Cozy Up to Cosi

For those looking for cheap eats and cheap stocks, Cosi(COSI Quote) might be worth nibbling on if you have an appetite for risk and a little patience.

Cosi owns, operates and franchises convenience restaurants. Their restaurants sell hot and cold sandwiches, salads, fresh bagels, pizzas, s'mores and other desserts, a variety of coffees along with soft drink beverages, teas and alcoholic beverages.

Since going public in 2002, Cosi pursued a growth strategy that increased stores from 79 fast casual restaurants in 11 states to 144 locations in 18 states, the District of Columbia, and the UAE today. The company's goals have always been to build the brand equity, provide a menu offering full of creative, high-quality foods and beverages in an attractive store format, and deliver profits for shareholders.

On the goal of creating a quality product, Cosi gets rave reviews and feedback from customers (including myself) for having a fresh, innovative menu, and warm, comfortable dining environment.

As one customer I talked to at a recent store visit put it, "I like the fresh ingredients in the made-to-order salads, fresh bread, the free Wi-Fi access, and the feeling of a neighborhood cafe rather than a fast-food chain."

Unlike competitors such as Subway, which have used aggressive pricing promotions such as the $5 foot-long promotion to lure in value-hungry diners, Cosi has steadfastly held its pricing so not to diminish its brand and to condition existing customers to a lower price point. This strategy may benefit the company in the long run at the expense of the short term, where the marginal consumer may be trading down to save an extra buck or two.