Cosi Inc. (COSI), a premium casual dining restaurant chain, recently reported its second quarter 2011 sales results. Total revenue, which comprises company-operated restaurant sales and franchise fees and royalties, decreased 9.2% year over year to $26.9 million. Sales were also below the Zacks Consensus Estimate of $28.0 million.
The decline was primarily attributable to the sale of 13 company-owned restaurants to a franchisee in second quarter 2010. As a result, company-operated restaurant sales tumbled 8.7% to $26.1 million and franchise fees and royalty revenues fell 24.3% to $0.8 million.
Moreover, system-wide comparable restaurant sales for the second quarter of 2011 inched down 0.2%, due to lower traffic as consumers continue to remain skeptical regarding their spending. Comparable restaurant sales represent a key figure, which measures growth at restaurants in operation for more than 15 months. Cosi experienced a dip in its comps for the first time after having recorded increases for four consecutive quarters.
Company-owned comparable restaurant sales spiked 0.5%, driven by a 2.9% rise in average guest check, partially offset by a plunge of 2.5% in traffic. However, same-store sales at franchise operated restaurants dipped 1.3%. Despite lower consumer discretionary spending, Cosi continues to pursue marketing initiatives to expand its customer base and drive traffic by providing catering services for breakfast as well lunch day parts.
During the first quarter of 2011, Cosi posted a 14.1% year-over-year decline in total revenue, as company-owned restaurant sales tumbled 17.7%. However, franchise fees and royalty revenues leaped 34.1%. In the reported quarter, system-wide comparable sales were up 1.7%, driven by a 3.0% rise in company-owned comparable restaurant sales, partially offset by a 0.5% dip in franchise operated same-store sales.
Deerfield, Illinois-based Cosi is slated to release its second quarter 2011 results on August 11, 2011. One of Its prime competitors BJ’s Restaurants, Inc (BJRI) reported second quarter 2011 adjusted earnings of 29 cents per share, which surpassed the Zacks Consensus Estimate of 27 cents.
