Einstein Bagels Rolling in Dough

LAKEWOOD, CO, Mar. 3, 2009—Talk about a recession-proof business. Bagels. Specifically, bagels made by divisions of Einstein Noah Restaurant Group.

The Colorado-based company today reported 12-month gross profit of $81.8 million versus $80.9 million in 2007.

Einstein’s other balance-sheet numbers are also impressive.

Total revenue grew 2.6 percent to $413.5 million from $402.5 million last year.

System-wide comparable store sales increased 1.4 percent. Einstein has 600 restaurants in 36 states.

Net income was $21.1 million versus $12.6 million in 2007. Earnings per share totaled $1.29 compared to 88 cents last year.

Cash on hand amounted to $24 million on Jan. 1, 2008 versus $9 million on Dec. 31, 2008.

Einstein’s assets totaled $173 million versus $149 million last year. And the company reduced its debt load to $25 million from $92 million a year ago.

Jeff O’Neill, (middle left photo) CEO and president of Einstein Noah, says his company’s 2008 performance is “a testament to the strength of our loyal customer base.

“In the face of unprecedented economic challenges, we’ve been able to preserve our comparable store sales, continue to build efficiencies in our manufacturing and commissary operations, and lower our G&A (general and administrative) costs significantly.

“Most importantly, in 2008 we generated free cash flow totaling $16.4 million, which further strengthens our liquidity position.”

For 2009, Einstein plans to open six to eight company-owned, six-to-eight franchised and 30 to 35 licensed stores, as well as upgrading 45 company-owned stores.

The company also should have no worries this year about obtaining supplies for its product.

“We have locked in over 90 percent of all major agricultural commodities at virtually flat prices compared to 2008, with an option to benefit from further reductions in pricing,” says O’Neill.

He says the company’s “key objectives (in 2009) are to accelerate our marketing and merchandising efforts, continue to build on our strong and growing base of franchise and license partners, and prudently manage our controllable costs.”

O’Neill adds, “We are pleased with our unique strength and positioning in the Fast Casual Breakfast day part (of the restaurant industry) and are confident that we can take additional market share from our competitors through our emphasis on exciting new products and value-oriented promotions.”

Rick Dutkiewicz, (bottom right photo) chief financial office of Einstein Noah, says the company has “over $24 million of unrestricted cash and remains in full compliance with out debt agreements.”

He says Einstein’s “growth strategy and brand-building efforts place greater emphasis on high-margin, capital efficient development.” The company’s goal is to have about 50 percent of all locations operated by franchise and license partners by 2012.