(WOIO) - On Wednesday,
announced that following a comprehensive unit-level performance review of the company's restaurant portfolio, it plans to close 20 Bob Evans restaurants. The closures will take place over the next 12 months, with the majority of locations to close by the end of May 2015. The company has not yet provided a list of locations.
"Closing a restaurant is a difficult decision as it directly impacts our guests and employees. These restaurants, however, despite efforts to improve performance, were not meeting expectations. Bob Evans Farms is committed to assisting impacted employees by offering positions in nearby restaurants where possible. In cases where relocation is not possible, severance benefits will be offered to full-time and part-time employees," said Chief Financial Officer Mark Hood.
The company says it owns 16 of the 20 affected restaurants, and it will immediately seek to sell the properties, with net proceeds estimated between $15 and $17 million. Although restaurants subject to closure generated approximately $20 million of annual revenue, this action is expected to improve annual operating income by approximately $2.5 to $3 million.
Company officials estimate it will incur approximately $4.7 to $5.2 million of expenses related to the closures, with approximately $2.1 million of the total expected to be non-cash charges. The company will provide an update of the estimated expenses related to the restaurant closures when it reports its fiscal 2015 fourth-quarter results in June 2015. These expenses will be classified as non-GAAP items, and will be reflected primarily in fiscal 2015 fourth-quarter results.