Catering helps boost Zoe’s Kitchen top lineCatering helps boost Zoe’s Kitchen top line

With dedicated sales teams and a to-go-friendly menu, Zoe’s Kitchen Inc. saw a significant increase in catering sales in 2015, the company said Thursday.

“Catering continues to be a key element in our overall strategy and is contributing to our overall results,” said Kevin Miles, president and CEO of the Plano, Texas-based fast-casual Mediterranean chain, adding later: “We believe that there is plenty of runway ahead of us to grow catering in existing markets and new markets that we enter.”

Miles said in a call with equity analysts that catering sales increased 17 percent in fiscal 2015, compared to an increase of 11 percent in fiscal 2014.

“By the end of fiscal 2015, catering represented approximately 16 percent of net sales,” Miles said. “Our dedicated catering sales teams build lasting relationships with our guests and build brand advocacy through education in Mediterranean food and lifestyle. The sales teams work closely with our operations teams in planning catering, where we leverage our morning prep hours to execute incoming orders.”

Catering was driving same-store sales improvements as well, said Sunil Doshi, Zoe’s chief financial officer, which increased 7.7 percent in the fourth quarter ended Dec. 29. That was made up of a 2.8-percent increase in transactions and a 4.9-percent increase in average check, he added.

The check increase included a 4.5-percent increase in mix, which Doshi said was driven by a growth in check because of larger catering orders and an “increased penetration in the dinner mix.” Zoe’s has been working to increase dinner sales, which are about 40 percent of the total, compared to 60 percent at lunch.

Miles said the company last week launched four new menu items, including a Mediterranean Baked Feta appetizer; a Live Med Salad with raw vegetables, farro and lupini beans; and two Italian street-style piadina sandwiches, a rosemary and ham version, and a spinach and mushroom.

“These are more sophisticated sandwich offerings and give our guests another warm sandwich option,” Miles said. “We expect them to enhance our entrée, starter and salad categories to support both lunch and dinner dayparts, as well as catering.”

With the introduction of the new items, Zoe’s took a 150-basis-point menu price increase in mid-February, Miles said. The company did not take a menu-price increase in 2015, he said, and this year’s increase is bit earlier than typical for the brand.

“We did a very surgical approach to the price,” he said. “We didn't just take a flat price across the board. We evaluated against our competitive set in fast casual and then looked at the uniqueness of the menu item itself and priced accordingly.”

On Thursday, Zoe’s said a provision for income taxes helped it swing to profit in the fourth quarter ended Dec. 29, posting net income of $2.6 million, or 13 cents a share, from a net loss of $1.6 million, or 8 cents a share, in the same period a year ago. Revenue increased 31.7 percent, to $52.7 million, from $40 million in the same quarter last year.

Zoe’s opened five new company-owned restaurants in the fourth quarter, bringing its year-end total to 163 company-owned units and three franchised restaurants. Since the end of fiscal 2015, the company has opened eight additional restaurants, bringing its total to 174 locations.

Miles said the company expects to open between 34 and 36 restaurants for all of 2016.

Contact Ron Ruggless at [email protected].
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Correction: Feb. 29, 2016 A headline on this story has been corrected to reflect that 16 percent of Zoe's 2015 sales came from catering.