Cosi Q3 Sales Down 3.0%

Così, Inc. (NASDAQ: COSI) reported that system-wide comparable restaurant sales for the 2011 third quarter as measured for restaurants in operation for more than 15 months decreased by 3.0% when compared to the third quarter of 2010. The breakdown in comparable sales between Company-owned and franchise-operated restaurants are as follows:

"We continue to operate in a challenging consumer spending environment marked by high unemployment and a lack of confidence in the economy which we believe has impacted the evening and weekend traffic in many of our restaurants," said Mark Demilio, Così's Interim Chief Executive Officer. "However, we are pleased with the continued growth we've seen in catering sales, the improvement in our breakfast business and the consistent results in our lunch day-part. Our results vary by market with some markets continuing to achieve comparable sales growth. Accordingly, in addition to pushing forward on system-wide initiatives such as growing our catering business, improving guest service and expanding our on-line ordering and delivery capabilities, we are focused on specific strategies to recapture the evening and weekend business as well as strategies to drive traffic in those markets at the bottom of the range."

Company-owned net restaurant sales were $24,468,000 for the third quarter compared to $26,341,000 for the 2010 third quarter with the resulting $1,873,000 decline being largely due to the closing of six Company-owned restaurants during and subsequent to the third quarter of 2010 as well as the decline in Company-owned comparable sales. Franchise fees and royalty revenues for the quarter contributed $868,000 compared to $782,000 in the 2010 third quarter. The increase over last year's third quarter was due primarily to the recognition of fees in the 2011 third quarter resulting from a franchisee termination. Total revenues for the 2011 third quarter decreased by $1,786,000 to $25,336,000 from $27,122,000 in the third quarter of 2010.

Così noted that the Company-owned comparable restaurant sales decrease for the 2011 third quarter of 3.0% resulted from a decrease in traffic.

Company-owned comparable sales are based on sales from restaurants that have been operating as Così^® for more than 15 months. Franchise-operated comparable sales are based on sales, as reported by franchisees, from restaurants that have been operating as Così^® for more than 15 months.

Franchise-operated and system-wide comparable restaurant sales percentages are non-GAAP measures, which should not be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP and may not be comparable to system-wide sales as defined or used by other companies. Così does not record franchise-operated sales as revenues. However, Così's royalty revenues are calculated based on a percentage of franchise-operated restaurant sales. Management believes franchise-operated and system-wide comparable restaurant sales information is useful in assessing consumer acceptance of the Company's brand, facilitates an understanding of financial performance and overall sales trends, helps the Company understand the effectiveness of marketing initiatives, the cost of which our franchisees contribute to based on a percentage of their sales, and provides information that is relevant for comparison within the industry.

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