Bob Evans reversing dinner declines

by Monica Watrous
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Bob Evans recently introduced a "broasted" chicken platform in its restaurants.

NEW ALBANY, Ohio — Menu innovation benefited Bob Evans Farms during the company’s second quarter. Restaurants featuring the company’s new broasted chicken platform outperformed the rest of the system in same-store sales.

Marinated and hand-breaded, the product is prepared with a proprietary cooking method that combines frying and pressure cooking to impart both juiciness and crispiness, according to the company. In Cincinnati and Dayton, Ohio, markets where the poultry program was launched, restaurants achieved same-store growth of 2.5 percent and 3.5 percent, respectively, compared to flat or declining sales in the year-ago quarter.

“The bottom line is the broasted program is having a positive impact at Bob Evans Restaurants,” said Steve Davis, CEO, during a Dec. 3 call with financial analysts to discuss second-quarter performance. “This platform is not only reversing declining dinner trends, it also led to second-quarter overall same-store sales outperformance of 230 basis points compared to locations where the platform has not yet been launched.”

But with broasted chicken comes higher training and food costs. To ensure a successful launch in new markets, Bob Evans has extended the roll-out of the platform through the second quarter of 2016.

“This decision in no way reflects less confidence in the broasted chicken offering,” Davis said. “Rather, it demonstrates our commitment to a solid launch execution to safeguard the platform’s long-term potential to drive our off premise lunch and dinner businesses.”

With respect to the morning day part, the chain is testing new breakfast items with a focus on value, customization, quality and portability.

“Our craveable menu platform, such as our Sweet and Stacked breakfast items and our slow roasted lunch and dinner entrees are also contributing to improved sales performance,” Davis said.

For the quarter ended Oct. 25, Bob Evans had net income of $6,039,000, equal to 26 cents per share on the common stock, down 1.3 percent from $6,119,000, or 23 cents per share, in the year-ago period.
Net sales rose to $333,279,000 from $332,600,000 from the second quarter of the previous year.

“Transformational multi-year investment programs coupled with improved operational execution are driving performance gains in both businesses, and we expect performance to continue improving throughout the remainder of the fiscal year,” Davis said.

Operating income for Bob Evans Restaurants dropped 44 percent to $6,712,000, reflecting higher food costs and increased operating expenses. Net sales for the segment increased 0.3 percent to $241,151,000. Overall, same-store sales were flat during the quarter, slightly trailing the family dining industry average.

On the BEF Foods side, operating income advanced to $2,300,000, which compared with a loss of $3,017,000 in the comparable quarter. Net sales remained flat at $92,128,000, reflecting an increase in side-dish volume that was offset by lower sausage sales. The company expects to see margins improve during the third and fourth quarters as it leverages lower forecasted sow costs and increased plant efficiency with increased sales volume.

“The overall efficiency of our plant network continues to increase, and we expect to more than offset the sales and profit impact of last year's supplier disruption as we have grown our points of distribution with our largest account,” Davis said.

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