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Cosi narrows Q4 net loss

Another 13 weeks of improved traffic and sales helped Cosi Inc. narrow its fourth-quarter loss, the company said Monday.

Overall revenues for the Deerfield, Ill.-based chain decreased due to the sale of 13 company-owned restaurants to a franchisee last year, but chief executive James Hyatt said comparable-store sales and restaurant margins continued to improve.

For the fourth quarter ended Dec. 27, 2010, the chain of 141 fast-casual restaurants narrowed its net loss to $2.8 million, or 5 cents per share, compared with a loss of $4.4 million, or 11 cents per share, in the year ago period.

Revenue for the quarter decreased 10.2 percent to $25.4 million, compared with $28.2 million in the fourth quarter of 2009. An 11.1-percent decline in company-owned restaurant sales resulted primarily from the purchase of 13 corporate units by a franchisee in the second quarter of 2010.

Franchise fees and royalties increased from $530,000 a year earlier to $723,000 in the fourth quarter of 2010.

Systemwide same-store sales rose 4.5 percent, reflecting gains of 6.1 percent at company-owned restaurants and 1.8 percent at franchised locations. Guest counts increased 3.8 percent while the average check rose 2.3 percent, driving the improvement at company-owned units, Cosi said.

“We are pleased to report our third consecutive quarter of systemwide comparable-sales growth,” Hyatt said. “We are also pleased with the quarter-over-quarter improvement achieved in our restaurant operating margins. We believe the results for the quarter reflect our continued focus on driving traffic and sales while working to improve operating margins and control administrative costs.”

For the full year, Cosi cut its net loss to $3.1 million, or 6 cents per share, compared with a net loss of $11.1 million, or 27 cents per share, in 2009.

Revenue decreased 7.5 percent to $109.7 million from $118.6 million a year earlier. The purchase of corporate-owned units by a franchisee resulted in company-owned sales declining 8.4 percent to $106.6 million and franchise income rising to about $3 million from $2.2 million a year earlier.

Same-store sales rose 2.4 percent systemwide, comprising gains of 2.6 percent at company-owned units and 2 percent at franchised locations. At company-owned restaurants, traffic rose 0.9 percent and the average check increased 1.7 percent for the year.

Deerfield, Ill.-based Cosi owns and operates 82 restaurants and franchises another 59 in 18 states, the District of Columbia and the United Arab Emirates.

Contact Mark Brandau at [email protected].

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