A Hold recommendation has recently been issued to restaurant chain Cosi, Inc. (COSI) by Zacks senior restaurant industry analyst Ann Northrop, CFA.  Here's what her latest update had to say:

'Cosi lost control of its operations last year as it rapidly added units to meet Wall Street expectations. Traffic has declined in each of the last five quarters, a problem, management attributes to lack of proper site selection of stores opened in 2H06, and poor management training, particularly for staffing and maintenance. Volume declines at these restaurants stem from a wide range of issues, including low traffic locations, signage, parking and service defects.

'Cosi has replaced several VPs and restaurant managers, and has slowed growth plans for company-owned stores. Under the new management, Cosi's restaurant cash flow margins increased from 9.5% in 2003 to 17% for the fiscal year ended 2006, as growth accelerated -- the chain grew 22% in 2006 to 110 company-owned, and 13 franchise-operated restaurants, with plans for 45% growth in 2007. Net loss per share was $0.08 in 2Q07 compared to net loss per share of $0.02 in 2Q06.

'During the reported quarter, the company incurred a one-time charge of $0.04 per share related to the closing of six Macy's stores, and one company-owned location. The company also recorded an impairment charge of $0.07 per share for five underperforming restaurants. Cosi maintains a strong balance sheet, with $10.8 million in cash, $41.5 million in equity and almost no debt. We would Hold the shares and wait for management's plans to be implemented properly.'