Dough From Bread
A sandwich maker counts on expansion and a new store format to boost profits.
Editor's note: This article was updated on July 2, 2006.
Enter a Cosigrave; restaurant and your eyes are immediately drawn to the open flame of the large hearth oven behind the counter. Look closely and you'll see rectangular loaves of bread baking. The hot, crusty bread is what separates Cosigrave; from other sandwich shops, says chief executive Kevin Armstrong. The bread, as well as the sandwiches and salads that Cosigrave; prepares, are attracting enough hungry customers to put the Deerfield, Ill., company on the cusp of its first quarterly profit since going public.
But the issue on investors' minds is, of course, the other kind of dough. The shares (symbol COSI) debuted in late 2002 at $7 and plunged to 95 cents within months. But the stock has been climbing steadily since. It hit $11 in March and traded at $9 in mid May, giving Cosigrave; a market capitalization of $351 million.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Faster food
A new look may determine Cosigrave;'s future success. Fifteen of the 95 company-owned stores follow a design that was launched two years ago in Avon, Conn. The new model costs about $700,000 to build, $100,000 less than was needed to develop a typical older store. More important, the new stores use ordering systems designed to improve profitability. In the older stores, diners pay after their meals are made. In the new ones, they pay first and then wait for their orders to be brought to them. This minor change cuts the average wait time for an order from seven minutes to four, increasing the number of people who can be served.
Cosigrave;, which now operates mostly on the East Coast and in the Midwest, wants to open 800 stores by 2010. That means a greater emphasis on franchising. Cosigrave; has already inked 18 franchise agreements, and it expects to have more than 580 franchised restaurants within four years, compared with just five now. Analyst Nicole Miller, of ThinkEquity Partners, thinks Cosigrave; can eventually grow to 1,400 stores in 25 major markets. Panera Bread, Cosigrave;'s big rival in the premium-sandwich market, has more than 895 stores.
Customers spend an average of $8.66 per visit to feast on fancy salads and sandwiches, such as wasabi roast beef and tandoori chicken. Cosigrave; has generated sales growth every quarter at stores open a year or more -- a key measure in retail -- since the stock's initial offering.
The stock fell 6% on May 11 after Cosigrave; reported a bigger-than-expected first-quarter loss because of stock-option expenses. Analysts polled by Thomson First Call expect Cosigrave; to lose a penny a share this year and earn 16 cents a share in 2007.
Because earnings are tiny, the price-earnings ratio -- 56 based on '07 estimates -- isn't very meaningful. But if Cosigrave; can achieve the 33% annual long-term earnings growth that analysts forecast, its stock may reward investors with more than a tasty meal.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
-
What To Look for in Great Dividend Stocks
Dividend-paying stocks have lagged lately but are due for a comeback. Here's what to look for in great dividend stocks.
By Kim Clark Published
-
How to Retire Early by 40: Build the FIRE Now
It's not easy, but you may be able to retire by 40 or 45 if you take these FIRE (Financial Independence, Retire Early) steps now.
By Jacob Schroeder Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
Stock Market Today: Markets Tumble Amid Slower Economic Growth and Rising Prices
Disappointing readings on GDP and inflation helped tank equities.
By Dan Burrows Published
-
Stock Market Today: Stocks Run Out of Steam Ahead of Meta Earnings
The Dow Jones Industrial Average snapped a four-day winning streak after Boeing's first-quarter results.
By Karee Venema Published
-
Stock Market Today: Nasdaq Soars Ahead of Tesla Earnings
The EV stock rose nearly 2% ahead of its highly anticipated Q1 earnings report, due after tonight's close.
By Karee Venema Published
-
Stock Market Today: Markets Rebound Ahead of Big Week for Earnings
Equities rallied on easing geopolitical tensions, upcoming quarterly results.
By Dan Burrows Published
-
Stock Market Today: Nasdaq Spirals as Netflix Nosedives
A big earnings boom for credit card giant American Express helped the Dow notch another win.
By Karee Venema Published
-
Stock Market Today: S&P 500, Nasdaq Extend Losing Streaks
The two indexes have closed lower for five straight sessions.
By Karee Venema Published
-
Stock Market Today: Dow Slips After Travelers' Earnings Miss
The property and casualty insurer posted a bottom-line miss as catastrophe losses spiked.
By Karee Venema Published