BLUM Growth Fund, LLC today announced it is leading an effort to SIGNIFICANTLY improve company performance and GREATLY increase shareholder value at Cosi (NASDAQ:COSI).

The BLUM Growth Fund proposal calls for a NEW BOARD OF DIRECTORS with proven ability to lead the company to strong profitability. On September 15th, BLUM Growth Fund filed form 13D with the Securities and Exchange Commission (SEC), indicating it has increased its ownership position in Cosi to nearly 7%.

BLUM Growth Fund maintains shareholder concerns center around the company’s poor performance under a long tenured board that can claim few successes. In its 9-year history as a public company, Cosi has never turned a profit and the company has endured a 95 percent reduction in stock price under 4 out of the 5 current board of directors. Shares were listed at $11.21 per share in March of 2006, and have been listed as low as $0.56 on September 12th of this year.

These issues culminated in the recent notification from NASDAQ that the stock is in danger of being delisted. The Cosi board of directors also recently accepted the resignation of former CEO James Hyatt. The current chairman of the board, Mark Demilio, assumed the position as interim CEO. Demilio has no prior restaurant or restaurant turnaround experience.

“Cosi is a publicly traded company. In the interest of protecting the investment of all involved, we must recommend a change in the board of directors, a change in philosophy and a new leadership focus,” said Brad Blum, founder and CEO for BLUM Growth Fund. “We call upon all shareholders to join us in our efforts to effect positive change at Cosi and participate in a non-legally binding expression of ‘no confidence’ for the current board. This is not a proxy fight or a hostile takeover, but an exercise in shareholder democracy.”

Blum has led the successful turnaround of several major restaurant brands, serving as chief executive of Olive Garden for eight years. He orchestrated a thorough transformation of the brand, with 33 consecutive quarters of same-restaurant sales increases, and increased profitability by hundreds of millions of dollars per year. During his tenure as CEO of Burger King, profits doubled in the first year. He and his team turned same-restaurant sales positive by introducing a new $1 billion product, setting the stage for a record-breaking IPO.

Restaurant industry analyst Howard Penney, managing director at Hedgeye Risk Management said, “Blum has extensive restaurant experience and abilities, including turnaround successes which require a very specific skill set. Blum’s leadership is the ideal solution for this struggling company. He knows how to get results, in the short term and in the long term.”

Blum has now offered to serve as chairman and CEO of Cosi at a salary of $1 for his first year. Blum would leverage his experience on behalf of the company, including his ability to raise capital and "patient money" to help stimulate the performance of Cosi. This should enable Cosi to attract a new board of directors, selected from industry leaders and experts. It is anticipated that a NEW BOARD OF DIRECTORS would also be paid $1 salary for their first year of service.

BLUM Growth Fund feels it is essential to the health of the Cosi business to have an active, results-driven, engaged board of directors working with and challenging a strong, experienced and talented CEO. Blum maintains its proposal is a comprehensive plan that addresses missed opportunities and provides a democratization process for all shareholders, ensuring shareholders get full information and have a voice during this crisis.

Cosi competes in the emerging, HIGH GROWTH SEGMENT of the restaurant industry – Fast Casual. Despite the market potential, Cosi has lost significant value while key segment competitors Panera and Chipotle, continue to increase their value, demonstrating an enormous missed opportunity for Cosi.

“Cosi has a strong brand DNA that originated in Paris and has a loyal, passionate customer base,” said Blum. “The quality of the people and the quality of the food are the two things that determine how great a restaurant company will be. It is time for new leadership to take swift and smart action to bring more relevance to Cosi, refresh the brand, get the company turned in the right direction and fulfill its enormous potential.”

“The first order of business at Cosi would be to increase profitability by increasing guest satisfaction and sales,” said Blum. “It will take innovation, operational excellence and strict cost controls to achieve superior financial results and increase shareholder value.”

Blum requests interested Cosi shareholders express their lack of confidence in the present Board of Directors and comment on its inability to successfully lead the company (or confidence in the Board, if comfortable with business as usual).

“We believe Cosi board members need to hear the honest views of company shareholders or in all likelihood the board and the company will continue on its current course,” said Blum.

About BLUM Growth Fund

BLUM Growth Fund, LLC is a private entrepreneurial capital investments company that is part of BLUM Enterprises, LLC. Brad Blum is Founder and Owner of BLUM Enterprises, whose mission is to “Provide Good Food for the Planet.” Based in Winter Park, Florida, and with offices in New York City, BLUM Enterprises is a progressive company dedicated to creating and operating highly profitable restaurant brands that focus on providing good food with exceptional flavor and responsible nutrition. The company also invests entrepreneurial capital and works closely with established restaurant brands to achieve outstanding profitability and shareholder value using this approach.

Copyright Business Wire 2010

If you liked this article you might like

I'm Dishing on Restaurant Stocks

I'm Dishing on Restaurant Stocks

Chipotle Should 'Kiss' Burger Idea Goodbye

Chipotle Should 'Kiss' Burger Idea Goodbye

Cracker Barrel Earnings Show How Casual Restaurants Are Making a Comeback

Cracker Barrel Earnings Show How Casual Restaurants Are Making a Comeback

Insider Trading Alert - AKR, COSI And FSP Traded By Insiders

Insider Trading Alert - AKR, COSI And FSP Traded By Insiders

Insider Trading Alert - COSI, CODI And AT Traded By Insiders

Insider Trading Alert - COSI, CODI And AT Traded By Insiders