DEERFIELD, IL -- (Marketwire) -- 08/10/09 -- Così, Inc. (NASDAQ: COSI), the premium
convenience restaurant company, today reported a net loss for the second
quarter ended June 29, 2009 of $(969,000), or $(0.02) per basic and diluted
common share, compared with a net loss of $(1,729,000), or $(0.04) per
basic and diluted common share, for the 2008 second quarter.
Così's total revenues for the 2009 second quarter decreased 13.9% to
$31,636,000 from $36,723,000 in the 2008 second quarter. Company-owned net
restaurant sales, excluding discontinued operations, declined 14.3% in the
quarter to $31,015,000, compared to $36,207,000 in the previous year's
quarter. Franchise fees and royalty revenues for the quarter contributed
$621,000 compared to $516,200 in the 2008 second quarter.
System-wide comparable restaurant sales for the second quarter as measured
for restaurants in operation for more than 15 months recorded an aggregate
decline of 12.2% as compared to the second quarter of 2008. The breakdown
in comparable sales between Company-owned and franchise-operated
restaurants is as follows:
For the 13 weeks ended
June 29, 2009
----------------------
Company-owned (12.7%)
Franchise-operated (9.8%)
Total System (12.2%)
James Hyatt, Così's President and Chief Executive Officer, said, "The
impact of the recession on consumer and business spending has created a
difficult environment for Così, especially in our catering business given
our high density of locations in major metropolitan business areas. We
remain intensely focused on working collaboratively with our franchise
partners to drive sales and improve operating margins, while remaining
diligent about controlling administrative costs."
2009 Second Quarter Financial Performance Review
Contributing to Così's aforementioned 14.3% decrease in second quarter
Company-owned net sales as compared to the second quarter last year was the
decline in Company-owned comparable sales as well as the impact of closing
five locations since the end of the 2008 second quarter. The Company-owned
comparable sales decline of 12.7%, which was comprised of a 9.8% decrease
in traffic and a 2.9% decrease in average check, was impacted by a 27.5%
decrease in overall catering sales during the second quarter as compared to
the 2008 second quarter.
For the second quarter, Così reported a 390 basis point increase in costs
and expenses related to Company-owned restaurant operations as a percentage
of restaurant net sales compared with the second quarter of 2008. The
increase resulted from a 260 and 180 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 50 basis
point improvement in the cost of food and beverage in the second quarter of
2009 as compared to the second quarter of 2008 as the Company saw commodity
costs for wheat and dairy products decline year-over-year.
During the same period, the Company improved by 470 basis points its
general and administrative expenses as a percentage of total revenues, to
$3,731,000 or 11.8% from $6,069,000 or 16.5% in the 2008 second quarter.
Così reported that as of June 29, 2009 it had cash and cash equivalents of
$5,184,000 and virtually no debt other than lease obligations.
Business Update
Così stated that despite the recession, it remains focused on improving the
guest experience while continuing to provide fresh and innovative product
offerings. James Hyatt said, "We are pleased with the continued improvement
in our guest satisfaction ratings during the second quarter which validates
our ongoing commitment to excellence in customer service."
In keeping with its heritage of developing unique product offerings, Così
stated that it recently launched a steak gorgonzola sandwich and a steak
salad as well as a limited time lobster salad sandwich and melt offering.
Early indications are that these value-driven offerings are being well
received by guests.
Così also announced that it was rated as the number one fast-casual family
restaurant by Parents Magazine reinforcing its goal of providing a great
dining experience for the entire family. Così also reported that it has
retained a new advertising agency to broaden and enhance its initiatives to
increase traffic and sales while continuing to expand awareness of the
brand.
Development Performance
Così finished the 2009 second quarter with a total of 144 locations
consisting of 98 Company-owned locations and 46 franchised locations.
During the 2009 second quarter, one franchise location was opened in the
District of Columbia and four franchise locations were closed during the
quarter including one in Minnesota that was re-opened as a Company-owned
location.
Investor Teleconference
As previously announced, Così 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 the franchise system.
About Così, Inc.
Così (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. Così's warm
and urbane atmosphere is geared towards its sophisticated, upscale, urban
and suburban guests. There are currently 98 Company-owned and 46 franchise
restaurants operating in eighteen states, the District of Columbia and the
United Arab Emirates. The Così vision is to become America's favorite
premium convenience restaurant by providing customers authentic,
innovative, savory food while remaining an affordable luxury.
The Così menu features Così sandwiches, freshly tossed salads, melts,
soups, Così bagels, flatbread pizzas, S'mores, snacks and other desserts,
and a wide range of coffee and coffee-based drinks and other specialty
beverages. Così restaurants are designed to be welcoming and comfortable
with an eclectic environment. Così's sights, sounds, and spaces create a
tasteful, relaxed ambience that provides a fresh and new dining experience.
