently consists of sixteen licensed locations with an average unit volume of $1.9 million and a total of $24.3 million in
sales for 2013, on which we receive a royalty. We opened units in Dallas/Fort Worth, Denver, San Diego and Atlanta in fiscal 2013 and were
recently awarded additional locations in the San Diego, Atlanta, La Guardia (New York), Miami and San Jose (California) airports.
We currently have a robust pipeline of existing franchise development agreements and new license locations. As of February 21, 2014, we
have 27 development agreements in place for 186 total restaurants, 47 of which have already opened. Based upon the development agreements, we
expect the remaining 139 new restaurants will open on various dates through 2021.
We expect to spend between $24 million and $26 million in capital expenditures in 2014 which includes the opening of company-owned
restaurants and the relocation of additional company-owned restaurants. We also intend to deploy our capital into areas such as the remodeling or
refreshing of existing stores, installing drive-thru lanes and adding new exterior signage at certain locations.