Cosi Expansion Heats Up Despite Stale Q1

DEERFIELD, IL—Total revenue growth of 8.3% and a 7.5% gain at company-owned units were dampened by a decline in same-store sales during the first quarter for Cosi Inc., a dip the sandwich emporium attributed to severe weather and a superior start to 2006. CFO William Koziel called the general restaurant environment in early 2007 “challenging,” and said results were further dragged down by new stores that have not yet reached their full financial potential.

“However, we continue to focus on executing our key drivers of long-term success,” Koziel said, among them “maintaining strong operating discipline,” aggressive franchise recruitment and an increase of new company stores. Indeed, Koziel relayed that Cosi has secured commitments from 33 franchisee developers who would collectively deliver 378 units on top of 20 new stores already in business.

The additions would substantially boost Cosi’s dining footprint nationally, with the firm operating 113 company-owned restaurants and 19 franchise locations as of the end of March. Cosi opened three company units and six franchise restaurants during the first quarter.