Editor's Note: A previous version of this story had been to updated to include the correct date of Blum's initial letter and to clarify that Demilio's response was issued to franchise owners and employees.
Of 95 Cosi Inc. shareholders who responded to an online survey from activist investor Blum Growth Fund LLC, all but two said they had lost confidence in the board of directors at Cosi, which operates and franchises 138-unit sandwich and salad chain.
Brad Blum, owner of Blum Growth Fund, said the survey is a nonbinding assessment of a portion of Cosi’s shareholders. He intended to increase “shareholder democracy” and bring about a meeting with the company’s board of directors so that shareholders might discuss Cosi’s performance and Blum’s proposal to turn around the brand’s performance with Blum as chairman and chief executive.
“My one request of the board is to listen to the shareholders,” said Blum, the former leader of Olive Garden, Burger King and Romano’s Macaroni Grill. “I didn’t know how many people would respond to this survey or what they would say, and depending on the feedback, it would have altered my direction. I’m suggesting the board do the same thing.”
At press time it could not be determined how representative a sample the 95 responses are relative to all holders of Cosi Inc. stock. The rate of response to the survey was incalculable because the questions were not sent directly to all shareholders, but hosted on the Blum Growth Fund website. The fund promoted the survey by advertising in the Wall Street Journal and Investor’s Business Daily, directing them to the survey on the website, where they could share their comments by name or anonymously.
Blum could not determine how many shares out of Cosi’s nearly 51.8 million shares outstanding were controlled by the 95 respondents. Blum Growth Fund owns about 3.5 million shares, or 6.8 percent of the company. He said several shareholders have contacted him personally to express support for his proposals and efforts to call a special shareholder meeting, including Chicago-based North Star Investment Management Corp., which owns about 1 million shares, or 1.9 percent of shares outstanding.
At press time, Cosi Inc. had not responded to phone calls or emails seeking an official response to the survey.