Einstein Bros 2008 Annual Report Download - page 22

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312509042707/d10k.htm[9/11/2014 10:10:56 AM]
locations, offset by increased cost of sales which was primarily driven by volatile commodity costs and labor costs for both the company-owned
restaurants and our manufacturing and commissary operations. Adding to this was a decrease in our general and administrative expenses related to
decreased stock-based compensation expense and other cost savings, decreased interest expense related to the debt redemption in 2007, offset by
an increase in depreciation expense from the new restaurants that have been opened and upgrades that have been completed. Additionally, general
and administrative expenses included expenses of $1.9 million related to the settlement of two class-action lawsuits in California and the $1.3
million from the senior management transition costs.
Company-Owned Restaurant Operations
Our company-owned restaurants vary in their unit volume, profitability and recent comparable store sales performance. As of December 30,
2008, we had 123 restaurants that generate an average unit volume in excess of $1 million. These 123 restaurants had an average unit volume of
approximately $1.2 million and an average gross profit of $322,000. In the aggregate, these restaurants contribute approximately 39.5% of total
restaurant sales and 53.8% of total restaurant operating profit.
The following table includes only restaurants that have been open for one full year and have not been relocated or closed during the current
year. It summarizes our financial performance since 2006 by reporting company-owned restaurants by sales level and the related revenue (in
thousands of dollars) and gross profit percentage:
Fiscal 2006 Fiscal 2007 Fiscal 2008
Sales Level:
Number of
Restaurants
Net
Revenue
Gross
Profit
Number of
Restaurants
Net
Revenue
Gross
Profit
Number of
Restaurants
Net
Revenue
Gross
Profit
greater than $1,000 96 $115,000 28.5% 119 $143,000 26.9% 123 $148,700 26.6%
$900 - $1,000 57 $ 54,300 23.2% 63 $ 59,800 21.2% 55 $ 51,800 21.0%
$800 - $900 76 $ 64,600 19.7% 72 $ 61,100 18.7% 79 $ 66,700 18.3%
$700 - $800 73 $ 55,200 16.7% 74 $ 55,700 14.9% 70 $ 52,600 14.8%
$600 - $700 72 $ 46,700 12.6% 49 $ 32,100 11.5% 58 $ 38,000 10.0%
less than $600 35 $ 18,700 4.8% 25 $ 13,700 3.6% 22 $ 12,000 2.5%
Totals 409 $354,500 20.9% 402 $365,400 20.6% 407 $369,800 20.2%
Revenue
(dollars in thousands)
Increase/
(Decrease)
Fiscal
2007
Fiscal
2008
2008
vs. 2007
Company-owned restaurant sales $372,997 $376,664 1.0%
Percent of total revenue 92.6% 91.1%
Company-owned restaurant gross margin 20.3% 19.5% (3.9%)
Number of company-owned restaurants 416 426
Company-owned restaurant sales for the fifty-two weeks ended December 30, 2008 increased $3.7 million, when compared to the same
period in 2007. These results were primarily due to price increases at Einstein Bros. and Noah’ s coupled with a net increase in the number of
restaurants opened over the last twelve months, partially offset by a decline in volume. On average, the restaurants opened since January 1, 2008
had higher volumes relative to those that were closed over the same period, which positively contributed to our sales. Additionally, restaurant sales
for 2008 benefited from $0.3 million in gift card breakage.
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For the fifty-two weeks ended December 30, 2008, our restaurant comparable store sales were relatively flat with a decrease of 0.1% over
the same periods in 2007. This was due to a decrease in the number of units sold, which we believe was mostly related to both the economic
climate and its negative impact on consumer discretionary spending and from a decrease in our hours of operation. This was offset by system-wide
price increases since January 1, 2008 and a shift in product mix to higher priced items.
Comparable store sales for our restaurants for each quarter in fiscal 2007 and 2008, compared to the same periods in the previous year were
as follows:
Fiscal 2007 Fiscal 2008
First Quarter 1.0% 3.6%
Second Quarter 5.2% 1.0%
Third Quarter 5.2% -1.7%
Fourth Quarter 3.2% -3.3%
Cost of sales