Cosi narrows loss in year; revenues rise

by Eric Schroeder
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DEERFIELD, ILL. — Cosi Inc. narrowed its loss in fiscal 2006 to $12,327,600, which compared with a loss of $13,126,000 in fiscal 2005. Total revenue, meanwhile, increased 8% to $126,887,500, which compared with $117,180,500 during the previous year.

During 2006, Cosi opened 27 new restaurants, helping generate company-owned restaurant sales of $126,038,300, up 8% from $117,080,000 in 2005.

"As an early stage franchisor, Cosi continues to make significant progress executing against its three key drivers of success: recruiting and supporting experienced franchise area developers, developing company-owned restaurants and delivering strong restaurant economics," said Robert Merritt, interim chief executive officer and president. "In 2006, each of these accelerated while leveraging general and administrative costs, resulting in Cosi’s first ever full year of positive cash flow from operations,"

The positive cash flow from operations was $3,949,200, an improvement of $8,198,500 compared with the previous year. The company attributed the gain to strong operating disciples and higher total sales.

At the end of 2006, the company had 123 locations with 110 company-owned and 13 franchised, and five locations closed during the year. The company said it believes having a franchising and area developer model will help the company maximize market potential. However, the company also said company-owned restaurants always will be an important part of restaurant growth.

For the fourth quarter ended Jan. 1, the company sustained a loss of $4,795,000, which compared with a loss of $6,037,700 in the same period a year ago. Revenues rose 11% to $31,782,000, which compared with $28,552,300 during the same period of the previous year.

William Koziel, chief financial officer, said the company expects to open between 45 and 55 franchised restaurants in 2007 in addition to 14 company-owned businesses. 

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