Cosi rethinks direction in face of declining sales and earnings
DEERFIELD, ILL. — Against a backdrop of declining sales and earnings, fast-casual restaurant chain Cosi, Inc. continues to work on “building a better Cosi,” said Stephen Edwards, president and chief executive officer.
“Our effort involves a complete rethinking of our products, our operating system, our brand, and our business,” Mr. Edwards said during a Nov. 14 conference call to discuss third-quarter results. “Many individuals in our company have stepped forward with a renewed drive to make Cosi great again, and the band of allegiance grows broader every day. Some of the changes we are pursuing are simple, and some are more significant. They are all driven toward developing a highly profitable business model that offers compelling value to consumers in a simple, fun, and cost effective way. There is still much work to do, but we are committed to the goal.”
Cosi sustained a loss of $2,455,000 in the third quarter ended Sept. 30, which compared with a loss of $1,354,000 in the same period a year ago. Net revenues slipped 12% to $21,412,000 from $24,359,000.
Since taking over as president and c.e.o. in mid-June, Mr. Edwards has talked extensively of Cosi’s need to improve the cleanliness, appearance and hospitality of its stores. He said employees “responded to the call” during the third quarter.
“We see the results primarily through a decline in the number of customer complaints, but there is still more work to do,” he said.
“What’s interesting about our business is that there’s really no way to hide people in the back of the house,” Mr. Edwards said. “Everybody on the team has to be outgoing and has to be willing to engage positively with our customers. We’re dealing with I think 1,400 people in the whole organization. We’ve asked everyone to sign a commitment that they understand that hospitality is an important part of what we do, and I think they’re all taking it very seriously. Some people are better at it than others though.”
Cosi also has shifted its focus on the types of foods and beverages it offers. Mr. Edwards said the restaurant chain has tightened its menu offerings in order to give Cosi “greater flexibility” to promote the products that sell well.
“We have been experimenting with a number of what I would call premium sandwiches, with the focus more heavily on sandwiches, but trying to really drive something that’s significantly better than you can find in other places,” he said. “It’s really early in the process, but I would say that our experimentation is broad. It involves ingredients. We’re even working through the bread and how we can make the bread better over time.”