Einstein Bros 2010 Annual Report Download - page 9

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312511067286/d10k.htm[9/11/2014 10:09:09 AM]
if a single stockholder holds more than 50% of the voting power of a listed company, that company is considered a “controlled company”, and is exempt from several other corporate governance rules, including
the requirement that companies have a majority of independent directors and independent director involvement in the selection of director nominees and in the determination of executive compensation. As a
result, our stockholders do not have, and may never have, the protections that these rules are intended to provide. The Company currently has a majority of independent directors on the board of directors and an
audit committee and a compensation committee that each consist entirely of independent directors. The Company does not have a nominating committee and all directors participate in the consideration of
director nominees.
Future sales of shares of our common stock by our stockholders could cause our stock price to fall.
If a substantial number of shares of our common stock are sold in the public market, the market price of our common stock could fall. The perception among investors that these sales will occur could
also produce this effect. Sales of our common stock by our majority stockholder, Greenlight, or a perception that Greenlight will sell their shares could cause a decrease in the market price of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
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ITEM 2. PROPERTIES
Our Properties
Our headquarters, manufacturing and commissary facilities and all of our restaurants are located on leased premises. Lease terms are usually five to 10 years, with two or three five-year renewal option
periods, for total lease terms that average approximately 10 to 20 years. The average company-owned restaurant is approximately 1,800 to 2,500 square feet in size with approximately 30—40 seats and is
generally located in a neighborhood or regional shopping center. As of December 28, 2010, leases for approximately 70 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. We estimate closing approximately six to ten company-owned restaurants over the next three years as their leases expire and
they cannot be relocated.
Information with respect to our headquarters, 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
Whittier, California Manufacturing Facility and USDA Approved Commissary 54,640 11/30/2013
Walnut Creek, California Administration Office-Noah’ s 1,672 3/31/2013
Carrolton, Texas USDA Approved Commissary 26,820 7/31/2011
Orlando, Florida USDA Approved Commissary 7,422 10/31/2012
Denver, Colorado USDA Approved Commissary 9,200 10/14/2013
Grove City, Ohio USDA Approved Commissary 20,644 8/31/2012
Our Current Restaurants
As of December 28, 2010, we owned and operated, franchised or licensed 733 restaurants. Our current base of company-owned restaurants under our core brands includes 358 Einstein Bros. restaurants,
72 Noah’ s restaurants and one Manhattan Bagel restaurant. Also, we franchise 73 Manhattan Bagel restaurants and 19 Einstein Bros. restaurants, and license 210 Einstein Bros. restaurants. In support of our
strategy to only license the Einstein Bros. brand, in 2010, we converted our final Noah’ s licensed restaurant to the Einstein Bros. brand. In addition, we had one company-owned restaurant which we owned and
operated under another brand, which we closed during the first quarter of 2010 and one company-owned restaurant that we sold to a franchisee during the third quarter of 2010. We also closed one company-
owned Einstein Bros. location in the second quarter of 2010.
The following table details our restaurant openings and closings for each respective fiscal year:
52 weeks ended December 29, 2009 52 weeks ended December 28, 2010
Company
Owned Franchised* Licensed* Total
Company
Owned Franchised* Licensed* Total
Consolidated Total
Total beginning 426 71 152 649 428 77 178 683
Opened restaurants 7 7 31 45 6 14 35 55
Closed restaurants (5) (1) (5) (11) (2) — (3) (5)
Refranchised restaurants — — — — (1) 1 — —
Total ending 428 77 178 683 431 92 210 733
*We use franchise agreements to contract with qualified disadvantaged business enterprises, non-profit and other entities, either as licensees, fractional franchisees, or franchisees under a traditional
franchise agreement, who do not meet the fractional franchise exemption to open restaurants in our traditional licensee venues. As of December 29, 2009 and December 28, 2010, we had six and four
franchisees, respectively, operating Einstein Bros. restaurants in such license locations which operationally fall under our licensing group.
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As of December 28, 2010, our company-owned facilities, franchisees and licensees operated in various states and in the District of Columbia as follows:
Location
Company
Owned Franchised Licensed Total
Alabama — — 4 4
Arizona 27 — 5 32
Arkansas — 1 — 1
California 79 7 11 97
Colorado 33 1 8 42
Connecticut 1 — 1 2
Delaware 1 1 — 2
District of Columbia 1 — 4 5
Florida 51 4 20 75
Georgia 17 1 14 32
Idaho — — 1 1
Illinois 32 3 9 44
Indiana 10 — 1 11
Kansas 6 — 2 8
Kentucky — — 7 7