Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=225799
Story Retrieval Date: 3/9/2014 4:35:26 PM CST
Cosi Inc. has not reported a quarterly profit since the second quarter of 2012.
Cosi Inc. hungers for profit as it reports a fifth consecutive quarterly loss
Shares of Cosi Inc. dropped 16 percent as the troubled fast-casual restaurant chain posted its fifth consecutive quarterly loss and said efforts to improve the customer experience had yet to generate higher revenue.
For the quarter ended Sept. 30, Cosi’s net loss widened to $2.5 million, or 14 cents per diluted share, compared with $1.4 million, or 8 cents per diluted share, in the year-ago period. Analysts had expected earnings per diluted share of 3 cents, according to Bloomberg’s market data.
Revenue in the quarter declined 12 percent to $21.4 million from $24.4 million in the year-ago period due in part to the closure of seven company-owned and seven franchise stores during and after the third quarter of 2012.
The Deerfield-based company said comparable store sales, or sales at stores open for more than a year, also fell by nearly 5 percent. Shares of Cosi plunged 37 cents to $1.92 in afternoon trading Thursday.
“We must reverse the decline in revenues,” Stephen Edwards, CEO of Cosi, said in a conference call with analysts. “We are working to meet the objective by offering better products and service to our customers.”
He added in a statement that the company is “acutely aware” that the viability of Cosi is dependent on fixing the problems quickly and effectively.
Among the problems in the quarter, the company cited a shift in menu sales towards products and promotional items with higher foods costs, including a new line of meals served in a bowl with premium ingredients such as roasted vegetables. Beverage sales declined as well.
The company also hired more workers in the third quarter as part of an initiative to speed service and improve the customer experience.
“We established store cleanliness and hospitality as a priority early in the quarter and many of our employees have responded to the call,” Edwards said. “We see the results primarily through a decline in a number of customer complaints, but there is still more work to do.”
For the first nine months of 2013, sales decreased 12 percent to $66.4 million from $75.3 million. Net loss widened to $7.3 million, or 41 cents per diluted share, compared with $2.4 million, or 17 cents per diluted share in the year-ago period.