Einstein Bros 2013 Annual Report Download - page 30

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
Net income decreased for fiscal 2012 primarily due to the extra 53 week in 2011, which contributed net income of $0.5 million, and $3.7
million ($2.2 million, net of tax) in non-recurring strategic alternatives expenses, partially offset by improved margins.
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Company-Owned Restaurant Operations
Fiscal Year Ended
(in thousands)
Increase/
(Decrease)
Percentage of company-owned
restaurant sales
January 3,
2012
January 1,
2013
2012
vs. 2011
January 3,
2012
January 1,
2013
Company-owned restaurant sales $378,723 $384,783 1.6%
Percent of total revenues 89.4% 90.1%
Cost of sales (exclusive of depreciation and
amortization):
Cost of goods sold $112,002 $106,925 (4.5%) 29.6% 27.8%
Labor costs 110,467 111,784 1.2% 29.2% 29.0%
Rent and related expenses 40,277 41,993 4.3% 10.6% 10.9%
Other operating costs 39,092 40,320 3.1% 10.3% 10.5%
Marketing costs 9,796 11,380 16.2% 2.6% 3.0%
Total company-owned restaurant costs $311,634 $312,402 0.2% 82.3% 81.2%
Total company-owned restaurant
gross margin $ 67,089 $ 72,381 7.9% 17.7% 18.8%
Comparable store sales for our company-owned restaurants for each quarter in fiscal 2011 and 2012 were as follows:
Fiscal 2011 Fiscal 2012 Change
First Quarter -1.4% +1.1% +2.5%
Second Quarter -0.3% +1.2% +1.5%
Third Quarter +0.7% +0.2% -0.5%
Fourth Quarter +0.8% +1.1% +0.3%
Annual 0.0% +0.9% +0.9%
Company-owned restaurant sales for fiscal 2012 increased $6.1 million, which is attributable to favorable company-owned comparable store
sales, net incremental revenue of $1.7 million from new company-owned stores opened in 2012, $3.4 million from stores we acquired from
franchisees and income from gift card breakage of $1.0 million. Stores that we opened in the fourth quarter 2011 further contributed incremental
revenue of $5.3 million in fiscal 2012. Company-owned comparable store sales increased +0.9%, with average check increasing +4.9% partially
offset by a decline in transactions. In fiscal 2012, we opened fifteen restaurants, acquired eight restaurants and closed one restaurant. Restaurant
sales for 2011 benefited from $6.7 million in revenue resulting from the extra 53 week. We took two price increases in fiscal 2012 totaling
approximately 1.0%.
Catering sales, which continue to be a strong revenue driver, comprised approximately 8% of our company store sales for fiscal 2012, an
increase of 18.1% from fiscal 2011. We believe that the implementation of a new online ordering system and an outsourced/expanded call center
contributed to the growth in catering sales. Coffee sales represent approximately 10% of our comparable company-owned restaurant sales.
Total costs for company-owned restaurants, as a percentage of company-owned restaurant sales, decreased 110 basis points primarily due to
sales leveraging and our cost saving initiatives, which in 2012 included a manufacturing packing efficiency review, the introduction of reusable egg
boats and the closure of our commissaries.
Our prime costs, consisting of costs of goods sold and labor costs, decreased by 2.0% to 56.8% of company-owned restaurant revenues.
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As a percentage of company-owned restaurant sales, we saw a decrease in our food costs from 29.6% for fiscal 2011 to 27.8% for fiscal
2012. This 180 basis point decrease includes savings from our initiatives (-140 basis points) and the leveraged impact of price increases (-80 basis
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