Einstein/Noah Bagel Corp. Announces $70 Million Financing, Intent to Gain Majority Interest in Area Developers; Reports Third Quarter Earnings per Share of $0.16.

GOLDEN, Colo.--(BUSINESS WIRE)--Oct. 29, 1997--Einstein/Noah Bagel Corp. (Nasdaq-NMS: ENBX) today announced it has signed a commitment letter for a new credit facility of $70 million with Bank of America National Trust and Savings Association, LaSalle National Bank and General Electric Capital Corporation.

The new credit facility, which consists of a $30 million term loan and $40 million revolving credit facility, is subject to definitive documentation and other customary conditions. The new financing and ENBC's cash from operations are expected to finance new store development of between 150-200 ENBC stores annually without the need for additional external financing.

In addition, ENBC's Board of Directors has recommended that ENBC gain a majority interest in its area developers. The board has appointed a special committee to consider, among other things, a proposal from management to convert the loans made by ENBC to its area developers. The proposed conversion would require no cash outlay and would result in ENBC owning approximately 75 percent of the outstanding equity in its area developers with the remaining interest continuing to be owned by area developer management and other private investors.

If the proposed loan conversions are completed, ENBC would consolidate the area developer operations in its financial statements. In such a consolidation, store sales and profits, and area developer overhead would be reflected on ENBC's consolidated financial statements. ENBC would expect to report positive cash flow after overhead in 1998, but depreciation and goodwill amortization associated with the proposed conversion would mean ENBC would expect a net loss for the year. The proposed loan conversions are subject to various approvals, including that of the special committee and the equity owners of the area developers. If the conversions are approved, the company expects the transactions to be complete before the end of the year.

"We're very pleased to make this announcement today," said Mark Goldston, CEO. "Our new financing will enable us to continue to grow our business through same store sales and unit growth. Our organizational strategy will streamline the management of our business and better reflect the tremendous progress we have made in our stores."

"Today's announcement is the result of a review of every aspect of our business. We have spent much of this year reviewing our organization, the way we work, our stores and our competition. Our area developers conducted the same review," said Jeff Butler, president. "We believe that having a majority interest in our area developers will result in a much-simplified organization that shares a unified goal. It makes sense from a strategic, organizational and economic viewpoint to bring the organizations together as one."

"This is an important moment in ENBC's development. With our expected new bank financing and the cash our stores should generate, ENBC expects to develop 150-200 stores annually for the foreseeable future," said Eric Carlborg, chief financial officer. "ENBC will enter 1998 with almost 600 stores and the clear leadership position in the bagel industry."

The company also reported financial results for its third quarter and year-to-date ended October 5, 1997. Highlights include:

Third Quarter

- Operating income was $9,267,000 with net income of $5,364,000,

or $0.16 per share.

- Systemwide net revenue increased 108% to $77,035,000 from

$37,076,000 in Q3 1996.

- The store base of the ENBC system increased by 59 stores in the

third quarter.

Year-to-date

- Operating income was $24,641,000, with net income of

$15,656,000, or $0.45 per share.

- Systemwide net revenue increased 133% to $223,412,000 from

$95,805,000 for the comparable period in 1996.

- At the end of the quarter, there were 546 stores open, 430

Einstein Bros.(R), Melvyn & Elmo(tm) and founding company

stores and 116 Noah's New York Bagels(R) stores.

"We continue to be pleased with the margin performance at the store level this quarter. Our focus on building the brand through strong store level execution is becoming evident in improved store margins," Butler added.

Currently, there are 546 ENBC retail bagel stores in 29 states and the District of Columbia. The stores operate primarily under the Einstein Bros.(R) Bagels and Noah's New York Bagels(R) brand names. Einstein Bros. and Noah's stores are unique bagel cafes and bakeries featuring fresh-baked bagels, a variety of cream cheese spreads, specialty coffee drinks, soups, sandwiches and salads. -0-

EINSTEIN/NOAH BAGEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)

