Einstein Bros 2011 Annual Report Download - page 30

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312512092597/d260635d10k.htm[9/11/2014 10:08:30 AM]
Comparable store sales for our company-owned restaurants for each quarter in fiscal 2009 and fiscal 2010 were as follows:
Fiscal 2009 Fiscal 2010 Change
First Quarter -5.7% -0.2% +5.5%
Second Quarter -3.2% -2.2% +1.0%
Third Quarter -3.1% -0.2% +2.9%
Fourth Quarter -1.7% +1.0% +2.7%
Annual -3.4% -0.4% +3.0%
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Our company-owned restaurant gross margin increased $3.7 million, or 5.6%, in 2010 primarily due to an increase in sales combined with
the success of our operations initiatives. Company-owned restaurant sales increased $1.8 million, or 0.5%, to $372.2 million. Comparable store
sales declined -0.4% with transactions declining by -0.8% offset by an increase in average check of +0.4%.
The total costs for company-owned restaurants declined by $1.9 million with our cost of goods sold and labor costs declining by a combined
$6.7 million, or 3.0%. This decline in our costs was substantially offset in part by an increase of $5.3 million in our marketing costs.
We were able to control and lower our variable cost of goods sold by 1.9% causing our cost of goods sold to decline from 29.2% to 28.5% as
a percent of company-owned restaurant revenues. We renegotiated agreements with several of our suppliers in early 2010 that will further decrease
our costs for certain products over the next several years. Most of our commodity-based food costs decreased during fiscal 2010. Wheat represents
the most significant raw ingredient we purchase at approximately 8.0% of our cost of goods sold. To mitigate the risk of increasing market prices,
we utilized a third party advisor to manage our wheat purchases for our company-owned manufacturing facility. As a result of this relationship,
our wheat costs declined throughout fiscal 2010. Further, we believe that we benefited from the successful implementation of our food waste
management initiatives and from the installations of our on-site restaurant cameras.
Total labor costs decreased 1.4% as a percentage of company-owned restaurant sales in fiscal 2010 due to labor initiatives we undertook in
2010 and lower health care benefit costs that were incurred.
Other operating costs increased $5.6 million as we more than doubled our investment in marketing to $9.9 million in fiscal 2010 from $4.6
million in fiscal 2009. The increase was principally attributable to increased media marketing including billboard advertising and radio spots.
Manufacturing and Commissary Operations
Fiscal Year Ended
Increase/
(Decrease)
Percentage of manufacturing
and commissary revenues (in thousands)
December 29,
2009
December 28,
2010
2010
vs. 2009
December 29,
2009
December 28,
2010
Manufacturing and commissary revenues $ 30,638 $ 30,405 (0.8%)
Percent of total revenues 7.5% 7.4%
Manufacturing and commissary costs $ 26,573 $ 25,566 (3.8%) 86.7% 84.1%
Total manufacturing and commissary
gross margin $ 4,065 $ 4,839 19.0% 13.3% 15.9%
Manufacturing and commissary revenues for fiscal 2010 decreased $0.2 million compared to fiscal 2009. The modest decline was due to a
decrease in third party domestic bagel sales, partially offset by a slight increase in international bagel sales as well as growth in sales to our
franchise and license locations. Manufacturing and commissary costs decreased substantially in fiscal 2010 as a result of lower raw ingredient costs
coupled with savings due to lower use taxes, maintenance and insurance costs for manufacturing and commissary locations, and continued
efficiency improvements in our bagel manufacturing facility.
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Franchise and License Operations