Bob Evans Farms Inc. said Wednesday an ongoing restaurant remodeling strategy lifted sales at its namesake family-dining brand during its first quarter and will soon be applied to its struggling Mimi’s Café casual-dining chain.
The Columbus, Ohio-based company, which along with its restaurants owns a packaged food division, reported a 16-percent decline in profit for the first quarter, in part as a result of one-time charges related to Bob Evans’ $50 million acquisition of Kettle Creations, its supplier of refrigerated side dishes.
For the quarter ended July 27, Bob Evans earned $15 million, or 53 cents per share, compared with $17.8 million, or 59 cents per share, in the same quarter a year ago. The latest quarter included severance charges and costs related to the acquisition of Kettle Creations, a Lima, Ohio-based maker of potato and macaroni-and-cheese products. Kettle Creations has been supplying Bob Evans since 2009.
Net sales, including the packaged foods division, increased about 1 percent to $409.7 million. For Bob Evans Restaurants, net sales increased 1.7 percent to $248 million in the first quarter, which reflected a same-store sales gain of 1 percent.
The company has remodeled about 150 Bob Evans locations this year, and about half will be refreshed before the end of the fiscal year.
Remodeled locations are reporting an average sales lift of about 5 percent, and the company plans to accelerate the program, said Steve Davis, Bob Evans Inc.’s chair and chief executive.
Mimi’s Café, however, reported a same-store sale decrease of 3.3 percent, with net sales for the chain down 3 percent to $86.3 million — an ongoing trend that has continued to fuel speculation that Bob Evans may be looking to sell the Mimi’s concept.
After seeing the sales lift from remodeling at the Bob Evans brand, the company plans to launch a similar remodeling program for Mimi’s, and three locations are currently in test.
Davis said Mimi’s is continuing to work on adding value to the menu with deals like a three-course dinner for $9.99, which has worked well for Bob Evans. Mimi’s guests can add shrimp skewers or crab cakes for $2, and three-quarters of guests do, he said.
Davis also noted that Mimi’s same-store sales improved throughout the quarter, showing a decline of 5.6 percent in May and a dip of 2.1 percent by July.
“We know value is top of mind when our guests make purchasing decisions,” Davis said. “Consumers are increasingly risk averse.”
Bob Evans’ food division recorded net sales of $75.5 million, an increase of 4.5 percent.
The company raised its outlook for the year by a penny, saying earnings per share would total between $2.67 and $2.73, compared with the previously projected range of between $2.66 and $2.72.
For the year, Bob Evans Restaurants same-store sales are expected to increase between 1 percent and 3 percent. Mimi’s same-store sales are expected to range between a decline of 2 percent and an increase of 1 percent. An increase of $1 million in marketing spending is expected to help drive that result, the company said.
Commodity pressures are expected to be a challenge next year as a result of this summer’s drought, Bob Evans executives noted. The company projected commodity inflation for the year will total between 2.5 percent and 3.5 percent, more than previous projections of inflation between 2 percent and 3 percent. Officials warned that a net menu price increase of between 1 percent and 2 percent may be likely for both restaurant chains.
Bob Evans operated 565 namesake restaurants at the end of the quarter, and 145 Mimi’s Café units.