Bob Evans explores sale of Mimi's Café

Encouraged by second-quarter results from the company’s namesake restaurant brand and packaged-foods business, officials for Bob Evans Farms Inc. expressed optimism that the Columbus, Ohio-based firm could increase its long-term earnings growth — most likely, however, without the Mimi’s Café chain still in its portfolio.

Bob Evans announced a strategic review for Irvine, Calif.-based Mimi’s Café, though chief executive Steve Davis noted during the company’s fiscal-2013 second-quarter earnings call that the future is bright for Bob Evans restaurants and the company’s BEF Foods segment.

He credited “the sustainability and long-term growth potential of the transformations we have achieved” in those divisions for Bob Evans raising its long-term earnings-per-share growth guidance to an annual range of 8 percent to 12 percent, an increase from the previous guidance of 7 percent to 10 percent.

The namesake restaurant chain’s remodeling program, the key source of executives’ confidence, would accelerate in the coming quarters, Davis said. He also noted that the packaged-foods diversification into more sales of side dishes and its acquisition of the Kettle Creations food manufacturer would make BEF Foods’ future growth less dependent upon sales of sausage and less vulnerable to volatility in sow costs on the commodities market.

Mimi’s Café, charges drag down earnings

Bob Evans’ second-quarter net income fell 18.9 percent to $10.3 million, or 36 cents per share, compared with $12.7 million, or 42 cents per share, in the second quarter of fiscal 2012. Several pretax charges for restructuring the company’s packaged-foods business negatively affected earnings, Bob Evans said.

Revenue for the Oct. 26, 2012-ended second quarter increased 0.9 percent to $410.9 million, reflecting sales growth in the namesake family-dining chain and the packaged-foods division, partially offset by a same-store sales decline at Mimi’s Café.

Same-store sales grew 1 percent at Bob Evans, and the brand remodeled 45 stores during the quarter. However, same-store sales declined 5.6 percent for Mimi’s Café.

The continuation of Mimi’s prolonged same-store sales slump led Bob Evans Farms to begin a formal pursuit of strategic alternatives for its casual-dining chain. “The strategic fit and long-term growth potential of Mimi’s Café relative to our other businesses prompted us to initiate a process to evaluate our strategic alternatives for that segment,” Davis said, “including but not limited to a potential sale.”

Until the review is completed, however, Mimi’s will continue to attempt a sales turnaround by building up its takeout and catering businesses, he said. “Part of getting into catering is to make it simple for the consumer, focusing on packaging and making it a great value,” Davis said. “They’ve completely retooled an outdated catering program. Then it’s just about getting people maniacally focused against customer service.”

The company will remodel three Mimi’s locations in fiscal 2013 but does not plan to build any new units.