Einstein Noah to focus on lunch, catering

One-time expenses weighed down fourth-quarter results for Einstein Noah Restaurant Group, but officials said menu initiatives on deck this year will help the bagel company navigate the still-choppy economic climate.

Like other public companies reporting this month, Einstein Noah’s chains — including Einstein Bros Bagels, Noah’s New York Bagels, and Manhattan Bagels — saw “softness” in sales in January, which executives blamed on the payroll tax increase and other pressures on consumer discretionary income.

In a Thursday call with analysts, however, Jeff O’Neill, Einstein Noah’s chief executive, said it was “nothing that’s insurmountable” and February sales have picked up.

The choppiness of the first quarter is nothing new, he added. “The last three years really have been choppy. I don’t see any difference in this year. It’s not easier, but it’s not harder,” he said. “I think that we’re just in a much better position to face it this year, maybe, than we have been in others.”

With new initiatives on deck for 2013, O’Neill expressed optimism about the year ahead, saying the company remains focused on its mantra: “best at bagels, win at coffee and compete at lunch.”

Lunch options will also be expanded with more of a value message and a new line of “Big Eat” sandwiches.

In recent weeks, the company rolled out nationally new “everyday value” combination meal options at $3.99 and $5.99. “Based on tests we did last year, we feel confident that we are going to get our traffic moving in the right direction and get our lunch business growing as effectively as we have with our breakfast daypart,” O’Neill said.

Einstein Noah has been growing its catering business, which now accounts for about 8 percent of sales in 2012. The company plans to continue that growth by boosting customer awareness of catering with search engine marketing, O’Neill said.

Also in test are extended hours, and the company is poised to roll out what O’Neill described as a “sort of happy hour.”

The company is also testing TV advertising and plans to roll out a simplified menu board, which has boosted traffic in test markets.

O’Neill said cost-saving initiatives have also resulted in savings of about $11 million over the past two years. This year, the company is committed to saving another $2.5 million to $5 million from efficiencies in packaging, supply contracts and distribution center rationalization, which he said would help offset the expected 2 percent to 3 percent increase in commodity costs in 2013 — though the company also plans a modest menu price increase of 1 percent.