Einstein Bros 2013 Annual Report Download - page 31

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10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
points), partially offset by a shift in product mix (-20 basis points) and deflation in our commodity costs (-20 basis points). Most of our
commodity-based food costs decreased in fiscal 2012 as we were able to lock in several of our prices.
As a percentage of company-owned restaurant sales, labor costs decreased by 0.2% to 29.0% in fiscal 2012. Rent and related expenses
increased primarily due to unit growth, scheduled rent increases and related increases in property taxes. Other operating expenses increased
primarily due to higher credit card fees resulting from the Durban Act, which began to take effect in October 2011.
We invested $1.6 million more in marketing during fiscal 2012, primarily related to product testing in certain markets, grass roots marketing
and grand opening support.
Gross margin for our company-owned restaurant segment increased in fiscal 2012 by $5.3 million, or 7.9%, to $72.4 million. We attribute
this to an increase of $6.1 million, or 1.6%, in company-owned restaurant sales while holding company-owned restaurant costs to a modest
increase of $0.8 million, or 0.2%, in fiscal 2012 due to our focus on our initiatives.
Manufacturing and Commissary Operations
Fiscal Year Ended
(in thousands)
Increase/
(Decrease)
Percentage of manufacturing
and commissary revenues
January 3,
2012
January 1,
2013
2012
vs. 2011
January 3,
2012
January 1,
2013
Manufacturing and commissary revenues $ 34,542 $ 31,037 (10.1%)
Percent of total revenues 8.2% 7.3%
Manufacturing and commissary costs $ 30,441 $ 24,236 (20.4%) 88.1% 78.1%
Total manufacturing and commissary gross
margin $ 4,101 $ 6,801 65.8% 11.9% 21.9%
Manufacturing and commissary revenue was down 10.1% when compared to fiscal 2011. We closed all five of our commissaries by the end
of the first quarter 2012. A decrease in commissary revenue of $4.9 million resulting from the closure of the commissaries was partially offset by
an increase in manufacturing revenue of $1.4 million. We attribute this increase in manufacturing revenue to higher export sales.
Cost savings resulting from the closures of our commissaries have had a significant positive impact on our margins. We believe that the
commissary closures resulted in saving of $1.5 million to the company in fiscal 2012.
Franchise and License Operations
Fiscal Year Ended
(in thousands)
Increase/
(Decrease)
January 3,
2012
January 1,
2013
2012
vs . 2011
Franchise and license related revenues $ 10,330 $ 11,186 8.3%
Percent of total revenues 2.4% 2.6%
Number of franchise and license restaurants 333 355
39
Table of Contents
Overall, franchise and license revenue improvement was driven by continued unit development as we opened 27 licensed locations and 13
franchised locations during fiscal 2012. Franchise and license comparable store sales were +1.3% for the fiscal year ended January 1, 2013.
Franchise and license revenue improved by $0.9 million, or 8.3% from fiscal 2011, primarily the result of continued unit development and
increases in comparable store sales, partially offset by a decline in initial license fee revenue recorded on unit openings.
Corporate Support
Fiscal Year Ended
(in thousands)
Increase/
(Decrease)
Percentage of
total revenues
January 3,
2012
January 1,
2013
2012
vs. 2011
January 3,
2012
January 1,
2013
General and administrative expenses $ 36,774 $ 39,569 7.6% 8.7% 9.3%
Depreciation and amortization 19,259 19,707 2.3% 4.5% 4.6%
Pre-opening expenses 265 1,115 ** 0.0% 0.3%