Così, Inc., the premium convenience restaurant company, today reported a net loss for the first quarter ended March 28, 2011 of $(2,140,000), or $(0.04) per basic and diluted common share, compared with a net loss of $(3,054,000), or $(0.06) per basic and diluted common share, for the 2010 first quarter.
Così’s total revenues for the 2011 first quarter decreased by $3,890,000 to $23,709,000 from $27,599,000 in the 2010 first quarter. Company-owned net restaurant sales were $23,005,000 for the first quarter compared to $27,074,000 for the 2010 first quarter with the resulting $4,069,000 decline related primarily to the sale of thirteen Company-owned restaurants to a franchisee during the second quarter of 2010. Franchise fees and royalty revenues for the quarter contributed $704,000 compared to $525,000 in the 2010 first quarter. The increase over last year’s first quarter was due primarily to royalties from the thirteen restaurants acquired by a franchisee from the Company during the second quarter of 2010.
System-wide comparable restaurant sales for the first quarter as measured for restaurants in operation for more than 15 months recorded an aggregate 1.7% increase as compared to the first quarter of 2010. The breakdown in comparable sales between Company-owned and franchise-operated restaurants is as follows:
For the 13 weeks ended
March 28, 2011
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Company-owned 3.0%
Franchise-operated (0.5%)
Total System 1.7%
“We’re pleased to announce our fourth consecutive quarter of positive comparable sales growth as well as improvement in our operating margins in spite of the severe winter weather experienced in many of our markets during the first quarter,” said James Hyatt, Così’s President and Chief Executive Officer. “We remain focused on driving sales and traffic across all dayparts, while staying committed to controlling restaurant and administrative costs.”
2011 First Quarter Financial Performance Review
Così’s aforementioned $4,069,000 decrease in first quarter Company-owned net sales as compared to the 2010 first quarter was largely related to the sale of thirteen Company-owned restaurants in Washington D.C. to a franchisee during the 2010 second quarter. The decline was partially offset by the 3.0% increase in Company-owned comparable net sales during the quarter which was comprised of a 1.5% increase in traffic and a 1.5% increase in average guest check.
For the first quarter, Così reported a 170 basis point decrease in costs and expenses related to Company-owned restaurant operations as a percentage of restaurant net sales compared with the first quarter of 2010. The change resulted from decreases of 140 and 40 basis points, as a percentage of net sales, in labor and related benefits expense and cost of food and beverage, respectively, partially offset by a 10 basis point increase, as a percentage of net sales, in occupancy and other restaurant operating expenses. The decrease in labor and related benefits expense as a percentage of net sales was due primarily to the impact of a price increase taken at the end of the second quarter of 2010 as well as the leveraging impact of the comparable restaurant net sales increase on the fixed portion of these costs during the period. The decrease in the cost of food and beverage as a percentage of net sales was due primarily to the impact of a price increase taken at the end of the second quarter of 2010, improved margins on certain limited-time promotional menu offerings compared to last year’s first quarter, and savings on certain commodities purchased as compared to the same period last year.
During the same period, the Company reduced its general and administrative expenses by 8% or $265,000, to $3,056,000 or 12.9% of total revenues from $3,321,000 or 12.0% of total revenues in the 2010 first quarter.
Così reported that as of March 28, 2011 it had cash and cash equivalents of $9,284,000 and virtually no debt other than lease obligations.
Così 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 82 Company-owned and 59 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, breakfast wraps, melts, soups, Così Squagels, 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.