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Cosi, Inc. Reports 2015 Third Quarter Results

The following excerpt is from the company's SEC filing.

BOSTON, MA, November 12, 2015 -- Così, Inc. (NASDAQ:COSI), the fast casual restaurant company, reported today a net loss for the 2015 third quarter of $(3.9) million, or $(0.08) per basic and diluted common share, compared with a net loss of $(4.1) million, or $(0.20) per basic and diluted common share, in the 2014 third quarter.

Così's total revenues for the 2015 third quarter increased by $4.3 million to $23.5 million from $19.2 million in the 2014 third quarter. Company-owned net restaurant sales increased by $4.5 million to $23.1 million from $18.6 million in the 2015 third quarter compared to the 2014 third quarter. Franchise fees and royalty revenues for the 2015 third quarter decreased by $0.2 million to $0.4 million compared to $0.6 million for the 2014 third quarter. The increase in revenues in the 2015 third quarter compared to the 2014 third quarter was driven primarily by the conversion of 13 franchise restaurants to Company-owned as a result of the Hearthstone merger completed on April 1, 2015.

System-wide comparable net restaurant sales for the 2015 third quarter, as measured for restaurants in operation for more than 15 months, recorded an aggregate decline of 0.3% compared to the 2014 third quarter. The breakdown in estimated comparable restaurant sales between Company-owned and Franchise-owned restaurants is as follows:

13 Weeks Ended

Company-Owned *

(0.3%)

(0.2%)

System-Wide

Does not include Hearthstone locations. Comparative locations are defined as restaurants in operation for more than 15 months as Company-owned locations.

"We have continued to implement Hearthstone's proven model of success across the entire system and are encouraged by the improved cash flows we are seeing in segments of our portfolio. At the same time, we have not seen the movement we expected in our most challenged restaurants, which continue to impact the cash flow gains we are seeing in the rest of our portfolio. We are working on a plan to deal with those restaurants," stated RJ Dourney, Così's CEO & President. "We are also right-sizing our overhead and capital expenditures. We believe these three cash management levers, together with the improvements we are seeing in sales and operating margins, will position us well to go into 2016 with the resources we need to enter the next phase of our turnaround, Dourney went on to say.

2015 Third Quarter Financial Performance Review

In the three month period ended September 28, 2015, restaurant net sales increased 24.4%, or approximately $4.5 million, in the 2015 third quarter, as compared to the three month period ended September 29, 2014. This increase was the result of incremental net sales of $4.5 million from the 13 Hearthstone restaurants added to the corporate portfolio, and an increase of $1.0 million from the non-comparable restaurant base, offset by net sales decreases of $1.0 million from closed restaurants, and a decrease in comparable restaurant sales of -0.3%, which did not have a measurable impact when measured in dollars. The percentage decrease in comparable restaurant net sales for the three month period ended September 28, 2015, was the result of a 5.5% increase in average check and a 5.8% decrease in transactions. Cosi's operating loss narrowed in the 2015 third quarter by $0.3 million, or 9%, to ($3.5) million, when compared to the 2014 third quarter.

Cost of food and beverages, as a percentage of restaurant net sales, for the 2015 third quarter, decreased by 1.6% when compared to the same period last year. This decrease was primarily the result of operational improvements and stability in the costs of certain contracted commodities.

Restaurant labor and related benefits, as a percentage of restaurant net sales, for the 2015 third quarter remained flat when compared to the same period last year, due to the investment in staffing and training required to drive future efficiencies, productivity, and overall guest experience.

Occupancy and other restaurant operating expenses, as a percentage of restaurant net sales, for the 2015 third quarter decreased 1.5%, when compared to the same period last year. This decrease was mostly the result of the acquired Hearthstone restaurants with higher sales volumes and lower fixed costs.

The Company reduced its general and administrative expenses in the three month period ended September 28, 2015, by $0.04 million when compared to the...


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