Food Business News - July 15, 2014 - (Page 10)

Bob Evans trying to capitalize on chicken c company's board of direct tors, citing a lack of effective o oversight for the disappointi results. ing C Company cautiously optimistic NEW ALBANY, OHIO - Bob Evans Farms is betting big on broasted chicken. Amid higher sow costs and restaurant traffic declines that hampered the company's fourth quarter and fiscal year, Bob Evans hopes to improve earnings with the introduction of a new poultry platform designed to lift dinner sales in its restaurants. Marinated and hand-breaded, "broasted" chicken is prepared with a proprietary cooking method that combines frying and pressure cooking to impart both juiciness and crispiness, according to the company. "The goal is to bolster dinner and overall same-store sales performance and reestablish Bob Evans Restaurant as a top dinner destination," said Steve Davis, chairman and chief executive officer, during a July 9 call with financial analysts to discuss fiscal earnings. "Currently, dinner represents 30% of our sales mix. The broasted platform is ideal for future expansion to other categories beyond chicken as we develop guest awareness and operational experience." The item is being tested 10 FOODBUSINESS NEWS ® with plans for a systemwide roll-out by the end of fiscal 2015. The company's confidence behind broasted chicken comes from successful results in initial tests. After launching in 31 restaurants with support from television spots, the company said the menu item soared. "Once we turned the TV on, we doubled the mix," said Mark Hood, chief financial officer. "All of a sudden, we started running out of product. So we didn't even push carryout, because we wanted to take care of the dining room." Now for the bad news Three factors drove a decrease in earnings and sales during Bob Evans' fourth quarter: severe winter weather that affected restaurant traffic in Midwest markets, a slower-than-expected startup of the company's expanded plant in Sulphur Springs, Texas, and higher costs of sausage materials, including sow and trim. A supplier dispute that restricted sales of Bob Evans Farms refrigerated side dishes also negatively affected results. Net income for the fiscal year ended April 25 was $33,685,000, equal to $1.27 per share on the common stock, which compared with a loss of $821,000 in the prior year. Net sales totaled $1,328,552,000, down from $1,330,226,000 the year before. For the fourth quarter, net income fell 56% to $13,009,000, equal to 53c per share on the common stock, which compared with $29,781,000, or $1.07 per share, in the prior-year period. Net sales for the quarter declined 4.4% to $231,000,000 from $241,700,000 the year before. Also weighing on earnings were legal and professional expenses related to discourse with activist shareholder Thomas E. Sandell of Sandell Asset Management Corp., which last September began pressuring Bob Evans to break up its business. "Many of our investors have asked is there a way to settle with Mr. Sandell instead of engaging in a costly, divisive proxy contest," Mr. Davis said. "We believe we have done our part to address our investors' concerns." In response to Bob Evans' earnings release issued on July 8, Mr. Sandell called for a reconstitution of the Though optimistic about t the broasted chicken roll-out, B Bob Evans has lowered its e expectations for fiscal 2015, r reflecting a more cautious o outlook on top-line trends in r restaurant traffic and sales, as w well as continued high price l levels in the sow market. The company expects to r realize benefits from a series o of significant investments c completed last year, which inc cluded its Farm Fresh Refresh r restaurant remodels, the dev velopment of Bob Evans Exp press units in such nontraditional venues as airports and malls, and plant consolidation and expansion. For the BEF Food segment, operating income for the fiscal year decreased to $5,991,000 from $18,637,000 a year before, reflecting higher costs for sausage materials, as well as expenses related to the Sulphur Springs facility expansion and the supplier dispute. Net sales for the segment in the fiscal year rose to $371,973,000 from $348,808,000 the year before. For the fourth quarter, operating income for BEF Food decreased to $2,116,000 from $3,383,000 a year before. Net sales for the segment rose to $99,626,000 from $97,827,000 in the prior-year period. The BEF Food segment is focused on four initiatives in fiscal 2015, which include restoring refrigerated side dish sales to double-digit growth following the supply dispute, expanding retail distribution, realizing benefits of a plant network optimization project that was completed in 2014, and realizing higher margins on the sausage business as pricing and trade spending strategies catch up to historically high sow cost pricing. FBN July 15, 2014

Table of Contents for the Digital Edition of Food Business News - July 15, 2014

Food Business News - July 15, 2014
ADM betting billions on flavor category
Bumper corn, soybean crops on the way
Dairy Business News - Managing the mouthfeel of dairy products
Table of Contents
Web Contents
Editorial - Food as medicine trend gaining momentum
Bob Evans trying to capitalize on chicken
Protein, gluten-free products coming from General Mills
Mars accelerating health and wellness strategy
Path cleared for Tyson to acquire Hillshire Brands
Nestle sells Juicy Juice business to private equity firm
Five profiles for protein-rich product development
Hormel adding muscle to its Specialty Foods business
Major C.P.G. manufacturers having trouble getting noticed
CVS launches better-for-you snack line
Kroger makes move to bolster e-commerce presence
Raising the bar on sports nutrition
Making insects inviting to eat
What’s for dinner?
The case for insects
Washington - 'Nano' ingredients
Health and Wellness - Cost, ‘cleanliness’ and flavor innovation
Ingredient Innovations - Masking protein’s undesirable flavors
Highlights and Photos from I.F.T. 2014
New Food Products
Ingredient Market Trends - Spring wheat production forecast 6% higher than in 2013
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - July 15, 2014