Einstein Bros 2007 Annual Report Download - page 5

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http://www.sec.gov/Archives/edgar/data/949373/000104746908002111/a2183061z10-k.htm[9/11/2014 10:12:02 AM]
•Since 2003, our average company-owned restaurant sales have increased by 18.5% from approximately $767,000 to approximately
$909,000.
In addition to operational improvements that have helped our financial performance, in the second quarter of 2007, we completed a secondary
offering and a debt refinancing, using the proceeds of our offering to pay down debt. These actions resulted in cash interest savings of
approximately $6.4 million for 2007, and we expect to realize approximately $11.7 million in cash interest savings on an annualized basis for
2008.
A Disciplined, Results-Oriented Team
We have assembled a seasoned management team with significant operating experience. Our management team has:
•employed a "back-to-the basics" approach to our financial performance, with a focus on sales and profitability;
•successfully improved restaurant operations through quality service checklists at all units, a focus on hospitality, improved ordering
systems and enhanced training programs;
•implemented new management information systems which provide profit management and optimization tools;
•created a low cost supply chain with strategically located commissary and manufacturing operations; and
•formed a new supervisor role and organized our associates to fit this role based on their strengths and leadership abilities.
Our Strategy
Expand Sales and Profitability at Our Existing Restaurants
Enhanced Menu to Capture Multiple Dayparts. We have enhanced our menu offerings at Einstein Bros., Noah's and Manhattan Bagel
restaurants to attract more guests to our restaurants across multiple dayparts. In addition to leveraging popular menu items across concepts, we
have introduced 2 new breakfast sandwiches, 8 lunch items, and 10 items for the afternoon daypart in the past year. We continue to enhance our
breakfast offerings, including offering any breakfast sandwich in new
4
"commuter friendly" whole wheat wraps to cater to the increasing number of our customers who consume breakfast on the go. To expand our sales
during the lunch daypart, we regularly test and introduce new sandwiches, soups and salads, as well as expand the availability of items popular at
one of our restaurant concepts, such as Noah's pressed panini sandwiches, across the entire company-owned restaurant base. For the afternoon
daypart, we have developed a line of frozen drinks for our Einstein Bros. restaurants, which we introduced to Noah's in the Fall of 2007 and
Manhattan Bagel in the Spring of 2007. We also developed the pizza bagel at our Einstein Bros. restaurants in the Spring of 2007, which is a
popular lunch item as well as a snack between traditional meal times, and introduced it to Noah's in January 2008. Manhattan Bagel offered a new
line of grilled chicken sandwiches in the Fall of 2007. As we have expanded our menu, we have refined its layout to simplify the presentation
while highlighting the breadth of our offerings by featuring large food images to help highlight our food categories. We believe the enhanced
offering at each daypart will help us capture new guests and encourage current guests to visit us more frequently.
Increased Focus on Guest Service and Hospitality. We believe exceptional guest service will foster repeat business and increase the
frequency of return visits. We have implemented an improved ordering system that reduces the time our guests wait in line before they receive
their food. Using wireless technology, this system allows our associates to take orders from a mobile ordering pad. The system tracks the time
from when the order is taken to completion and alerts our associates to orders that have exceeded our acceptable completion time. Additionally, we
believe that this system improves production accuracy compared to our current paper tickets process and helps to reduce waste. During 2007, we
implemented this system into 111 of our restaurants and for 2008, we plan to implement it in approximately 60 to 70 of our restaurants where we
believe waiting time has been a limiting factor to increasing sales.
We also encourage superior hospitality through the creation of area hospitality manager positions. We train our general managers to be out in
the front of our restaurants greeting guests and making them feel welcome. We have developed a variety of programs to test our success at
providing exceptional guest service.
Upgraded Selected Restaurants. Our new Einstein Bros. restaurant prototype provides superior merchandising and improved functionality,
resulting in increased throughput in our restaurants. This new restaurant format provides better service flow for our guests, including a new, more