Zoe's Kitchen (NYSE:ZOES) reported financial results for its second quarter after the market close on Thursday. The Mediterranean-inspired fast-casual restaurant chain delivered revenue and earnings that topped Wall Street's expectations, and boosted its full year sales guidance. Yet it appears investors were hungry for more, as shares were down about 5% in after-hours trading as of 6 p.m. ET.
Revenue jumped 30% year over year to $54.5 million, coming in slightly above the $53.83 million analysts were expecting. Helping to drive that growth was a 5.6% increase in comparable restaurant sales, including 0.8% from price increases, 1.3% from higher traffic, and 3.5% from favorable changes in product mix.
Restaurant contribution (defined as restaurant sales less restaurant operating costs) increased 31.2% to $11.6 million. As a percentage of restaurant sales, restaurant contribution margin increased 10 basis points to 21.3% as lower commodity prices boosted results.
Net income fell to $120,000 from $1.1 million in the second quarter of 2014, as $0.5 million in executive transition costs related to turnover at the CFO position dented results. Excluding non-recurring costs, adjusted net income was $1 million, up from $0.7 million in the year-ago quarter. And on a per-share basis, adjusted earnings rose 25% to $0.05. That was above analysts' EPS estimates of $0.04.
"We are proud of our second-quarter results, including comparable restaurant sales growth of 5.6%, total revenue growth of 30%, and adjusted EBITDA growth of 28%," said CEO Kevin Miles in a press release. "These strong results, which mark our 22nd consecutive quarter of positive comparable restaurant sales, reflect a continuation of our strong operating momentum and the emotional connection we're fostering with our guests, inspiring them to Live Mediterranean."
Zoe's Kitchen opened seven new company-owned restaurants during the quarter, which brought the total to 148 company-owned locations and three franchised restaurants as of July 13. Since that time, Zoe's has opened seven additional restaurants, bringing its total restaurant count to 158 as of Aug. 27.
Management raised its 2015 full-year outlook for restaurant sales to between $220 million and $224 million, up from its previous estimates of $218 million to $223 million. However, the midpoint of new restaurant sales forecast was slightly below the $222.9 million Wall Street was looking for.
Zoe's also increased its comparable restaurant sales growth expectations to between 5% and 6% -- up from its previous projections of 4% to 6% -- and reaffirmed its restaurant contribution margin forecast of 20% to 20.5%.
"We continue to be excited about the enormous opportunity to strengthen and grow our brand through investments in our people, our differentiated menu, and our operations, as well as through new unit development," Miles said. "With 19 new restaurants opened during the first half of this year, we are on track to open 31 to 33 restaurants in 2015. We remain confident that we can successfully operate over 1,600 restaurants in the U.S. over the long term, bringing the Mediterranean lifestyle and Southern hospitality to guests across the country."