Einstein Noah Restaurant Group, Inc. (Nasdaq:BAGL), a leader in the quick-casual segment of the restaurant industry operating under the Einstein Bros.® Bagels, Noah’s New York Bagels®, and Manhattan Bagel® brands, today announced that it has extended the redemption date for its Series Z Preferred stock held by Halpern Denny III, L.P. and has committed to redeem all remaining outstanding shares, inclusive of the accrued additional redemption price, on or before June 30, 2011. The previous redemption date was June 30, 2010.  As of December 29, 2009, there was $32.2 million of Series Z Preferred stock outstanding and $1.3 million of accrued additional redemption price.

Under the terms of the agreement, the Company will redeem at least $5.0 million of the Series Z Preferred stock on or before March 31, 2010. The Company will be allowed to make further redemptions of any amount and at any time until June 30, 2011 based upon the generation of free cash flow as well as the unrestricted cash balance available at that time. However, the Company currently anticipates redeeming $12 million to $16 million of the Series Z Preferred stock on or before March 31, 2010, which will be comprised of an $11 million draw on its senior secured credit facility as well as free cash flow beyond normal operating needs. The Company also expects $12 million to $15 million of the Series Z Preferred stock to be outstanding on June 30, 2010.

In addition, Halpern Denny III, L.P. was granted an option to exchange 50% of the Series Z Preferred shares, inclusive of the accrued additional redemption price of those shares that are outstanding on June 30, 2010, into shares of freely trading common stock at a price of $11.50 per share. Halpern Denny III, L.P. may exercise this option at any time after June 30, 2010 by giving notice to the Company, and if it exercises this option, all additional redemption amounts that accrue after June 30, 2010 will be waived with respect to the shares of Series Z Preferred exchanged.

The Company must first redeem the shares of the Series Z Preferred stock that are not subject to the exchange option. Then, to the extent that Halpern Denny III, L.P. has not exercised its exchange option, the Company may redeem the shares that are subject to the exchange option, which could serve to decrease the number of Series Z Preferred shares that are subject to the exchange option.

Jeff O’Neill, Chief Executive Officer and President of Einstein Noah, added, “We appreciate the relationship we have with Halpern Denny III, L.P. and view the terms of this new agreement as a win-win for both parties. While our asset light business model sets the stage for strong free cash flow generation, the extension of the Series Z Preferred stock redemption period offers us increased flexibility to enhance our platform for sustainable long-term growth.”

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 680 restaurants, including more than 175 license locations, in 36 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.

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