O’Neill concluded, “Over the past several years, we have been working diligently to build a stronger foundation and enhance value for our stockholders by shifting to an asset-light expansion strategy, de-levering our balance sheet, inaugurating a dividend, and embarking on a comprehensive cost savings program. After careful consideration, our Board of Directors believes that it is now an opportune time to review strategic alternatives available to the Company, including a possible business combination or sale of the Company, as the next step in its efforts to maximize value for all stockholders and positively position Einstein Noah for the future.”
First Quarter 2012 Financial Results
For the first quarter ended April 3, 2012, system-wide comparable store sales increased 1.1%, reflecting 5.0% growth in average check primarily driven by a strong increase in catering sales partially offset by lower comparable transactions, as the Company lapped some discounting activity from the last year’s first quarter. Total revenues increased 3.6% to $104.9 million from $101.2 million.
Restaurant gross margin as a percentage of company-owned restaurant sales increased 380 basis points to 19.4% from 15.6%, which was due to sales leveraging, higher pricing and less discounting compared to the year-ago period. In addition, operational efficiencies in food costs and labor, cost initiatives and lower marketing spending, all combined to drive margin improvement.Manufacturing and commissary gross margin as a percentage of manufacturing and commissary revenues increased 290 basis points to 18.4% from 15.5%, which was primarily attributed to benefits from ongoing cost initiatives, including the closure of the Company’s remaining commissaries that were completed in the first quarter. Overall, gross margin was $22.6 million in the first quarter of 2012 compared to $17.8 million in the first quarter of 2011, and as a percentage of total revenues, increased to 21.6% from 17.6% in the year-ago period.