Einstein Bros 2012 Annual Report Download - page 31

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312513085036/d445565d10k.htm[9/11/2014 10:07:50 AM]
Company-owned restaurant sales for fiscal 2011 increased $6.5 million, which was primarily due to the impact of the additional 53 week in
fiscal 2011. Company-owned comparable store sales remained flat, with transactions declining by -4.0% offset by an increase in average check of
+4.0%. In fiscal 2011, we acquired nine restaurants, opened an additional four restaurants and closed one restaurant. The majority of our
acquisitions and openings occurred during the fourth quarter and contributed $0.9 million of incremental net sales for the year. Restaurant sales for
2010 benefited from $0.4 million in gift certificate breakage from a program that no longer exists.
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Our bagel thin sandwich offerings, which were introduced in the second quarter of 2010, comprised 4.9% of our total mix for fiscal 2011,
compared to 2.6% for fiscal 2010. Catering sales, which comprised approximately 6% of our total sales for fiscal 2011, increased 16.3% from
fiscal 2010.
Total costs for company-owned restaurants increased by $9.6 million, primarily due to additional expenses of $5.1 million contributed by the
extra 53 week and inflationary pressures in our product costs. To help offset these costs, we took price increases of 4.0% during 2011 and
established several initiatives to control costs.
As a percentage of company-owned restaurant sales, we saw an increase in our food costs from 28.5% for fiscal 2010 to 29.6% for fiscal
2011. This 110 basis point increase includes the impacts of inflation in our commodity costs (+120 basis points) and a product mix shift towards
catering and sandwiches (+100 basis points) partially offset by price increases (-60 basis points) and savings from our initiatives (-50 basis points).
We implemented a cross functional team to evaluate innovative ways to target $3.0 million in annualized incremental savings on a go-forward
basis without negatively impacting the customer experience.
As a percentage of company-owned restaurant sales, labor costs, other operating costs (which include marketing costs), and rent and related
costs were essentially flat to fiscal 2010. We incurred approximately $9.8 million in marketing costs for both fiscal 2010 and fiscal 2011.
Our company-owned restaurant gross margin decreased from 18.9% for fiscal 2010 to 17.7% for fiscal 2011, primarily due to inflationary
pressures in our product costs.
Manufacturing and Commissary Operations
Fiscal year ended
Increase/ Percentage of manufacturing
(in thousands) (Decrease) and commissary revenues
December 28, January 3, 2011 December 28, January 3,
2010 2012 vs. 2010 2010 2012
Manufacturing and commissary revenues $ 30,405 $ 34,542 13.6%
Percent of total revenues 7.4% 8.2%
Manufacturing and commissary costs $ 25,566 $ 30,441 19.1% 84.1% 88.1%
Total manufacturing and commissary gross
margin $ 4,839 $ 4,101 (15.3%) 15.9% 11.9%
Manufacturing and commissary revenues for fiscal 2011 increased $4.1 million compared to fiscal 2010, driven mainly by higher frozen
dough sales to third parties from our manufacturing facilities and $0.5 million contributed by the extra 53 week in fiscal 2011. Manufacturing and
commissary gross margin decreased 15.3% primarily due to higher commodity costs and a shift in sales volume to lower margin export customers.
On a year to date basis, gross margin as a percentage of manufacturing and commissary revenue was 11.9%, down from 15.9% in 2010.
We closed our Ohio commissary in the fourth quarter of 2011 and closed our remaining four commissaries by the end of the first quarter
2012.
Franchise and License Operations
Fiscal year ended
Increase/
(in thousands) (Decrease)
December 28, January 3, 2011
2010 2012 vs. 2010
Franchise and license related revenues $ 9,115 $ 10,330 13.3%
Percent of total revenues 2.2% 2.4%
Number of franchise and license restaurants 302 333
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