Cosi continues to close stores....both on the company side and franchisee side. Since 2008, company stores have dwindled from 101 to 77 and Franchised stores have gone from 50 to 52. The total has shrunk from 151 in 2008 to 129, a 15% reduction. Don't be encouraged by the small gain on the franchise side since they were actually sold more than that only to then close some. When you look at the lease commitment chart in the 10K (and the list of properties along with their open date), you can see that many leases will be expiring in the next 12-18 months. Let's hope Cosi can effect the turnaround quickly. If not, it's going to be a very tough decision to extend the lease (likely a 5 year commitment) on a questionable store which would then accelerate the store closure trend.
a good stock to compare this to is Jamba juice from 4 years ago. They sold and refranchised many of their stores in a restructuring plan at the same time revamped the menu and launched an expansion plan to keep things going.
The fear I have with this if you're saying they closed stores as opposed to refranchising then even potential franchise owners knew that the stores were so dead that there was no hope in turning them around. Even jamba sold and refranchised stores at a discount, and they used that opportunity to raise additional capital through the restructuring process.
I am watching this company as a potential turnaround just as jamba had done, but my fear is that this may have more of an uphill battle although it looks more manageable of a turnaround being such a small size and less commitments to turn around. Jamba lost $140mm in 2008, and continued to bleed money up until 2013.
This can turnaround in 1/4 the time because it is 1/5 the size, however, the scale of the operation may prove to be just as difficult because it takes revenue to make money. Therefore, simple cutting bleeding is not an answer but actually making profit and growing it is the bigger issue.
If I can get a good entry I will look at getting some COSI, but only after it shows just enough promise that the wait will be worth while
Good point on Jamba but not sure Cosi is all that similar for a variety of reasons. A big one you point out is scale....where being smaller hurts because they don't have the revenue to fund the marketing to let customers know something is different (assuming it is). The other issue is that I believe Jamba had multiple channels to work on. In addition to their retail stores, they had a grocery presence that may have helped along the way. There are many things going against restaurants in general....over-capacity (does anyone have a problem finding a place to eat?), cost pressures (labor/wage/healthcare) and availability of "A" sites to grow. This is going to be a very tough turnaround. Hoping it works because nobody likes to see honest companies fail.
I guess one should have determined store closures were a sign of weakness and that it was not operational efficiency as the cause of the problem for their inability to make a profit. I ate in the DC location once while on a trip there, this is just discouraging they had all sales declines. The last 2 quarters tell me that their turn around isn't working. If another downtrend in the market hits, they have no cash to sustain a turnaround phase.