The traditional staples at Bob Evans Farms (NASDAQ:BOBE), like sausage-patty breakfasts and chicken-fried-steak dinners, will probably go straight to your waistline. Thankfully, calories aren't the only thing going straight to the bottom line at the restaurant chain lately. Yesterday's fiscal second-quarter report shows that margins are widening, creating a dramatic impact on the company's earnings growth.
For the period, sales rose just 5% to $412.7 million. However, if you back out asset sales, earnings per share climbed from $0.30 a year ago to $0.36 today. Unfortunately, analysts were packing a heartier appetite, expecting the company to earn $0.39 a share on a 6% boost in sales.
That sent the shares lower in after-hours trading last night, though faithful investors have to appreciate the year-over-year improvement. Just as importantly, the company's original casual-dining concept isn't the only factor driving the growth spurt.
Mimi's Cafe has been Bob Evans' better half since the company acquired the chain two years ago. Mimi's menu features items like ravioli stuffed with butternut squash and scallops, and turkey pesto sandwiches on ciabatta bread, that almost seem like heresy compared to the more traditional comfort food being served up at Bob Evans.
When Mimi's was acquired, it had 82 locations and was fiddling with the notion of going public. The Bob Evans empire consisted of 562 namesake eateries. Even though expansion has favored the original chain, adding 27 more Bob Evans restaurants as opposed to just 19 more Mimi's Cafes, the company plans to open more of the Mimi's concept this year. The expansion shift makes sense, since Mimi's has posted better comps than Bob Evans during each of the past three quarters.
Having that second concept certainly helps. Casual-dining giants Darden (NYSE:DRI), Brinker (NYSE:EAT), and OSI (NYSE:OSI) all have prominent Italian dining concepts to offset their meat- and seafood-driven flagship chains.
Mimi's isn't necessarily a radical departure (though I can't imagine a Tuscan artichoke dip flying on the Bob Evans menu), but it's a welcome secondary outlet to help offset the sting when the bread-and-butter chain isn't making a whole lot of bread. Despite the market's relative disappointment, Bob Evans is making some hearty strides financially. That kind of waistline widening is actually good for you -- and your portfolio.
For more tempting treats, check out:
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Longtime Fool contributor Rick Munarriz thinks the Bob Evans restaurants look really cool from the outside -- though he's never been exactly wowed on the inside. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
