Cosi has struggled mightily since going public 10 years ago, and this is a small glimmer of hope that, under new leadership, the company may be turning around. It will no doubt be a tough road, as the chain has been beset by extremely high operating costs and, in my opinion, a menu that is far too complicated. To management's credit, they've reduced the menu by 15%, which is a step in the right direction. Now they need to make progress in cutting costs.
For now, Cosi has a new lease on life, primarily due to a recent rights offering that raised $12.8 million for the company. While it also increased shares outstanding by about 38%, it was necessary. This is Cosi's last stand in my view. The company has cash on the books and no debt, but will face an uphill battle in the ever-competitive restaurant landscape.
I've been a big fan of the food Cosi serves (although the menu makes my head spin), and believe it has a shot at turning around. Interestingly, there were two Cosi's in our small town about one and a half miles apart. The one that we frequented just closed. While that was disappointing, perhaps the closure demonstrates management's seriousness about trying to repair this company. Why on Earth were there ever two stores so close together in a small town?
Stay tuned. There are, no doubt, more surprises on the horizon.
At the time of publication, the author was long KKD and COSI.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.