Einstein Bros 2006 Annual Report Download - page 3

http://www.sec.gov/Archives/edgar/data/949373/000104746907001622/a2176540z10-k.htm[9/11/2014 10:12:36 AM]
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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PART I
ITEM 1. BUSINESS
Our Company
We are a leading fast-casual restaurant chain, specializing in high-quality foods for breakfast and lunch in a café atmosphere with a
neighborhood emphasis. As of January 2, 2007, we own and operate, franchise or license 598 restaurants in 36 states and the District of Columbia,
primarily under the Einstein Bros. Bagels (Einstein Bros.), Noah's New York Bagels (Noah's) and Manhattan Bagel (Manhattan) brands. Einstein
Bros. is a national fast-casual restaurant chain. Noah's is a regional fast-casual restaurant chain operated exclusively on the West Coast. Manhattan
is a regional fast casual chain operated predominantly in the Northeast. Our product offerings include fresh bagels and other goods baked on-site,
made-to-order sandwiches on a variety of bagels and breads, gourmet soups and salads, decadent desserts, premium coffees and other café
beverages. Our manufacturing and commissary operations prepare and assemble consistent, high-quality ingredients and we deliver them to our
restaurants quickly and efficiently through our network of independent distributors. These operations support our main business focus, restaurant
operations, by exposing our brands to new product channels as well as enabling sales of our products to third parties.
Our Proposed Name Change
We are recommending to our stockholders an amendment to our restated certificate of incorporation that would change our name from "New
World Restaurant Group, Inc." to "Einstein Noah Restaurant Group, Inc." Our board of directors has approved the amendment, which is subject to
the approval of our stockholders at the Annual Meeting to be held on May 3, 2007. You can find additional information in our 2007 Proxy
Statement, which will be filed within 120 days after the close of the 2006 fiscal year, and is hereby incorporated by reference.
Our History
We opened our first company-owned restaurant, a New World Coffee café, in New York in 1993. Over the next couple of years, we grew by
opening additional New World Coffee cafés in the Northeast and through the 1996 acquisition of our coffee supplier, Willoughby's Coffee and Tea
(Willoughby's). We became a significant franchisor of bagel specialty restaurants by purchasing Manhattan in 1998, which included a bagel
manufacturing facility, and Chesapeake Bagel Bakery in 1999. After completing these acquisitions, there were approximately 340 restaurants in
our system, about 90% of which were franchises. In 2001, we acquired the assets of Einstein/Noah Bagel Corp., which included approximately 460
company-owned restaurants operated under two brands—Einstein Bros. and Noah's, as well as an additional bagel manufacturing facility. The
Einstein Bros. acquisition marked a shift in our business focus to company-owned restaurants rather than franchised restaurants. Through this
series of acquisitions, we became the largest owner/operator/franchisor/licensor of bagel specialty restaurants in the United States.
In 2001, to finance the Einstein Bros. acquisition, we issued a substantial amount of short-term debt and preferred equity. We then completed
a series of transactions aimed at simplifying and rationalizing our capital structure which resulted in an equity restructuring in September 2003. As
a result, Greenlight Capital L.L.C. and its affiliates (Greenlight) beneficially acquired 92 percent of our common stock as of September 2003.
Today, Greenlight beneficially owns approximately 94 percent of our common stock.
Our current management team, which was appointed in 2003, has focused on streamlining our operations and capital structure to provide a
foundation for future growth. In particular, we have closed 51 company-owned restaurants and 140 franchised and licensed restaurants that did not
meet our performance standards, and have taken steps to enhance our brands, improve our margins and expand our menus. We have identified
Einstein Bros., Noah's and Manhattan as our core brands. As a result, we sold
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Willoughby's in 2004 and developed an exit strategy for our Chesapeake brand. There are only two company-owned New World Coffee locations
and four franchised Chesapeake locations remaining. As of January 2, 2007, we have 598 restaurants in key locations and plan to expand our
operations under our core brands.