A quarter ago, Bob Evans' (Nasdaq: BOBE ) management team indicated that the company was building momentum, but also admitted it had a long way to go. These sentiments pretty much sum up the company's first-quarter performance.
Bob Evans restaurants showed improvement in comparable same-store sales, as comps were up 3.2% from a year ago. It was nice to see that this growth was driven by both an increase in average ticket sales and increased customer traffic. Management pointed to its "Bob-B-Q" campaign as one of the quarter's successes.
Things were not quite as rosy at its Mimi's concept. Here, even though average menu prices were up 4%, because of lower traffic levels, comps were actually down 0.7%. The management team expressed a "sense of urgency" in the call and believes Mimi's can do more to go after customers.
Things that management is looking at include curbside service, new promotional activity, and localizing its marketing strategy. In terms of improving average ticket sales, management believes Mimi's restaurant associates can be more proactive in presenting other menu options like appetizers and bar items, both of which can improve the sales mix.
Despite recent shortcomings at Mimi's, Bob Evans' leadership remains optimistic about the brand's growth potential. The company is planning to expand Mimi's restaurant footprint at a rate of about 15% annually. Management has upped its previous store development forecast and now plans to open 17 new Mimi's locations in fiscal 2008, in addition to two new Bob Evans restaurants.
Right now, I can't say I share management's optimism. I am willing to cut Mimi's some slack given the tough operating environment that the casual dining segment as a whole is contending with. But I also believe that just like other struggling concepts -- including Applebee's (Nasdaq: APPB ) , Brinker's (NYSE: EAT ) Chili's, Ruby Tuesday (NYSE: RT ) , and O'Charley's (Nasdaq: CHUX ) -- it can do more within the brand to improve performance and offset some of the macro-pressures.
It's a challenging environment right now for casual diners, no question about it. But can Mimi's step up to the plate and grow comps like a Texas Roadhouse (Nasdaq: TXRH ) , even in the tough times? When it proves that it can, I believe investors will have a real reason to look at Bob Evans as a potential long-term investment.
Fool contributor Jeremy MacNealy has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.