Updated from 11:46 a.m.
The typical sandwich and drink at
costs about $8.20 -- that's more than twice the price of the company's shares on Monday amid news of a management shakeup.
The New York-based restaurant chain said Chief Executive Andy Stenzler had resigned and would be succeeded by Cosi President Jay Wainwright.The company also said Eric Gleacher, a former Wall Street investment banker and a Cosi director, would become chairman of the company's board. Stenzler previously had held that title too.
Shares of Cosi were down $1.15, or 24%, to $3.32 heading into the close of trading -- down 52% from the stock's initial public offering price last November.
For Gleacher, who led the global mergers and acquisitions group at
from 1985 to 1990, the stepped-up involvement with the company is not surprising. He is the uncle of Wainwright, the company's president and new CEO. Prior to the Cosi IPO, Gleacher also funded up to $1,500,000 of the company's credit facility.
Stenzler, 34, had engineered Cosi's merger with a chain of coffee bars and was the driving force behind the plan to take the company public. In recent years, Stenzler had won praise from a number financial publications, even though Cosi has lost more than $114 million since its inception.
The chain's signature sandwiches are served on something called "Cosi bread," which the company describes as a pizza romano flat bread. It also serves a variety of square bagels called "Squagels." But Cosi's reach for the high-end sandwich market has led it to spill lots of red ink. That's one reason investors have turned a cold shoulder to the stock since its debut.
Specifically, the company said it will take a $1.7 million restructuring charge in the first quarter, which will include the cost of paying severance to laid-off workers. Cosi predicted that it will turn a profit in the second quarter on a pro form basis, but the company offered no estimate about when it will achieve a profit under traditional accounting standards.
To some extent, the poor performance of Cosi's stock hasn't been unexpected. Gourmet restaurant stocks have had an uneven time on Wall Street.
The company, founded in 1994, struggled to find a Wall Street firm willing to underwrite its $39 million IPO. In the end, the underwriter on the stock offering was William Blair, an investment-banking boutique that rates the stock outperform. The stock priced at $7 a share, well below the $8 to $10 range Cosi executives had wanted.