Cosi, Inc. Reports 2010 Third Quarter Results
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Cosi, Inc. (NASDAQ: COSI), the premium convenience restaurant company, today reported a net loss for the third quarter ended September 27, 2010 of $(1,096,000), or $(0.02) per basic and diluted common share, compared with a net loss of $(2,362,000), or $(0.06) per basic and diluted common share, for the 2009 third quarter.
Cosi's total revenues for the 2010 third quarter decreased 9.7% to $27,123,000 from $30,033,000 in the 2009 third quarter. Company-owned net restaurant sales declined 10.8% in the quarter to $26,341,000, compared to $29,528,000 in the previous year's quarter. Franchise fees and royalty revenues for the quarter contributed $782,000 compared to $505,000 in the 2009 third quarter.
System-wide comparable net restaurant sales for the third quarter as measured for restaurants in operation for more than 15 months recorded an aggregate 5.2% increase as compared to the third quarter of 2009. The breakdown in comparable sales between Company-owned and franchise-operated restaurants is as follows:
For the 13 weeks ended
September 27, 2010
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Company-owned 6.6%
Franchise-operated 2.9%
Total System 5.2%
James Hyatt, Cosi's President and Chief Executive Officer, said, "We are pleased to report our second consecutive quarter of system-wide comparable sales growth. We are also pleased with the year over year improvement achieved in our restaurant operating margins for the quarter. We believe the results for the quarter demonstrate that our continued focus on driving traffic and sales while working to improve operating margins and control administrative costs is gaining traction."
2010 Third Quarter Financial Performance Review
Cosi's aforementioned 10.8% or $3,187,000 decrease in third quarter Company-owned net sales as compared to the 2009 third quarter was due to a $4,856,000 decrease in sales related to the thirteen Company-owned restaurants in Washington D.C. that were sold to a franchisee during the 2010 second quarter. The decline was partially offset by the 6.6% increase in Company-owned comparable net sales during the quarter which was comprised of a 3.7% increase in traffic and a 2.9% increase in average guest check.
For the third quarter, Cosi reported a 220 basis point decrease in costs and expenses related to Company-owned restaurant operations as a percentage of restaurant net sales compared with the third quarter of 2009. The change resulted from decreases of 100, 60 and 60 basis points, as a percentage of net sales, in cost of food and beverage, labor and related benefits and occupancy and other restaurant operating expenses, respectively. The decrease in the cost of food and beverage as a percentage of net sales was due primarily to the favorable impact on cost of food and beverage of the price increase taken at the end of the 2010 second quarter as well as advantageous pricing obtained on certain commodities. The decrease in labor and related benefits as a percentage of net sales was due primarily to the favorable impact on labor of the price increase taken at the end of the second quarter. Occupancy and other restaurant operating expenses decreased as a percentage of sales due primarily to the leveraging impact of the increase in comparable restaurant net sales during the quarter.
For the 2010 third quarter, general and administrative expense decreased by $285,000 or 8.3% to $3,156,000 from $3,441,000 in the 2009 third quarter.
Cosi reported that as of September 27, 2010 it had cash and cash equivalents of $11,500,000 and virtually no debt other than lease obligations.
Development
Cosi finished the 2010 third quarter with 144 locations consisting of 85 Company-owned locations and 59 franchise locations. During the 2010 third quarter, one franchise location was opened at Logan Airport in Boston while one Company-owned location was closed in Great Neck, New York. Subsequent to the end of the 2010 third quarter, one additional Company-owned location was closed in Darien, Connecticut.
Nasdaq Listing Standards Compliance
On November 4, 2010, Cosi received notice from the Listing Qualifications Department of The Nasdaq Stock Market that the Company had regained compliance with the Nasdaq Listing Standards by curing the minimum bid price deficiency. As of November 3, 2010, the bid price of the Company's stock had closed above the $1.00 minimum requirement for a period of 10 consecutive trading days. |
