Zoe's Kitchen Inc. Cooks Up 29% Sales Growth

By Joe TenebrusoFool.com

Zoe's Kitchen reported third-quarter results on Nov. 19. The Mediterranean-inspired fast-casual restaurant chain delivered solid revenue growth and boosted its full-year sales outlook.

Zoe's Kitchen results: The raw numbers

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Data source: Zoe's Kitchen Q3 2015 earnings press release.

What happened with Zoe's Kitchen this quarter?Total revenue jumped 29.4% to $56.4 million, as Zoe's Kitchen opened 10 new company-owned restaurants during the third quarter. Also helping to drive revenue growth was a 4.5% increase in comparable-restaurant sales, including 0.3% from price increases and 4.6% from favorable changes in product mix. Traffic, however, declined by 0.4%.

Restaurant contribution (defined as restaurant sales less restaurant operating costs) increased41%to$12.2 million. As a percentage of restaurant sales, restaurant contribution margin increased 180 basis points to 21.6% as lower commodity prices boosted results.

Image source: Zoe's Kitchen.

Zoe's Kitchen incurred a net loss of $2.3 million, or$0.12per share, compared to net income of$0.4 million, or$0.02per share in the third quarter of 2014. Net income was affected by a$3.1 millionprovision for income taxes,$0.3 millionof executive transition costs, and$0.4 millionof non-cash casualty loss related to a hurricane.

Excluding non-recurring costs, adjusted net income was $0.9 million, up from $0.7 million in the year-ago quarter. And on a per-share basis, adjusted earnings increased to $0.05, up from $0.03 in the year-ago quarter.

What management had to say"We are proud of our third quarter results, including 29% total revenue growth, 4.5% comparable restaurant sales growth, which marks the 23rd consecutive quarter of positive comparable restaurant sales growth, and 34% adjusted EBITDA growth," said CEOKevin Miles in a press release. "We opened 10 new Company-owned restaurants during the third quarter, bringing our year to date openings to 29 new Company-owned restaurants. Since the end of the quarter, we have opened an additional four Company-owned restaurants to bring the total for the year to 33, matching the high end of our previous guidance."

Looking forwardManagement raised its 2015 full-year outlook for restaurant sales to between $222 million and $224 million, up from its previous estimates of $220 million to $224 million.

Zoe's also increased its projections for comparable-restaurant sales growth of 5.5% to 6% (previously 5% to 6%) and restaurant contribution margin between 20.3% and 20.6% (previously 20% and 20.5%).

"Despite headwinds from Hurricane Joaquin, our strategies are driving results and have us excited about the enormous opportunity we have to strengthen and grow our brand through investments in our people, our differentiated menu, our operations, and our new unit development," added Miles.

The article Zoe's Kitchen Inc. Cooks Up 29% Sales Growth originally appeared on Fool.com.

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