Così Inc. is looking for a new CEO and chief financial officer to turn around the fast-casual brand, which has not generated a profit in 13 years as a public company.
Boston-based Così terminated president and CEO R.J. Dourney on Monday, and named board member Patrick Bennett as interim CEO while the company searches for a replacement.
At the same time, Così CFO Miguel Rossy-Donovan also resigned, effective Sept. 23, to take an undisclosed position elsewhere.
Dourney remains on Così’s board, and is one of the company’s largest shareholders. But his departure indicates that efforts over the past two years have not generated the traction that was hoped for, especially with Nasdaq threatening to delist Così in November if results do not improve.
Dourney was hired as president and CEO in March 2014. At the time, he was founder and CEO of the largest Così franchise group, Hopkinton, Mass.-based Hearthstone Associates, which operated 13 Così restaurants in the Boston area. At the time, those restaurants had reported nine years of positive same-store sales. The Hearthstone locations were merged with company units as part of the deal.
After Dourney was hired, Così, which was previously based in Deerfield, Ill., moved its headquarters to Boston.
And Dourney went to work, cutting costs and refocusing the hearth-baked flatbread concept’s menu with more healthful options. Dishes were reworked to include more “clean label” ingredients in a way that has prompted some observers to refer to Così as “the poor man’s Panera.”
Over two years, Così has shrunk by roughly 17 locations, including underperforming units that were closed. Another 14 restaurants were targeted for closure this year, but that number was reduced to nine locations, after five restaurants showed improved results.
Così ended the second quarter with 104 units, including 74 company-owned locations and 30 franchised restaurants in 15 states, the District of Columbia, the United Arab Emirates and Costa Rica.
Earlier in 2016, Così launched a profit-sharing plan to motivate restaurant managers. The company tested new real-time customer satisfaction measurement tools, as well as digital marketing campaigns designed to drive new trial and boost frequency among loyal customers, particularly Millennials, which represent about 43 percent of the Così customer base.
At company units, the menu was streamlined to allow for faster service and improved employee efficiency. The new menu was expected to roll out systemwide by Aug. 30.
Dourney had pledged to generate positive cash flow before the end of the year, but those hopes were dashed after the June 27-ended second quarter.
Così reported a loss of $3.1 million, or a loss of 7 cents per share, although that was an improvement from a loss of $3.9 million, or a loss of 8 cents per share, a year ago.
Revenue decreased 7 percent, to $22.8 million, on systemwide same-store sales that declined 4.5 percent. That included a 6.6-percent slide among company-owned units, despite a 2.1-percent increase in same-store sales among the Hearthstone restaurants.
Dourney blamed second-quarter results in part on a challenging external environment. At the time, he said that Così would remain relentlessly focused on increasing customer satisfaction, boosting frequency and driving trial.
Over the past two years, Dourney indicated that his long-term strategy was to move to a more franchised system. The company was exploring refranchising, and looking at the sale of company-owned restaurants in franchised markets.
The chain’s franchise operators were showing a positive trajectory in sales and profitability, with same-store sales rising 0.4 percent in the second quarter.
In a call on Aug. 11 with analysts following the second-quarter report, Dourney focused on positive results among franchise operators, saying their success “speaks to the value of the brand,” and indicated that turnaround efforts were taking hold.
“Overall, our franchise community continues to perform at high level,” he said.
Contact Lisa Jennings at [email protected]
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