Bob Evans Farms, Inc. (NASDAQ:BOBE) today announced that, following a comprehensive unit-level performance review of the Company’s restaurant portfolio, it is closing 27 Bob Evans Restaurants. Twenty-one of the restaurants are owned and six are leased locations. The owned locations closed April 23 and 24, 2016, and the remaining leased locations are expected to close during fiscal year 2017.
President and Chief Executive Officer Saed Mohseni said, “Decisions to close restaurant locations are always difficult. Performance at each of these locations, despite the loyalty of valued guests and the efforts of our dedicated employees, was not meeting expectations. Employees impacted by closures have been offered positions in nearby restaurants where possible. In cases where relocation is not possible, severance benefits will be offered to full-time and part-time employees.”
The Company expects proceeds of approximately $20 million from sale of the owned properties. Although restaurants subject to closure generated $30 million of annual revenue, this action is expected to improve annual operating income by approximately $1 million.
The Company estimates it will incur $7.5 to $8.0 million of expenses related to the closures, with $6.5 to $7.0 million of the total expected to be non-cash charges. The Company will provide an update of the estimated expenses related to the restaurant closures when it reports its fiscal 2016 fourth-quarter results in June 2016. These expenses will be classified as non-GAAP items, and will be reflected in fiscal 2016 fourth-quarter results. The Company also estimates it will incur $1.5 to $2.5 million of pre-tax charges in fiscal 2017 related to lease termination, holding and other costs.