Deerfield, Illinois-based Cosi Inc. (COSI), a premium casual dining restaurant chain, reported its fourth quarter 2010 sales results. Total revenue, which comprises company-operated restaurant sales and franchise fees and royalties, dipped 11.4% year over year to $25.4 million in the quarter.
This decline was due to the sale of 13 company-owned restaurants to a franchisee in second quarter 2010. As a result, company-operated restaurant sales tumbled 12.5% to $24.6 million, while franchise fees and royalty revenues soared 36.7% to $0.7 million.
However, system-wide comparable restaurant sales for the fourth quarter 2010 went up 4.5%, in spite of lower consumer discretionary spending. The comparable restaurant sales represent a key figure, which measures growth at restaurants in operation for more than 15 months. Cosi has succeeded in increasing its comparable restaurant sales for the tenth consecutive month.
The company-owned comparable-restaurant sales grew 6.1%, driven by a 3.8% rise in traffic and 2.3% increase in average guest check. The same-store sales at franchise- operated restaurants inched up 1.8%. Also, Cosi is benefiting from its marketing strategy to expand its customer base and drive traffic by providing catering services for breakfast as well lunch day parts.
During the third quarter of fiscal 2010, Cosi posted a 9.7% year-over-year drop in total revenue, as company-owned restaurant sales plunged 10.8%. However, franchise fees and royalty revenues leaped 54.9%. In the reported quarter, system wide comparable sales were up 5.2%, driven by a 6.6% rise in company-owned comparable restaurant sales and a 2.9% growth in franchise operated same-store sales.
Cosi is slated to release its fourth quarter 2010 results on March 28, 2011. Its prime competitors — Panera Bread Co. (PNRA) and Starbucks Corp. (SBUX) — are expected to report on February 10 and January 26, respectively.
Cosi currently operates 143 restaurants, of which 83 are company-owned and 59 are franchised. The company operates in 18 states and the District of Columbia in the U.S., and the United Arab Emirates.
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