Zoe's Kitchen (ZOES) Guides Lower as Sector Weighs Heavy

Destiny A. Lopez  |

Zoe's Kitchen (ZOES), a restaurant chain operator, saw a significant fall in the market today. According to Insider Monkey, this activity is due to the disappointment regarding the company’s restaurant chain’s guidance. “Shares have fallen by almost one-fifth in morning trading after the restaurant chain provided underwhelming guidance,” reported Insider Monkey. “Although its second quarter earnings of $0.06 per share were in-line with estimates and its revenue of $66.3 million only narrowly missed the consensus target, by $0.98 million, the restaurant chain’s guidance was a relative disappointment.”

This fall comes despite the company’s recent positive Q2 2016 results, which reported $66.3 million, a 21.7 increase, in total revenue. Other highlights from the report include:

  • Restaurant sales increasing 4.0%.
  • Adjusted EBITDA increasing 20.1% to $7.1 million.
  • Opening nine new company-owned restaurants.

“We’re pleased to have delivered strong second quarter financial results that included a 22% increase in total revenue and our 26th consecutive quarter of positive comparable restaurant sales growth,” said Kevin Miles, President and CEO of Zoës Kitchen. “Furthermore, our topline results and operational execution enabled us to deliver strong profit growth with a 20% increase in adjusted EBITDA. We believe the consistency of our results reflects the success of our long term strategic focus and we remain confident in our potential to operate over 1600 units in the US.”

Headquartered in Plano, Texas, Zoe's Kitchen, along with its subsidiaries, operates 163 owned and 3 franchised fast-casual restaurants in 17 states. Since its founding in 1995, the company is known for, according to its official website, its distinct menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality.

Earlier today, the company introduced an expanded kids menu that keep health conscious parents in mind. “I’m a father of two daughters born in Generation Z. They love experiencing new flavors, and gladly choose kabobs and hummus over fries,” said Kevin Miles, CEO and President at Zoës Kitchen. “Ultimately, they crave food that makes them feel good. I’m excited to share our new kids menu with families who also value made-from-scratch, nutritious options."

Despite today’s market performance, Zoe's Kitchen continues to move forward with strategic growth initiatives. “We continue to execute on our development plans, opening nine new Zoës Kitchen locations during the second quarter and have since added another five locations in the third quarter. With 25 new locations opened year-to-date, we are on track to open 35 to 36 restaurants in 2016. Our increased footprint and growing brand presence continue to establish Zoës Kitchen as the leader in Mediterranean.”

The investment community looks forward to further developments from the company.

To learn more about Zoe's Kitchen, visit www.zoeskitchen.com.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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