Einstein Bros 2013 Annual Report Download - page 4

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
We are the largest owner/operator, franchisor and licensor of bagel specialty restaurants in the United States. As of December 31, 2013, we
had 852 restaurants in 42 states and in the District of Columbia. During fiscal 2013, we opened our first restaurants in Montana, Vermont and
Iowa. As a leading fast-casual restaurant chain, our restaurants specialize in high-quality foods for breakfast, lunch and afternoon snacks in a
bakery-café atmosphere with a neighborhood emphasis. Collectively, our concepts span the nation with Einstein Bros. restaurants, Noah’ s
restaurants in California and Manhattan Bagel restaurants concentrated in eight states primarily in the Northeast. Currently, our Einstein Bros. and
Noah’ s restaurants are predominantly company-owned or licensed and our Manhattan Bagel restaurants are predominantly franchised.
Our product offerings include fresh-baked bagels and other bakery items baked on-site, made-to-order sandwiches on a variety of bagels,
breads or wraps, gourmet soups and salads, assorted pastries, premium coffees, specialty beverages and an assortment of snacks. Our
manufacturing and independent distribution network delivers high-quality ingredients that are delivered fresh to our restaurants. We seek to create
an inviting atmosphere which enables us to attract a diverse group of customers primarily in the middle to upper-middle income brackets during
breakfast hours.
We believe that controlling the development, sourcing, manufacturing and distribution of our key products is an important element in
ensuring both quality and profitability. To support this strategy, we have developed proprietary recipes, invested in processing technology and
manufacturing capacity, and aligned ourselves with strategic suppliers.
We also believe that through franchising and licensing, we are able to increase our geographic footprint and brand recognition. Franchising
and licensing allows us to generate additional revenues without incurring significant additional expenses, such as those for capital commitments
and rents, while also avoiding the risks associated with opening new company-owned restaurants.
Employees:
As of December 31, 2013, the Company had 6,824 employees, of which approximately 95% were restaurant personnel. Most restaurant
personnel work part-time and are paid on an hourly basis. We have never experienced an organized work stoppage and our employees are not
represented by a labor organization.
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Table of Contents
Company-owned restaurants
We generated approximately 89% of our fiscal 2013 total revenues from restaurant sales at our company-owned restaurants. For the fiscal
year ended December 31, 2013, approximately 62% of our company-owned restaurant sales were generated from restaurant sales during breakfast
hours.
• Principal products and services sold: Einstein Bros. offers a menu that specializes in high-quality foods for breakfast and lunch,
including fresh-baked bagels and hot breakfast sandwiches, cream cheese and other spreads, premium coffees, specialty beverages,
freshly prepared lunch sandwiches, soups, salads and other unique menu offerings. Our company-owned Einstein Bros. restaurants
generated approximately 83% of our total company-owned restaurant sales in fiscal 2013.
Noah’ s is a neighborhood-based, New York inspired bakery/deli restaurant that serves fresh-baked bagels, hot breakfast sandwiches,
cream cheese and other spreads, premium coffees, specialty beverages, made-to-order deli-style sandwiches, soups, salads and other
unique menu offerings. Our company-owned Noah’ s restaurants generated approximately 16% of our total company-owned restaurant
sales in fiscal 2013.
Manhattan Bagel provides a traditional New York style boil and baked bagel. Manhattan Bagel also serves a variety of grilled
sandwiches, freshly made deli sandwiches, freshly prepared breakfast sandwiches, soups, and a variety of other fresh-baked
sweets. Similar to Einstein Bros. and Noah’ s, Manhattan Bagel also features a full line of fresh brewed premium coffees and other
specialty beverages. Our company-owned Manhattan Bagel restaurants generated approximately 1% of our total company-owned
restaurant sales in fiscal 2013.
• Restaurant Development: We are planning to open new company-owned restaurants within existing markets. Our expansion plans are
intended to increase penetration of our restaurants into the most attractive markets. In fiscal 2013, we acquired three restaurants from
existing franchisees and sold six restaurants to existing franchisees. We opened an additional ten company-owned restaurants and
closed ten company-owned restaurants. Pre-opening costs related to new unit development were $1.1 million for fiscal 2013. For 2014,
we plan to open, own and operate fifteen to twenty new company-owned restaurants.
• Status of Products/Services: Our premium coffee program, which was launched in 2011, continues to be successful with coffee sales
now representing over 9% of our menu mix.
We believe catering is an effective way to generate incremental sales, drive trial and expose more people to our food and our brands.
We believe that a successful catering program requires different skills for effectively selling to businesses that frequently utilize this