"Così," "Così (w/hearth design)," "Simply Good Taste" and related marks are
registered trademarks of Così, Inc.
Copyright © 2009 Così, Inc. All rights reserved.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. This press release contains statements that constitute
forward-looking statements under the federal securities laws.
Forward-looking statements are statements about future events and
expectations and not statements of historical fact. The words "believe,"
"may," "will," "should," "anticipate," "estimate," "expect," "intend,"
"objective," "seek," "plan," "strive," or similar words, or negatives of
these words, identify forward-looking statements. We qualify any
forward-looking statements entirely by these cautionary factors.
Forward-looking statements are based on management's beliefs, assumptions
and expectations of our future economic performance, taking into account
the information currently available to management. Forward-looking
statements involve risks and uncertainties that may cause our actual
results, performance or financial condition to differ materially from the
expectations of future results, performance or financial condition we
express or imply in any
forward-looking statements. Factors that could contribute to these
differences include, but are not limited to: the cost of our principal food
products and supply and delivery shortages or interruptions; labor
shortages or increased labor costs; changes in consumer preferences and
demographic trends; expansion into new markets including foreign markets;
our ability to locate suitable restaurant sites in new and existing markets
and negotiate acceptable lease terms; competition in our markets, both in
our business and in locating suitable restaurant sites; our operation and
execution in new and existing markets; our ability to recruit, train and
retain qualified corporate and restaurant personnel and management; cost
effective and timely planning, design and build-out of restaurants; our
ability to attract and retain qualified franchisees; the availability and
cost of additional financing, both to fund our existing operations and to
open new restaurants; the rate of our internal growth and our ability to
generate increased revenue from our existing restaurants; our ability to
generate positive cash flow from existing and new restaurants; the
reliability of our customer and market studies; fluctuations in our
quarterly results due to seasonality; increased government regulation and
our ability to secure required governmental approvals and permits; our
ability to create customer awareness of our restaurants in new markets;
market saturation due to new restaurant openings; inadequate protection of
our intellectual property; adverse weather conditions which impact customer
traffic at our restaurants and adverse economic conditions. Further
information regarding factors that could affect our results and the
statements made herein are included in our filings with the Securities and
Exchange Commission.
Additional information is available on the company's website at
http://www.getcosi.com in the investor relations section.
Cosi, Inc.
Consolidated Balance Sheets
As of June 29, 2009 and December 29, 2008
(dollars in thousands, except share and per share data)
June 29, 2009 December 29, 2008
----------------- -----------------
(Unaudited) (Note 1)
Assets
Current assets:
Cash and cash equivalents $ 5,184 $ 5,589
Accounts receivable, net 662 916
Inventories 948 998
Prepaid expenses and other current
assets 1,316 3,650
----------------- -----------------
Total current assets 8,110 11,153
Furniture and fixtures, equipment and
leasehold improvements, net 26,123 29,779
Intangibles, security deposits and
other assets, net 1,759 1,849
----------------- -----------------
Total assets $ 35,992 $ 42,781
================= =================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,733 $ 3,378
Accrued expenses 8,093 9,835
Deferred franchise revenue 44 149
Current liabilities of discontinued
operations - 4
Current portion of other long-term
liabilities 414 668
----------------- -----------------
Total current liabilities 11,284 14,034
Deferred franchise revenue 2,580 2,545
Other long-term liabilities, net of
current portion 6,813 7,176
----------------- -----------------
Total liabilities 20,677 23,755
----------------- -----------------
Commitments and contingencies
Stockholders' equity:
Common stock - $.01 par value;
100,000,000 shares authorized,
40,866,474 and 40,663,164 shares
issued, respectively 409 407
Additional paid-in capital 277,175 276,593
Treasury stock, 239,543 shares at
cost (1,198) (1,198)
Accumulated deficit (261,071) (256,776)
----------------- -----------------
Total stockholders'
equity 15,315 19,026
----------------- -----------------
Total liabilities and
stockholders' equity $ 35,992 $ 42,781
================= =================
The accompanying notes are an integral part of these consolidated financial
statements.
Cosi, Inc.
