Einstein Noah Restaurant Group (BAGL)

[eastunder]

FOR IMMEDIATE RELEASE:
(here's the longer version)

May 7, 2008

Einstein Noah Restaurant Group Reports Solid Growth in Revenue, Comparable Store Sales and Net Income

Selected Highlights for the Quarter:

~ 3.6% increase in comparable store sales at company-owned restaurants.

~ 14th consecutive quarter of positive comparable store sales growth.

~ Average unit volume for company-owned restaurants increased $10,000 to $919,000 for the trailing four quarters.


~ 7.3% revenue growth to $103.3 million from $96.3 million in the first quarter of 2007.


~ 239% net income growth to $3.8 million, compared with $1.1 million the first quarter of 2007.


~ Diluted EPS of $0.23.


~ Opened our first Einstein Bros. franchised location, three new company-owned restaurants and four new licensed locations.


LAKEWOOD, Colo. – Despite the difficult operating environment characterized by heavy cost pressure from agricultural commodities and soft consumer spending, Einstein Noah Restaurant Group (NASDAQ: BAGL) today posted strong results for the first quarter ended April 1, 2008. The Company posted its 14th consecutive quarter of positive comparable store sales, an overall increase of 7% in revenue and a 239% improvement in net income compared with the same period a year ago.

“Thanks in large part to our increased same store sales and our efforts in 2007 and early 2008 to lock in the cost of wheat, implement a well-timed price increase and introduce a revamped menu, our results for the first quarter of 2008 reflect impressive financial performance. We are in a growth mode during a time when most campanies are pulling back,” said Paul Murphy, President and Chief Executive Officer of Einstein Noah Restaurant Group. “I’m pleased with our ability to execute and deliver on the objective we set for the first quarter of 2008.”

During the quarter, and in spite of heavy cost pressure from agricultural commodities, increased compensation costs for bonuses in the quarter, and certain one-time charges equaling about $250,000 in the quarter, the Company held gross profit and income from operations relatively flat. Furthermore, we have begun to enter into wheat purchases for the first quarter of 2009 at or below the cost we experienced in the current quarter.

At the same time, revenues increased to $103.3 million from $96.3 million last year, net income grew 239% to $3.8 million from $1.1 million in the same period a year ago and average unit volume increased $10,000 to $919,000 from $909,000 for the trailing four quarters.

In addition, the company opened three new company – owned restaurants, four license locations and the first Einstein Bros. franchise restaurant in Jacksonville, Fla.

“The entire organization has been focused on keeping costs down during difficult economic times, while at the same time investing in areas that are designed to continue to grow the business,” said Rick Dutkiewicz, Chief Financial Officer of Einstein Noah Restaurant Group. “We are in a growth mode during a time when most companies are pulling back. In addition to the efforts from our operational personnel to greatly enhance our profitability, we recently entered into an interest rate swap to fix $60 million of our floating rate debt through August 2010 at a Libor rate of 3.52% plus an applicable margin. This will provide us a measure of cost certainty on our interest expense for the next couple of years.”

During the first quarter of 2008, Einstein Noah Restaurant Group generated $11.3 million in cash from operating activities, which was 77% more than the $6.4 million generated in the same period a year ago.

“Our financial performance in the first quarter has prepared us well to properly invest in our growth strategy for the remainder of 2008,” Mr. Murphy said. “I look forward to the many investments we plan on making in the right areas to continue to grow the business.”

About Einstein Noah Restaurant Group

Einstein Noah Restaurant Group Inc. is a leading company in the quick casual restaurant industry that operates locations primarily under the Einstein Bros.® Bagels and Noah’s New York Bagels® brands and primarily franchises locations under the Manhattan Bagel® brand. The company’s retail system consists of more than 600 restaurants, including more than 100 license locations, in 35 states plus the District of Columbia. It also operates a dough production facility. The company’s stock is traded under the symbol BAGL. Visit www.einsteinnoah.com for additional information.