Bob Evans Farms Inc. announced its results for the 2011 second fiscal quarter ended Friday, Oct. 29, 2010. Chairman and CEO Steve Davis said the Company's second-quarter adjusted operating results, excluding special items, exceeded management's expectations.

"Our restaurant segment demonstrated good cost management, along with sequential improvement in same-store sales at Bob Evans Restaurants, due partly to off-premise revenue drivers such as carryout and catering," Davis said. "The food products segment benefited from better management of sales promotions and manufacturing productivity initiatives. As a result, our second-quarter performance was much better than expected. This gives us the confidence to increase our operating income guidance for fiscal 2011."

In the quarter that ended Oct. 29, 2010, the company's earnings fell to $7.8 million, or 26 cents per share, from $15.5 million, or 50 cents per share, a year ago. Analysts, on average, were expecting earnings of 40 cents per share, excluding one-time items, according to Thomson Reuters.

The company's reported second-quarter fiscal 2011 results include the net negative impact of $13.9 million, which included $2.8 million in charges related to manufacturing productivity initiatives in the company's food products segment and the discontinuation of fresh sausage operations at two manufacturing facilities.

Net sales were $417.0 million in the second quarter of fiscal 2011, a 1.8 percent decrease compared to $424.8 million in fiscal 2010. This decrease was primarily the result of same-store sales declines at Bob Evans Restaurants and Mimi's Café.

Reported operating income for the food products segment was $4.7 million, or 6.0 percent of net sales, in the second quarter of fiscal 2011, compared to $8.6 million, or 10.8 percent of net sales, in fiscal 2010. The operating income decline is due primarily to an 83.9 percent year-over-year increase in sow costs and $2.8 million in charges related to manufacturing productivity initiatives, largely offset by a significant decrease in promotional expenses and reductions in operating wages and other operating expenses. The manufacturing productivity initiatives included the discontinuation of the company's fresh sausage operations at its Galva, Ill., and Bidwell, Ohio facilities, along with other headcount reductions.

Source: Bob Evans Farms Inc., BusinessWeek

U.S. clears imports from Brazilian state

U.S. authorities have cleared the import of fresh Brazilian beef and pork from the state of Santa Catarina, local pork producers and exporters association Abipecs said on Tuesday. Santa Catarina is Brazil’s largest pork-producing state. The move is expected to benefit large producers including Marfrig, Brasil Foods and potentially JBS

U.S. inspectors are expected to visit meat-processing plants in the southern state in the near future, after which they would issue clearance to individual plants and exporters to ship meat to the United States, reports ForexPros.com.

"Now they will have to clear each plant. It's a case-by-case process," said the head of Abipecs, Pedro de Camargo Neto, adding that Brazilian pork ribs and bacon should be competitive on the U.S. market. He added that the clearance will help companies make further inroads into Asian countries like Japan and Korea.

Source: Reuters, ForexPros.com

Study shows costs of GIPSA rule to poultry industry

Proposed new regulations from the U.S. Department of Agriculture will cost the broiler chicken industry more than $1 billion over five years in reduced efficiency, higher costs for feed and housing, and increased administrative expenses, according to a study released today by the National Chicken Council.

That doesn’t count the potential costs of litigation, lost export sales, and increased consumer prices, according to the study by FarmEcon LLC, an agricultural economics consulting firm.

“The proposed rule changes are likely to slow the pace of innovation, increase the costs of raising live chickens, and result in costly litigation,” wrote Thomas E. Elam, president of FarmEcon. “Higher costs would put upward pressure on chicken prices, and economic theory strongly suggests that consumers would ultimately bear most of these costs.”

Rules proposed by USDA’s Grain Inspection, Packers & Stockyards Administration (GIPSA) would force changes in the relationship between the nation’s chicken companies and the independent farmers who grow chickens under contracts with the companies, and would also require changes in the production and marketing system for cattle and pigs. GIPSA maintains that the changes will have little economic impact, but evidence is accumulating that the cost will in fact be considerable. The FarmEcon study was the first to look at the impact on the meat chicken industry specifically.

“GIPSA’s proposed rules would alter long-standing contractual and business relationships between chicken companies and independent growers,” Elam wrote. “The changes that are proposed are, in part, designed to broaden the scope of GIPSA authority, reduce the latitude to pay growers based on their performance, limit the ability of chicken companies to seek grower investments, and set new requirements for cessation or reduction of delivery of birds to growers.”

“The most likely economic effects would be a reduction of performance-based competition among growers, a reduced rate of capital investment, a reduced rate of efficiency gains, higher chicken prices, and reduced chicken exports,” he added.

The cost burden from all identified sources increases over time, Elam wrote, reaching about $337 million per year in 2015. The total identified cost over the first 5 years is about $1.03 billion.

Elam noted that the chicken industry has achieved “exemplary” efficiencies and technological and management improvements that have brought lower costs of production, lower prices for consumers, and increased chicken production and exports. The GIPSA proposed rule would introduce inefficiencies into the system and make it more expensive to produce chickens, he predicted.

For example, Elam wrote, chicken companies do not normally run technical analyses, called “assays,” on every load of feed delivered to chicken farmers. Yet the rule could require a feed analysis to be available for each load of feed delivered to a grower. Simply running and tracking the huge number of tests required would cost over $20 million per year, Elam noted.

Less efficient use of the “growout houses” in which chickens are raised would lead to a need for about $150 million over five years in costs to operate additional space, and could cause the chicken companies to consider building their own growout houses, Elam said. More than 95 percent of chicken are now raised in growout houses owned by the farmers rather than the companies.

By changing the system under which farmers are paid by the companies to grow their chickens, the rule would also reduce the incentive for farmers to improve their facilities, Elam said. Without the level of upgrades normally expected, more feed would be needed to produce the chickens, costing an extra $644 million over the years 2011-2015, Elam estimated.

The FarmEcon study is available at http://www.nationalchickencouncil.com/files/FarmEcon%20study%20of%20GIPSA%20rule%20impact%20Nov%202010.pdf. It will be filed with the government as part of the industry’s comments on the proposed rule.

Source: National Chicken Council

Charlie Brown, Bugaboo Creek steakhouses shut down in East Coast

CB Holding Corp. announced it was closing 20 underperforming Charlie brown’s Steakhouse restaurants and 10 Bugaboo Creek Steak House restaurants in New Jersey, New York and Pennsylvania. That number represents about one-third of the company’s restaurants, leaving it in operation of 29 Charlie Brown’s Steakhouses, 20 Bugaboo Creek Steak Houses and seven The Office Beer Bar & Grill restaurants.

Charlie Brown's director of marketing, Rich Covey, told The Courier News of Bridgewater, N.J., that the company was looking to place employees from the closed restaurants in ones that are still open.

Source: Wall Street Journal, The Courier News