                          Quarter Ended     Three Quarters Ended
                        __________________  ____________________
                          Oct. 6,  Oct. 5,     Oct. 6,  Oct. 5,
                            1996     1997        1996     1997
                         _______  ________   ________  ________
Revenue:
  Royalties and
    franchise-related
    fees...............  $ 5,996  $ 7,578     $13,755  $24,904
  Interest income......    1,940    6,304       3,277   16,878
  Company-operated
    stores.............    2,321        -      33,810    2,103
                         _______  _______     _______  _______
    Total revenue......   10,257   13,882      50,842   43,885
                         _______  _______     _______  _______
Costs and Expenses:
  Cost of products
    sold...............      793        -      10,871      704
  Salaries and
    benefits...........    1,842    1,390      16,286    6,158
  General and
    administrative.....    3,387    3,225      18,417   12,382
                         _______  _______     _______  _______
    Total costs and
      expenses.........    6,022    4,615      45,574   19,244
                         _______  _______     _______  _______
Income from Operations.    4,235    9,267       5,268   24,641
Other Income (Expense):
  Interest expense,
    net................     (282)  (1,493)     (6,266)  (2,066)
  Other income, net....        -        -       1,929        -
                         _______  _______     _______  _______
    Total other income
     (expense).........     (282)  (1,493)     (4,337)  (2,066)
                         _______  _______     _______  _______
Income Before
  Income Taxes.........    3,953    7,774         931   22,575
Income Taxes...........        -    2,410           -    6,919
                         _______  _______     _______  _______
Net Income.............  $ 3,953  $ 5,364     $   931  $15,656
                         =======  =======     =======  =======

Net Income
  Per Common and
  Equivalent Share.....  $  0.13  $  0.16     $  0.04  $  0.45
                         =======  =======     =======  =======
Weighted Average
  Number of Common and
  Equivalent Shares
  Outstanding..........   30,377   34,578      19,225   34,776
                         =======  =======     =======  =======


EINSTEIN/NOAH BAGEL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

                                       July 13,    Oct. 5,
                                         1997       1997
                                      _________   _________

ASSETS
______
Current Assets:
 Cash and cash equivalents............ $ 70,169   $ 30,522
 Accounts receivable..................   13,542     14,910
 Prepaid expenses and other
   current assets.....................      209        237
 Deferred income taxes................    1,375        300
                                       ________   ________
    Total current assets..............   85,295     45,969

Property and Equipment, net...........   27,443     29,028
Notes Receivable:
  Area developers.....................  259,158    300,744
  Other...............................    3,437      3,437
Goodwill, net.........................   65,148     65,263
Trademarks, net.......................   22,115     22,064
Recipes, net..........................    7,521      7,370
Other Assets, net.....................   12,145     14,172
Deferred Income Taxes.................      525          -
                                       ________   ________
    Total assets...................... $482,787   $488,047
                                       ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Current Liabilities:
  Accounts payable.................... $  6,205    $ 3,483
 Accrued expenses....................     5,082      8,045
  Deferred franchise revenue..........    3,000      2,000
                                       ________   ________
    Total current liabilities.........   14,287     13,528

Convertible Subordinated Debentures...  125,000    125,000
Deferred Franchise Revenue............    5,905      6,076
Other Noncurrent Liabilities..........      305        296
Commitments and Contingencies
Stockholders' Equity:
  Preferred Stock -- $.01 par value;
    20,000,000 shares authorized; no
    shares issued and outstanding.....        -          -
  Common Stock -- $.01 par value;
    200,000,000 shares authorized;
    33,230,122 shares issued and
    outstanding in July and
    and 33,293,468 shares issued
    and outstanding in October........      332        333
  Additional paid-in capital..........  364,675     36,167
  Accumulated deficit.................  (27,717)   (22,353)
                                        ________   ________
    Total stockholders'
      equity..........................  337,290    343,147
                                        ________   ________
Total liabilities and
      stockholders' equity............ $482,787   $488,047
                                       ========   ========

Certain statements in this release constitute "forward-looking statements" and involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company, its area developers, Einstein Bros. Bagels stores and Noah's New York Bagels stores to be materially different from any performance or achievements expressed or implied by such forward looking statements. Such factors include, among others, the following: competition; success of operating initiatives; development and operating costs, achievement of development schedules; advertising and promotional efforts; brand awareness; adverse publicity; acceptance of new product offerings; availability, locations and terms of sites for store development; changes in business strategy or development plans; availability and terms of capital; food, labor and employee benefit costs; changes in government regulation; regional weather conditions; and other factors referenced in the Company's filings with the Securities and Exchange Commission. Statements that include the terms "believes" or "expects" or the like should be considered to be uncertain and forward-looking. All forward-looking statements relating to the proposed transaction with the Company's area developers are subject to, among other things, various board, special committee and regulatory approvals, and negotiation of definitive agreements on acceptable terms.

CONTACT: Einstein/Noah Bagel Corp.

Analyst Contact: Nancy Shipp, 303-216-3738

Media Contact: Gary Gerdemann, 303-216-3724