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Cosi, Inc.'s CEO Discusses Q2 2012 Results - Earnings Call Transcript.

In order to supplement the work that we're doing, we've contracted Chef Charlie Baggs, a local Chicago culinary consultant and his team to help us with future menu innovations. As we've communicated on our last call, we've completed a 15% menu reduction. It is always a risk to make changes but often more of a risk to have a menu that you can't deliver well. These changes are setting us up to be stronger operationally for the long term and most importantly to increase guest satisfaction and guest count. We also introduced new menu boards that are cleaner, less cluttered, more contemporary and much easier to read.

Our second initiative was to further improve the guest experience with throughput initiatives and operations simplifications. We've completed several of the initiatives from optimizing our kitchen equipment for improved quality and reduced cooking time to upgrading our POS configurations to simplify and shorten the order entry process. Early results indicated an immediate improvement of 10 to 15 seconds per guests.

Now for the balance of the year, we're testing pagers to alert guests when their food is ready and we are in the process of completing the conversion of 10 more of our restaurants to the pay first model. This is what takes away the major confusion of how to use Cosi. All of these actions combined are improving the ambiance in our restaurants, further increasing our speed of service and reducing labor costs.

Our third initiative is controlling costs and it's also progressing. Our improved performance is coming from managing cost of goods in a difficult commodity environment, restaurant labor productivity with our guest satisfaction on the rise and continued reductions in G&A. And we have taken a modest price increase of 1% for the year.

For the results of these initiatives, in the second quarter Cosi achieved a profit and was cash flow positive. Yes, that's correct. Cosi achieved a profitable quarter after six months with this new leadership team. The Company earned $77,000 which is our first step in getting the core profitable and establishing a solid foundation for future growth in the business.

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