Cosi struggles with service shortfall
DEERFIELD, Ill. – A noticeable shortfall in customer service has fast-casual restaurant chain Cosi Inc. considering all alternatives in an attempt to reboot revenues. In the second quarter ended July 1, the company sustained a loss of $2,135,000, which compared with income of $77,000 in the same period a year ago. Net revenues fell 11 percent to $23,408,000 from $26,308,000.
In an Aug. 15 conference call to discuss quarterly results, Stephen Edwards, president and chief executive officer, cut to the chase in placing the blame squarely on service at the restaurant chain’s 72 company-owned and 49 franchise restaurants.
“People love our sandwiches, they love our salads,” he said. “We hear it time and time again, it’s never a complaint – a complaint is because someone was rude to me, my sandwich or my salad was incomplete in the ingredients that it was supposed to have … or I got the wrong order or it took me 20 minutes to get my order when there was nobody else in the store. And those are the kinds of service items that we need to address. Class-A hospitality and service experience is what we are really focused on.”
Edwards said Cosi has a culture that has “lost engagement with the process of serving food to people in a hospitable way.”
“We get a number of remarks from customers about how much they love our food and our products, but they have just been disappointed time and time again by the service or the experience that they received in the store,” he added.
To address the service problem, Cosi is focused on elevating the quality of service, customer engagement, being more friendly and hospitable, and delivering food faster, Edwards said. The goal is to increase customer counts.
Failure to improve its service could place Cosi clearly on a trajectory toward another year of unprofitability and capital loss, Edwards said. It may even lead to more change.
“This cannot stand,” he said. “We must change either the way we do business or the structure of our company or both. We are reviewing all alternatives.
“First, we must reverse the decline in revenues,” he added. “Without sales growth, we will not be a profitable company. To that end, we are working to create the products, service and experience our customers demand. Service is where we are experiencing the greatest shortfall and where we will be focusing the majority of our efforts.
“Second, many of our stores are unprofitable,” he continued. “We cannot continue to carry them. We are exploring several options for these locations, including early termination, subleasing, refranchising and, where justified, additional investment.