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Start Time: 16:30

End Time: 17:07

Zoe's Kitchen, Inc. (ZOES)

Q3 2015 Earnings Conference Call

November 19, 2015, 16:30 PM ET


Kevin Miles - President and CEO

Sunil Doshi - CFO

James Besch - VP of Accounting


Karen Short - Deutsche Bank

Sam Beres - Robert W. Baird

Nicole Miller Regan - Piper Jaffray

Sharon Zackfia - William Blair

Paul Westra - Stifel, Nicolaus & Co.

Andrew Charles - Cowen and Company

Stephen Anderson - Maxim Group



Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Zoe's Kitchen, Inc. Third Quarter 2015 Earnings Conference Call. At this time, all parties have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this conference is being recorded today, November 19, 2015.

On the call today, we have Mr. Kevin Miles, President and Chief Executive Officer; Sunil Doshi, Chief Financial Officer; and Mr. Jim Besch, Vice President of Accounting.

I'd now like to turn the call over to Mr. Jim Besch. Thank you. You may begin.

James Besch

Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter 2015 earnings release. If not, it can be found at www.zoeskitchen.com in the Investor Relations section.

I would like to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not guarantees of future performance and, therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

Also during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and a reconciliation to comparable GAAP measures is available in our earnings release.

With that, I would like to turn the call over to Kevin Miles.

Kevin Miles

Thanks, Jim. Good afternoon, everyone, and thank you for joining us on the call today. Before we begin our prepared remarks, I’d like to take a brief moment to thank Jim Besch, our VP of Accounting and formally introduce you to Sunil Doshi who most of you know is named Chief Financial Officer of Zoe's Kitchen in October. Jim has done a remarkable job leading the accounting team through our CFO transition. He’s been a driving force the past several years, from his yeoman’s work on the IPO to his most recent duty. Jim, I thank you for your partnership and your leadership.

Sunil brings more than 20 years of diverse corporate finance leadership experience from world class, lifestyle companies serving most recently as CFO for Fossil Americas. I’m confident that Sunil’s strategic approach to the business, strong operational retail experience and people-first mentality will serve Zoe's well.

Sunil Doshi

Thanks, Kevin, and good afternoon, everyone. I’m happy to be here on my first earnings call since joining in October. This is truly an exciting time for everyone here at Zoe’s Kitchen. I’ve spent my first few weeks meeting the team and spending time in our restaurants. A special thanks to Alicia and the team at Park & Trust [ph] here in Dallas for teaching me the ropes. I’ll have more to learn.

It’s obvious that there is an incredibly talented, dedicated and passionate team throughout Zoe’s. The team is very aligned and hyper-focused on owning Mediterranean, delivering a brand proposition to our guests. I look forward to the opportunity to speak with many of you over the coming weeks and months, and to helping Zoe’s realize its full potential.

Kevin Miles

Thanks, Sunil. I’m pleased to report another strong operating quarter despite the headwinds that we saw from Hurricane Joaquin. These results reinforce that our key strategies are driving our mission at Zoe’s Kitchen where both our guests and team members embrace delivering goodness from the inside out.

For the third quarter, we delivered 29% total revenue growth, 4.5% comparable restaurant sales growth, 34% adjusted EBITDA growth and adjusted earnings per share of $0.05. Additionally, we opened 10 company-owned restaurants during the quarter ending the quarter with 161 restaurants system wide.

From a top line perspective, we achieved 29% revenue growth in the quarter. We drove positive comparable restaurant sales growth for the 23rd consecutive quarter and operated 35 more restaurants than a year ago period. We are proud of the fact that we’ve opened more restaurants this quarter while achieving better operating volumes than expected, a testament to all our teams and brand residents across our markets.

Our sales growth results from gains in lunch, dinner, catering, to go and new menu introductions like our Hummus Trio and Mediterranean dinner. We continue to innovate and are currently testing new menu items that incorporate diverse ingredients originating from the 21 countries that span the Mediterranean. These new menu items will enhance our entrées, starters and salads categories to support both lunch and dinner dayparts as well as catering.

Our business was driven with the positive results in both dayparts and comparable restaurant sales in our dinner daypart slightly outpaced lunch. We saw another strong quarter of catering growth where our ability to deliver on our made-from-scratch freshly prepared menu is a compelling offer to our guests.

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