Così CEO Carin Stutz Resigns
Company names executive chair Stephen Edwards president, CEO
Carin Stutz has resigned as chief executive of Così 18 months after taking the top postat the long-struggling brand.
The Deerfield, Ill.-based company’s board of directors has named executive chair Stephen Edwards president and chief executive.
“On behalf of the board,” Edwards said in a statement, “I would like to thank Carin for her service to Così. We wish Carin well in her future endeavors.”
Edwards and the board indicated that the 124-unit fast-casual chain’s first priorities under the new management structure would be to shrink its cost structures by focusing on unit-level profitability and exiting unprofitable locations, preferably through refranchising.
Accelerating franchise growth had been a key goal for the company when it raised $12.8 million last year in a secondary-rights offering to shareholders, which it completed on July 9, 2012.
“Our franchise partners have proven that they can operate successful restaurants under our brand,” Edwards said. “Our focus will be to give these partners and other entrepreneurs like them the tools they need to grow the Così system. … Così is a great brand. Our mission is to create a business model that builds on the strength of our brand while generating profits for our shareholders. And to do so quickly.”
The company’s first-quarter earnings, which it reported last month, reflected franchisees’ outperformance in Così’s uneven operating results. For the April 1-ended quarter, franchisees’ same-store sales decreased only 1.3 percent, compared with a 6.6-percent drop in company-owned restaurants, leading to an overall 4.5-percent decrease for the chain’s entire system.
Così Inc.’s first-quarter net loss widened to $2.74 million, or negative 15 cents per share, compared with $1.13 million, or negative 9 cents per share, a year earlier.
In that filing, the company reported pockets of success, including several franchised locations and an aggregate same-store sales increase in the New York City market, where reimaging efforts and a program designed to improve unit-level operations had started to return positive results. The company’s home market of Chicago also had been completely remodeled, and one downtown location served as a “pop-up” unit last winter, where an extensive new menu was tested.
Darren Tristano, executive vice president of Chicago-based Technomic Inc., acknowledged that Così had fallen behind competitors in the bakery-café segment, but still characterized Stutz’s resignation as a “sudden decision.”
“I had just spoken to Carin during the NRA Show and she was excited about the direction Così was going,” Tristano said. “So her decision is evidence that this is a very competitive segment of the industry, not just in bakery-café or sandwich, but, in general, breakfast. Even with a good product and good locations, it’s been difficult to build profitability.”
With more transition in leadership, Così’s path back to profitability and growth will probably be a little longer, he added. The sustained focus on refranchising could bring much-needed capital to Così Inc. and allow it to focus on building the brand rather than running restaurants, Tristano said.
“This decision can help narrow down what Così focuses on,” he said. “I don’t think it has to do with the menu, because they have a good product and their pricing is competitive and the décor is appropriate.
“They still have to tweak the service format and better understand what dayparts they want to own,” he continued. “I think it very likely comes down to service when competing with Panera Bread and Corner Bakery.”
In addition to Stutz’s resignation, Così layed off some administrative staff, which the company said would result in annual savings of approximately $1 million. Così operates 74 company-owned locations and franchises another 50 restaurants in 16 states, the District of Columbia and the United Arab Emirates.