Cosi Inc. (COSI), a premium casual dining restaurant chain, reported its third quarter 2010 sales results. Total revenue, which comprises company-operated restaurant sales and franchise fees and royalties, dipped 9.7% year over year to $27.1 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 10.8% to $26.3 million, while franchise fees and royalty revenues soared 53.5% to $0.8 million.

 
However, system-wide comparable-store sales for third quarter 2010 upped 5.2%, inspite of lower consumer discretionary spending, as cash-strapped consumers either preferred to dine out less or opted for cheaper alternatives, such as fast food centers. The comparable restaurant sales represent a key figure, which measures growth at restaurants in operation for more than 15 months.

 

The company-owned comparable-restaurant sales grew 6.6%, driven by a 3.7% rise in traffic and 2.9% increase in average guest check. The same-store sales at franchise operated restaurants inched up 2.9%. 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 second quarter of fiscal 2010, Cosi posted a 6.4% year-over-year drop in total revenue, as company-owned restaurant sales plunged 7.8%. However, franchise fees and royalty revenues leaped 66.5%. In the reported quarter, same store sales were up 3.1%, driven by a 3.3% rise in company-owned comparable restaurant sales and a 2.6% growth in franchise operated same-store sales.

 

Cosi is slated to release its third quarter 2010 results on November 11, 2010. Its prime competitors – Panera Bread Co. (PNRA) and Starbucks Corp. (SBUX) are expected to report on October 27 and  November 4, respectively.

 

Cosi currently operates 143 restaurants, of which 84 are company-owned and 59 are franchised. Based in Deerfield, Illinois, the company operates in 18 states, the District of Columbia and the United Arab Emirates.

 
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