Einstein Bros 2007 Annual Report Download - page 24

http://www.sec.gov/Archives/edgar/data/949373/000104746908002111/a2183061z10-k.htm[9/11/2014 10:12:02 AM]
Our Properties
All of our restaurants are located on leased premises. As of January 1, 2008, leases for approximately 26 restaurants are set to expire within
the next 12 months and most of these leases contain a renewal option, usually with modified pricing terms to reflect current market rents. Lease
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terms are usually five to 10 years, with either two, three or five year renewal option periods, for total lease terms that average approximately 11 to
20 years. Our leases generally require us to pay a proportionate share of real estate taxes, insurance, common charges and other operating costs.
We have identified approximately 10 to 15 company-owned restaurants that we anticipate closing over the next three years as their leases
expire. Generally, these restaurants have an average unit volume of less than $650,000 and contribute negligible cash flow. Additionally, there are
four restaurants with average unit volumes greater than $650,000 that we anticipate closing over the next three years as they are either in areas
being taken over by eminent domain or the landlord is completely redeveloping the area and will not renew our lease.
The average Einstein Bros. restaurant is approximately 2,200 square feet in size with approximately 40 seats and is generally located in a
neighborhood or regional shopping center. We design each restaurant to create a comfortable, casual environment that is consumer friendly,
inviting and reflective of the brand's personality and strong neighborhood identity.
The average Noah's restaurant is approximately 1,800 square feet in size with approximately 12 seats and is located in urban neighborhoods or
regional shopping centers. We use elaborate tile work and wood accents in the brand's design to create an environment reminiscent of a Lower East
Side New York deli, which reinforces the brand's urban focus with an emphasis on the authenticity of a New York deli experience.
Information with respect to our headquarters, training, production and commissary facilities is presented below:
Location Facility
Square
Feet
Lease
Expiration
Lakewood, Colorado Headquarters, Support Center, Test Kitchen 44,574 5/31/2017
Hamilton, New Jersey(1) Franchise Support Center, Training Facility 6,637 10/31/2008
Whittier, California Production Facility and USDA Approved Commissary 54,640 11/30/2008
Walnut Creek, California(2) Administration Office-Noah's 2,190 2/29/2008
Walnut Creek, California(2) Administration Office-Noah's 1,672 2/28/2013
Carrolton, Texas USDA Approved Commissary 26,820 7/31/2011
Orlando, Florida USDA Approved Commissary 7,422 10/31/2010
Denver, Colorado USDA Approved Commissary 9,200 10/13/2008
Grove City, Ohio USDA Approved Commissary 20,644 8/31/2012
(1) This facility was closed in March 2007, but we still have obligations under the lease and have sub-leased the space to a third party.
(2) Effective March 1, 2008, our Noah's Administration Office will be relocated to a new building in Walnut Creek, California.
ITEM 3. LEGAL PROCEEDINGS
We are subject to claims and legal actions in the ordinary course of our business, including claims by or against our franchisees, licensees and
employees or former employees and/or contract disputes. We do not believe any currently pending or threatened matter, other than as described
below, would have a material adverse effect on our business, results of operations or financial condition.
On August 31, 2007, the Company was served in an action brought by Fiera Foods Company in the Superior Court of Justice of Ontario,
Canada. Fiera claims that the Company failed to negotiate in good faith for a frozen bagel dough supply agreement, which was not concluded, and
made misrepresentations in the negotiations. Fiera is seeking damages of $17.0 million (Canadian) as well as interest and costs. The Company
believes that these claims are not valid and is defending this action.