Bob Evans Farms Hit by Weather, Sow Prices

US - US meat processor and restaurant chain Bob Evans Farms saw 2014 operating profit fall by $41.6 million compared to the previous year.
calendar icon 14 July 2014
clock icon 4 minute read

Severe winter weather, higher than projected sausage material costs, and other costs all hit the performance of Bob Evans.

Bob Evans Restaurants saw profits hit by nearly $16 million with more than $13.3 million being put down to severe weather conditions.

Bob Evans Farms Foods were saw a reduction of profits of $23 million because of an increase of $22.6 million of in sausage material costs, including $21.1 million of sow costs and $1.5 million of trim costs.

Chairman and Chief Executive Officer Steve Davis said,: "Fiscal 2014 financial performance was negatively impacted by several challenges beyond the Company’s control, including unusually severe and sustained winter weather, historically high sow costs, and BEF Foods’ supplier disruption issues.

“However, by focusing on factors we can control, we continued transforming our businesses to remain relevant to our restaurant guests, food customers, and stockholders for years to come.

“We successfully completed several key investment programs at both Bob Evans Restaurants and BEF Foods in fiscal year 2014. As a result of the Farm Fresh Refresh remodelling programme, Bob Evans Restaurants now offers guests a consistent and revitalized restaurant environment, better positioning each of our restaurants to deliver an upgraded dine-in experience, while also offering new off-premise sales layers including bakery, carryout, and catering. Fourth-quarter monthly same-store sales trends improved, becoming sequentially less negative during the period. With the benefits of remodeled restaurants, as well as our new menu initiatives.

“We are encouraged by insights gained from the two initial Bob Evans Express locations opened during fiscal 2014. With this experience, we are moving forward with plans to license up to ten new Bob Evans Express locations in fiscal year 2015.

“At BEF Foods, completion of a multi-year plant network optimization and vertical integration project reduced our production footprint from nine manufacturing facilities and two primary co-packers to four manufacturing facilities with supplemental co-packing arrangements for meeting high seasonal demand and production of selected products.

“At the four production facilities, we expect our investments in expansions, equipment upgrades, and efficiency enhancements to enable continued growth, both top- and bottom-line, as we focus on expanding points of retail distribution and increasing product authorizations at each point of retail distribution.”
Mr Davis added.

“We remain deeply committed to generating returns for our stockholders through our balanced approach to capital allocation.

“Along with investing an expected $85 to $90 million of capital expenditures in our businesses during fiscal 2015, the Company is authorised to repurchase up to $100 million of shares during fiscal year 2015. As capital expenditures return to a more typical level focused on opening new restaurants, ERP implementation, smaller-scale efficiency projects, and infrastructure maintenance in fiscal 2015, both Bob Evans Restaurants and BEF Foods are focused on operational execution. Strategic priorities in fiscal 2015 include media and trade spending to drive traffic in our restaurants, and sales in the grocery store, along with menu and product innovation.

“Fiscal 2015 is the year we expect to begin reaping the rewards of the recent capital investments we have made in Bob Evans Restaurants and BEF Foods. We believe the critical investments have been completed, the strategic course has been set, and we have the programs in place to execute effectively.”

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