Einstein Bros 2008 Annual Report Download - page 24

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312509042707/d10k.htm[9/11/2014 10:10:56 AM]
Rent and related, and marketing costs
$39,544
$40,653
2.8%
As a percentage of company-owned restaurant sales 10.6% 10.8%
As a percentage of total revenue 9.8% 9.8%
Rent and related, and marketing costs consist of restaurant-level rent expense, common area maintenance expense, property taxes and
marketing expense. For the fifty-two weeks ended December 30, 2008, rent and related and marketing costs increased $1.1 million compared to
the same period in 2007. The increase was principally attributable to an increase in rent and related expense due to new restaurants as well as
increases in the cost of rent on renewed leases, partially offset by a decrease in marketing expense from $3.3 million in fiscal 2007 to $2.3 million
in fiscal 2008.
Manufacturing and Commissary Operations
Revenues
(dollars in thousands)
Increase/
(Decrease)
Fiscal
2007
Fiscal
2008
2008
vs. 2007
Manufacturing and commissary revenues $24,204 $30,369 25.5%
Percent of total revenue 6.0% 7.3%
Manufacturing and commissary gross margin (2.4%) 5.9% **
** not meaningful
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Table of Contents
Manufacturing and commissary revenues for the fifty-two weeks ended December 30, 2008 increased $6.2 million compared to the same
period in 2007. This increase to revenue and gross margin was attributed to price increases and our expanded role within the distribution chain for
sales to our franchise and license locations. For the fifty-two weeks ended December 30, 2008, we saw a moderate rise in volume of units sold to
our more significant third-party customers compared to the same periods in 2007.
Cost of sales
Cost of sales consists of cost of goods sold, labor expenses and other operating costs and expenses.
(dollars in thousands)
Increase/
(Decrease)
Fiscal
2007
Fiscal
2008
2008
vs. 2007
Manufacturing and commissary costs $24,792 $28,566 15.2%
As a percentage of manufacturing and commissary revenue 102.4% 94.1%
As a percentage of total revenue 6.2% 6.9%
Manufacturing cost of sales are composed of cost of goods sold, labor costs and other operating costs. For the fifty-two weeks ended
December 30, 2008, manufacturing cost of sales increased $3.8 million compared to the same period in 2007. The component change within
manufacturing cost of sales was as follows:
• Manufacturing costs of goods sold increased predominantly due to an increase in commodity costs and, to a lesser extent, a rise in
volume of units sold.
• Labor expenses decreased in fiscal 2008 compared to the same period in 2007. This was due to a decrease in incentive compensation
and a decrease in personnel that occurred late in the second quarter of 2008, partially offset by an increase in merit pay year-over-year
coupled with increased minimum wage rates at the federal level and in some states in which we operate.
• The changes in other operating costs and expenses for the fifty-two weeks ended December 30, 2008 compared to the same period in
2007 decreased primarily related to a decrease in travel expenses, bad debt expense which was higher in 2007 related to our closed
commissaries, cost of utilities due to production efficiencies, and marketing costs.
Franchise and License Operations
(dollars in thousands)
Increase/
(Decrease)
Fiscal
2007
Fiscal
2008
2008
vs. 2007
Franchise and license related revenues $ 5,701 $ 6,417 12.6%