(Source: MARKETWIRE)Cosi, Inc. (NASDAQ: COSI), the premium convenience restaurant company, today reported a net loss for the first quarter ended March 30, 2009 of $(3,326,000), or $(0.08) per basic and diluted common share, compared with a net loss of $(3,028,000), or $(0.08) per basic and diluted common share, for the 2008 first quarter. Excluding the effect of discontinued operations, Cosi's net loss per basic and diluted common share in the 2009 and 2008 first quarters was $(0.08) and $(0.07), respectively.

Cosi's total revenues for the 2009 first quarter decreased 13.6% to $28,666,000 from $33,191,000 in the 2008 first quarter.

James Hyatt, Cosi's President and Chief Executive Officer, said, "While the impact of the economy on consumer and business spending has created a very difficult environment for Cosi and the restaurant industry in general, our team remains intensely focused on working collaboratively with our franchise partners to drive sales and improve operating margins, while remaining diligent about controlling administrative costs."

2009 First Quarter Financial Performance and Restaurant Economics

Contributing to Cosi's aforementioned 13.6% decrease in first quarter revenues as compared to the 2008 first quarter revenues was the decline of the Company's restaurant net sales to $28,124,000 from $32,459,000 in the prior year quarter due primarily to an 11.3% decrease in comparable restaurant net sales as well as the impact of closing six locations since the first quarter of 2008. The comparable sales decline was comprised of a 9.3% decrease in traffic and a 2.0% decrease in average check. Franchise fees and royalties decreased by $190,000 to $542,000 in the first quarter of fiscal 2009 from $732,000 in the 2008 first quarter due primarily to lower fees resulting from seven fewer new franchise unit openings in the first quarter of 2009 as compared to the 2008 first quarter.

For the first quarter, Cosi reported a 400 basis point increase in costs and expenses related to Company-owned restaurant operations as a percentage of restaurant net sales compared with the first quarter of 2008. The increase resulted from a 290 and 210 basis point increase, as a percentage of net sales, in labor and related benefits and occupancy and other restaurant operating expenses, respectively, due primarily to the impact of the comparable restaurant net sales decrease on the fixed portion of these costs during the period. The increase was partially offset by a 100 basis point improvement in the cost of food and beverage in the first quarter of 2009 as compared to the first quarter of 2008 as the Company saw commodity costs for wheat and dairy products as well as fuel decline year-over-year.

During the same period, the Company improved by 140 basis points its general and administrative expenses as a percentage of total revenues, to $3,969,000 or 13.8% from $5,038,000 or 15.2% in the 2008 first quarter.

Cosi reported that as of March 30, 2009 it had cash, cash equivalents, and short-term investments of $4,576,000 and virtually no debt other than lease obligations.

Development Performance

Cosi finished the first quarter with a total of 145 locations consisting of 97 Company-owned locations and 48 franchised locations. During the 2009 first quarter, one franchise location was opened in the United Arab Emirates. Four Company-owned and three franchise locations were closed during the quarter.

Subsequent to the end of the first quarter, one additional franchise location opened at Georgetown University in Washington, D.C. and one franchise location in Florida closed. Also, the Company entered into an agreement to purchase from a franchisee one franchise location in Minnesota and at the same time entered into a management agreement with the same franchisee to operate their one remaining franchise location in Minnesota.

Investor Teleconference

As previously announced, Cosi has temporarily suspended its quarterly investor conference call. Management has continued to focus all of its efforts on creating shareholder value by driving revenue growth, improvements in operating margin and continued reductions in general and administrative expenses while also supporting the continued long-term growth of our franchise system.

About Cosi, Inc.

Cosi (http://www.getcosi.com) is a national premium convenience restaurant chain that has developed featured foods built around a secret, generations-old recipe for crackly crust flatbread. This artisan bread is freshly baked in front of customers throughout the day in open flame stone hearth ovens prominently located in each of the restaurants. Cosi's warm and urbane atmosphere is geared towards its sophisticated, upscale, urban and suburban guests. There are currently 98 Company-owned and 47 franchise restaurants operating in eighteen states, the District of Columbia and the United Arab Emirates. The Cosi vision is to become America's favorite premium convenience restaurant by providing customers authentic, innovative, savory food while remaining an affordable luxury.

The Cosi menu features Cosi sandwiches, freshly tossed salads, melts, soups, Cosi bagels, flatbread pizzas, S'mores, snacks and other desserts, and a wide range of coffee and coffee-based drinks and other specialty beverages. Cosi restaurants are designed to be welcoming and comfortable with an eclectic environment. Cosi's sights, sounds, and spaces create a tasteful, relaxed ambience that provides a fresh and new dining experience.

"Cosi," "Cosi (w/hearth design)," "Simply Good Taste" and related marks are registered trademarks of Cosi, Inc.

Copyright Copyright 2008 Cosi, Inc. All rights reserved.

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