Consolidated Statements of Operations
For the Three and Six Month Periods Ended June 29, 2009 and June 30, 2008
(dollars in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
2009 2008 2009 2008
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Restaurant net sales $ 31,015 $ 36,207 $ 59,139 $ 68,666
Franchise fees and
royalties 621 516 1,163 1,248
----------- ----------- ----------- -----------
Total revenues 31,636 36,723 60,302 69,914
----------- ----------- ----------- -----------
Costs and expenses:
Cost of food and
beverage 6,915 8,261 13,152 15,797
Restaurant labor and
related benefits 10,896 11,778 21,505 23,016
Occupancy and other
restaurant operating
expenses 9,044 9,930 18,011 19,685
----------- ----------- ----------- -----------
26,855 29,969 52,668 58,498
General and
administrative
expenses 3,731 6,069 7,704 11,106
Depreciation and
amortization 1,779 2,056 3,743 4,167
Restaurant pre-opening
expenses - 73 - 100
Provision for losses on
asset impairments
and disposals 238 267 238 267
Closed store costs 2 13 45 47
Lease termination
expense 5 - 207 243
----------- ----------- ----------- -----------
Total costs and
expenses 32,610 38,447 64,605 74,428
----------- ----------- ----------- -----------
Operating loss (974) (1,724) (4,303) (4,514)
Interest income 1 27 2 72
Interest expense (1) (2) (3) (3)
Other income 5 - 9 -
----------- ----------- ----------- -----------
Loss from
continuing
operations (969) (1,699) (4,295) (4,445)
Discontinued
operations:
Loss from
discontinued
operations - (30) - (312)
----------- ----------- ----------- -----------
Net loss $ (969) $ (1,729) $ (4,295) $ (4,757)
=========== =========== =========== ===========
Per Share Data:
Loss per share,
basic and diluted
Continuing
operations $ (0.02) $ (0.04) $ (0.11) $ (0.11)
Discontinued
operations $ - $ - $ - $ (0.01)
----------- ----------- ----------- -----------
Net loss $ (0.02) $ (0.04) $ (0.11) $ (0.12)
=========== =========== =========== ===========
Weighted average
shares outstanding: 40,381,372 40,030,460 40,321,325 39,980,356
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
Cosi, Inc.
Results of Operatins as a Percent of Sales
Three Months Ended Six Months Ended
------------------- -------------------
June 29, June 30, June 29, June 30,
2009 2008 2009 2008
-------- -------- -------- --------
Revenues:
Restaurant net sales 98.0 % 98.6 % 98.1 % 98.2 %
Franchise fees and royalties 2.0 1.4 1.9 1.8
-------- -------- -------- --------
Total revenue 100.0 100.0 100.0 100.0
-------- -------- -------- --------
Cost and expenses:
Cost of food and beverage (1) 22.3 22.8 22.2 23.0
Restaurant labor and related
benefits (1) 35.1 32.5 36.4 33.5
Occupancy and other restaurant
operating expenses (1) 29.2 27.4 30.5 28.7
-------- -------- -------- --------
86.6 82.7 89.1 85.2
General and administrative
expenses 11.8 16.5 12.8 15.9
Depreciation and amortization 5.6 5.6 6.2 6.0
Restaurant pre-opening expenses - 0.2 - 0.1
Provision for losses on asset
impairments
and disposals 0.8 0.7 0.4 0.4
Closed store costs - - 0.1 0.1
Lease termination expense - - 0.3 0.3
-------- -------- -------- --------
Total costs and expenses 103.1 104.7 107.1 106.5
-------- -------- -------- --------
Operating loss (3.1) (4.7) (7.1) (6.5)
Interest income - 0.1 - 0.1
Interest expense - - - -
Other income - - - -
-------- -------- -------- --------
Loss from continuing
operations (3.1) (4.6) (7.1) (6.4)
Discontinued operations:
Loss from discontinued
operations - (0.1) - (0.4)
-------- -------- -------- --------
Net loss (3.1)% (4.7)% (7.1)% (6.8)%
======== ======== ======== ========
(1) These are expressed as a percentage of restaurant net sales versus all
other items expressed as a percentage of total revenues.
Cosi, Inc.
System-wide Restaurants
For the Three Months Ended
June 29, 2009 June 30, 2008
--------------------------- ------------------------------
Company- Company-
Owned Franchise Total Owned Franchise Total
-------- --------- -------- -------- --------- --------
Restaurants at
beginning of
period 97 49 146 102 42 144
New restaurants
opened 1 1 2 1 2 3
Restaurants
permanently
closed - 4 4 1 1 2
-------- --------- -------- -------- --------- --------
Restaurants at
end of period 98 46 144 102 43 145
======== ========= ======== ======== ========= ========
For the Six Months Ended
June 29, 2009 June 30, 2008
--------------------------- ------------------------------
Company- Company-
Owned Franchise Total Owned Franchise Total
-------- --------- -------- -------- --------- --------
Restaurants at
beginning of
period 101 50 151 107 (a) 34 141
New restaurants
opened 1 3 4 1 10 11
Restaurants
permanently
closed 4 7 11 6 1 7
-------- --------- -------- -------- --------- --------
Restaurants at
end of period 98 46 144 102 43 145
======== ========= ======== ======== ========= ========
(a) Includes three locations that are classified as discontinued operations
CONTACT:
William Koziel
(847) 597-8800
