Così taps activist investor as consultant
Così Inc. said Thursday it signed an agreement with former activist investor and restaurant veteran Brad Blum to consult on branding, product development, merchandising and marketing for the struggling fast-casual bakery brand.
The pact signals an armistice in Così’s months-long tussle with Blum and his Blum Growth Fund, which holds 3.5 million shares, or about 6.8 percent, of Così’s outstanding stock. Blum said he was changing his status to “passive shareholder” from activist.
The open-ended consulting agreement came after Carin Stutz, who in December was named president and chief executive at the Deerfield, Ill.-based Cosi, which operates or franchises 136 locations, sought a meeting with Blum.
“I just wanted to see if I could make him an ally,” Stutz said. “I didn’t want the distraction for me or for Così. ... I really wanted to make sure our team was spending all of our energies and focus on turning Così into a profitable business.”
The planned hour-long meeting expanded into three hours, Blum said.
“When we spent the three hours there at the Così in New York City and talked with people on her staff, I listened to what she thought could be done better. There really was an alignment particularly around the idea of simplifying and streamlining the guest experience.”
In the fall, Blum and other investors had pressured Così to make leadership changes. Blum, a former top executive at Burger King, Olive Garden and Romano’s Macaroni Grill, had even volunteered at one point to serve as Così CEO for a $1 annual salary.
Stutz said Blum’s consulting agreement will focus on several key initiatives, including brand strategy, marketing and culinary.
“We have a little momentum coming out of the fourth quarter and into the beginning of the year,” Stutz said. “My thought was about how could I accelerate the turnaround. The thinking was to surround myself with the best talent that I could find. I know that Brad has a lot of expertise in many aspects of the business, but this one specifically is focused around driving top-line profitable sales.”
Last month, Così said sales in its fourth quarter, which ended Dec. 26, had swung slightly positive. The company, which will report full earnings on March 29, added that same-store sales in the fourth quarter rose 2.6 percent, with a 0.9-percent gain at company-operated locations and a 5.3-percent increase at franchised units. At corporate units, traffic rose 0.6 percent and average check increased 0.3 percent. Revenue for the fourth quarter rose 3.3 percent to $26.2 million, compared with $25.4 million in the fourth quarter of 2010, reflecting an extra operating week in 2011.
“Carin is moving quickly to utilize every resource available to the company to quickly turn Così into a profitable business,” Stephen Edwards, Così’s executive chairman, said in a statement. “I welcome the involvement of Mr. Blum as part of Carin’s strategy.”
The company operates 80 restaurants and franchises another 56 locations in 17 states, the District of Columbia and the United Arab Emirates.