Zoës Kitchen expands kids’ menuZoës Kitchen expands kids’ menu

Zoës Kitchen will debut a new kids’ menu on Sept. 27 with expanded choices to appeal to Gen Z customers, the company said Tuesday.

Plano, Texas-based Zoe's Kitchen Inc. said the post-Millennial diners, who influence their parents’ dining decisions, are more open-minded about menu options. Generation Z is generally defined as the group born from 1995 through 2015.

“They desire more variety and meals that are made from scratch, and tend to gravitate toward fast-casual dining,” the company said in an announcement for the new kids’ entrees. “The new Zoës Kitchen kids’ menu offers wholesome and diverse selections for their evolving taste buds.” 

The kids’ meal entrées include salmon or shrimp kabobs, a ham and cheese piadina, a pizza piadina and an orzo pasta bowl. Each kids’ meal entrée will be served with a choice of side, offering children the opportunity to customize their meals, the company said. Sides include hummus, Greek salad, roasted vegetables, pesto farro and fresh fruit.

“I’m a father of two daughters born in Generation Z. They love experiencing new flavors and gladly choose kabobs and hummus over fries,” said Kevin Miles, president and CEO of Zoe’s Kitchen, in a statement.

“Ultimately, they crave food that makes them feel good,” he said. 

In an earnings call Monday, Miles said the kids’ menu changes join other new items added in the first quarter, including a Mediterranean Baked Feta appetizer; a Live Mediterranean Salad; and rosemary-ham and spinach-mushroom piadina sandwiches.

“After a successful launch, we have seen these items settle into a normalized run rate still mixing better than originally expected,” Miles said. He added that the third quarter’s “new, elevated kids menu offers busy families a choice with better-for-you options with flavors kids crave.”

The kids’ menu announcement came the day after Zoe’s Kitchen posted income for the second quarter ended July 11 of $1.2 million, or 6 cents per share, compared with $120,000, or 1 cent per share, a year ago, when the company was hit by $500,000 in executive transition costs. Adjusting for that impact, net income a year ago was $1 million, or 5 cents per share.

Revenue for the quarter increased more than 21 percent, to $66.3 million.

Same-store sales for the quarter increased 4 percent, largely as a result of a 3.1-percent increase in price and 0.9-percent growth in transactions and product mix.

That company warned it was reducing same-store sales guidance for the remainder of the year. 

“As you've seen, the industry is seeing slower traffic with heavy and prolonged discounting,” said Miles in the earnings call.

Sunil Doshi, Zoe’s Kitchen chief financial officer, said daypart sales remained fairly constant in the second quarter.

“Dinner comps did outpace lunch. That's something that we've seen before,” Doshi said. “We're a little bit stronger in the front half of the quarter compared to the back half of the quarter.”

David Tarantino, senior research analyst with Robert W. Baird & Co., wrote in a note Tuesday that his team was “disappointed” in the “softer-than-anticipated comps trajectory.”

“But we are inclined to think the recent slowdown is a transitory issue caused by external issues and not a structural problem with internal brand fundamentals,” Tarantino said, suggesting the slower same-store sales were “likely a cyclical issue and not a structural problem.”

As of July 11, Zoës Kitchen had 191 restaurants in 20 states.

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