Davis noted, “Bob Evans Restaurants has generated positive same-store sales for three of the last four quarters based upon our guests’ favorable reactions to both the Farm Fresh Refresh remodeling program and our launch of value-oriented sales layers available at every day part. All of our sales layers – dine-in, carryout, bakery and catering – are contributing to both the revenue and margin lift we are generating through the Farm Fresh Refresh remodels. In response to consistently high returns on investment, positive guest feedback, and operating results, we are accelerating the rollout of the Farm Fresh Refresh program. We now expect to have the entire chain remodeled by the end of fiscal 2014, one year ahead of our original plan.
“BEF Foods is also performing well with positive volume gains in three of the last four quarters. Our high-growth refrigerated side dish business, up more than 12% during the second quarter, and food service business, up more than 44% during the second quarter, continue to drive revenue growth and enhance the margin structure of the business. The acquisition of the Kettle Creations(R) brand and manufacturing facility at the beginning of the second quarter raises the level of vertical integration within BEF Foods to 82%, and enables us to continue growing and innovating economically with side dish products to serve our retail and food service customers.”
Davis continued, “The sustainability and long-term growth potential of the transformations we have achieved in our core Bob Evans Restaurants and BEF Foods segments provide us with the confidence to raise our long-term annual non-GAAP EPS growth guidance to 8 to 12 percent, from the previous guidance range of 7 to 10 percent. Furthermore, the strategic fit and long-term growth potential of Mimi’s Cafe relative to our other businesses prompted us to initiate a process to evaluate our strategic alternatives for that segment, including but not limited to a potential sale. We have been working with our independent financial advisor, Lazard, to assist us in that process.”
During the second quarter of fiscal 2013, the effective tax rate recorded by the Company was 32.3%.
Below is a summary of the Company’s consolidated second-quarter fiscal 2013 income statement.
When a restaurant is refreshed, it is closed for an average of five to seven days. During the second quarter the Company refreshed 45 restaurants (which we define as “transitional” restaurants) with a total of 290 closed restaurant days. During the second quarter of last year, the Company refreshed 31 restaurants with a total of 221 closed restaurant days. The Company refreshed 81 restaurants during the first half of fiscal 2013 with a total of 544 closed restaurant days. During the first half of fiscal 2012, the Company refreshed 33 restaurants with a total of 228 closed restaurant days. As part of the refresh process, the Company also incurs pre-opening expenses for training restaurant staff to operate the restaurant more efficiently and local marketing to support re-opening sales. A typical restaurant yields positive cumulative profit flow-through by the twelfth week to offset: the opportunity cost of lost sales due to closed restaurant days; initial operational inefficiencies; and pre-opening expenses.
During the second quarter of fiscal 2013, Bob Evans Restaurants:
During the second quarter of fiscal 2013, Mimi’s Cafe remodeled one restaurant and did not open or rebuild any restaurants.
This outlook relies on a number of important assumptions, including the risk factors discussed in the Company’s securities filings. Particular assumptions for the Company’s full-year outlook include the following:
The Company, consistent with its commitment to enhance shareholder value, is exploring a range of strategic alternatives for the Mimi’s Cafe business segment, including but not limited to a potential sale of the business or its assets. In order to assist the Company in evaluating strategic alternatives, including discussions with third parties, the Company is utilizing Lazard, its independent financial advisor. While there have been confidential discussions with third parties, the Company cannot assure any outcome of this process.
Note: amounts are in thousands, except per share amounts
Future quarters represent estimates for fiscal year 2013.
SOURCE Bob Evans Farms, Inc.