Così Inc. pointed to the closing of 13 units during and after the second quarter of 2012 for this year’s 11-percent drop in second-quarter revenue, and officials said the company would focus on improving customer service going forward to turn around its falling unit count and same-store sales.
In the July 1-ended second quarter, same-store sales decreased 3.6 percent at corporate restaurants and 1.4 percent at franchised locations.
“The savior of our business is going to be retaining customers,” chief executive Stephen Edwards said during the company’s earnings call, “and that’s only going to happen if they come to our stores and have a positive experience.”
Così will still deploy capital within its fast-casual restaurants, as planned, for some light remodeling and upgrading of equipment. However, said Edwards, “I just don’t want people to think it’s the savior of our business.”
Edwards spoke of customer service as the “biggest shortfall” in Così’s stores, with team member’s attentiveness and engagement with customers showing the most crucial need for improvement.
“We’re trying to make sure we have class-A hospitality in the stores,” he said. “We get a number of remarks from customers about how much they love our food but are disappointed time and time again by the experience they receive. Speed of service isn’t the issue at stores operating nowhere near capacity.”
Così is confident in the potential for retraining staff and managers around service, Edwards said, because those efforts have paid off in a few units where the brand has tested the program. For example, Edwards said a unit in Columbus, Ohio, at the Easton Town Center, recently relocated to a new facility within the same mall, but even before that, the old space was producing sales days as high as 20 percent above year-earlier volumes after the staff was trained in the new service initiative.
“It’s night and day from some of our locations where we’re failing miserably,” Edwards said. “The level of excitement there is what you like to see an a restaurant operator. I would feel differently if it were about being in new, shiny location, but sales improved before we even arrived there, so it’s more about the people than anything else.”
He added that there was “no meaningful change” in the menu at the new Columbus store, and while the relocated facility is “a beautiful restaurant,” the reason sales have picked up at that Così unit “has to do with the caliber of employee and the level of engagement they have in the business.”
Shifting the approach to labor management
In order to provide better service, Così is managing labor in its stores differently under Edwards than it did under his predecessor, Carin Stutz, who resigned as chief executive in June. Edwards said the company is working to shift focus from controlling hourly labor as a percentage of sales more toward having a level of staff at each restaurant necessary to deliver upon Così’s service goals.
“What happens is when your average unit volumes drop below a certain level, you manage labor to a percentage and you end up understaffed in the stores,” Edwards explained. “That causes a poor experience for the customer, and sales just don’t come back. … We’ve had to add additional bodies in the store, which seems odd for a company declining in profitability, but it is a necessity to delivering the experience people expect.”
For locations where service upgrades might not turn around falling sales quickly, Così may still have to close units or explore other options, executives also noted during the call. Edwards said Così has about 12 stores on a “watch list” right now that might be candidates for closure if the brand is unable to work out alternative measures with its landlords like early termination, sub-leasing or refranchising.
“Some of the stores on the list are not performing and losing money, but they’re in tremendous real estate locations and are being undermanaged,” Edwards said. “We’re going to try to rejuvenate those stores in a short time horizon.”
Deerfield, Ill.-based Così operates 72 restaurants and franchises another 49 locations in 16 states, the District of Columbia, the United Arab Emirates and Costa Rica.