Bob Evans Farms Inc. plans to ramp up and complete its Farm Fresh Refresh remodeling program at its namesake chain during fiscal 2014, as well as drive innovation in both its packaged foods and restaurant businesses.
While fiscal 2013 was a transition year for Bob Evans Farms, in which the family-dining operator divested the Mimi’s Café chain and acquired Kettle Creations for its packaged-foods business, the company’s fiscal 2014 will be “an investment year,” officials said during a call Wednesday to discuss fourth-quarter results.
Officials noted that Bob Evans drove a 1-percent gain in full-year same-store sales despite losing more than 1,300 operating days while stores closed for remodels.
“The positive results are the outcome of a multiyear effort to position ourselves for growth and leadership in the restaurant and packaged-foods segments,” chief executive Steve Davis said during the earnings call. “We’re engaged in a share battle in both businesses, and we must engage in innovation in each of them.”
Chief financial officer Paul DeSantis disclosed that reimaged restaurants led the way for Bob Evans in the fourth quarter, as same-store sales at restaurants reimaged for more than one year rose 1.8 percent, while units that had been remodeled within the past year produced a collective 2.2-percent same-store sales gain. At the restaurants yet to be reimaged, same-store sales fell slightly by 0.6 percent.
The company will reimage the remaining 233 locations by the end of fiscal 2014 and will open four new restaurants with the new look during the year. Once the remodeling program is done, officials said, Bob Evans then would transition to opening about 10 new restaurants per year, as well as a “Farm Fresh Refresh 2.0” program that refurbishes the back of the house at every Bob Evans restaurant to expand capacity and improve speed of service.
“The Farm Fresh Refreshes elevate the customer experience while building our sales for bakery, carryout, catering and soon an expanded beverage program,” Davis said. “Our restaurants were long overdue for a facelift and new sales layers.”
For its April 26-ended fiscal fourth quarter, Bob Evans Farms’ net income grew to $27 million, or 97 cents per share, compared with $22 million, or 76 cents per share, a year earlier.
Fourth-quarter results included a $68.2 negative net pretax impact from the sales of Mimi’s Café, the acquisition of Kettle Creations, the consolidation of packaged-food production at a plant in Texas and the sale of Bob Evans’ corporate campus in Columbus, Ohio. However, a $66 million tax benefit masked many of those impairment charges.
Revenues from restaurant sales at Bob Evans and Mimi’s Café and the Bob Evans Foods packaged-goods business totaled $353.9 million in the fourth quarter, a 14.4-percent decrease from $413.5 million in the fourth quarter of fiscal 2012.
Same-store sales at Bob Evans restaurants rose 0.5 percent for the quarter.
Bob Evans Farms recorded a full-year net loss of $2.9 million, or negative 10 cents per share, compared with a $72.9 million gain, or $2.45 per share, a year earlier. Full-year revenue fell 2.8 percent to $1.61 billion, and same-store sales at Bob Evans restaurants rose 1 percent.
In fiscal 2013, carryout sales grew 8 percent, while bakery sales and catering sales increased 32 percent and 20 percent, respectively, Davis said. Improvements in Bob Evans’ average check of more than 3 percent came mostly from a shift into bundled meals and far less from pricing, he added.
“Most of our mix benefit comes from our $9.99 Three Course Dinners, and we’re selling a lot more Farmer’s Choice Breakfasts,” Davis said. “When we take pricing, it’s moderate. We know this is a price-sensitive market in which we compete. And our soup sales continue to grow, so every period we look for more ways to innovate around that. Any time we can get a bakery in there, that adds to our check as well.”
Bob Evans Farms operates 560 namesake family-dining restaurants in 19 states.