Article

Cosi CEO Carin Stutz talks brand turnaround

How Cosi's new CEO plans to rebrand, reimage and rebuild the chain.

March 4, 2012 by Valerie Killifer — senior editor, NetWorld Alliance

As the newly appointed CEO of Cosi Inc., Carin Stutz will have to leverage her background working for brands such as Chili's and Applebee's to bring about much needed change for the struggling bakery café.

With several challenges ahead of her, one large one was overcome Feb. 21, when, during an interview, Stutz received confirmation the chain would not face a Nasdaq delisting.

Cosi, which has 80 locations, was threatened with a Nasdaq delisting last year and in its 9-year history as a public company, has never turned a profit. Further, it endured a 95-percent reduction in stock price over a five-year period – shares were listed at $11.21 per share in March of 2006, and were listed as low as $0.56 in September 2011.

Now the challenges will be about streamlining its operational structure, including the number of items on the menu.

"We have more menu items and sku's than Chili's and that's not typical of a fast casual. We have to simplify and set up our operators to win and we have to have executive leadership," Stutz said. "I have no tolerance for dirty restaurants or rude behavior so things like that I have to focus on very quickly."

As of August, Cosi had 58 franchise-operated locations and a strong cheerleader in Brad Blum, who owns nearly 7 percent of Cosi's stock and is founder/CEO of BLUM Growth Fund.

In late September, Blum called for a new board of directors and even offered to run the company for a $1 salary. While the board declined his offer, he agreed to join Cosi as a consultant in early February and will work on menu innovation, marketing and merchandising strategies.

"We're working on our brand strategy because I do think that is absent," Stutz said. "Cosi has a healthy halo around it and I want to make sure I get that right for the guest."

While the Cosi brand has had its fair share of bumps in the road, the chain saw its same-store sales increase 2.6 percent overall during the company's fourth quarter 2011, driven by an increase in guest traffic and check average.

Stutz said Cosi customers rave about its food quality, an important aspect of operations given the chain's customers are 60 percent female, an audience known for paying more attention to the quality of a chain's menu.

"The most enviable position you can be in us when people already love your food. And the frequency of when people come in is quite surprising," Stutz said.

Leadership and learing

Stutz has spent her first two months on the job participating in the training program and meeting with the company's largest franchisees and shareholders. Her first experience with the Cosi brand came through a franchisee whom she had worked with while at Applebee's from 1999-2007.

In March, she will present Cosi's new strategic plan to the board of directors. In the meantime, she will continue to develop a strong operational foundation from which the chain can grow.

"It's very easy to walk into a Cosi and see where the opportunities are," she said. "I've read every comment that the guest has sent since I've been here. It's very common to get a letter that says 'I love your food, but I was so disappointed …' and then they talk about a guest experience that they've had. That makes me even more anxious to get it fixed."

Once her initiatives are put into action, the goal is to create a profitable company and lead it to unit growth once more.

"This is a company that has a lot of energy and a lot of passion behind it, and I hope that as the story unfolds, I'm the right leader to make it a success," she said.

Stutz's career in the restaurant industry started as a high school junior when she landed a job working at McDonald's with her twin sister. From 7-11 p.m. she would fill out the day's paperwork as a crew leader/administrative assistant. She then went to college and was studying dentistry when she applied for a position at a local Wendy's.

"I thought the restaurant industry was fun and enjoyable, but it also held opportunities for career advancement," she said.

During and after college, Stutz held various positions from within the Wendy's organization. In 1999, she joined Applebee's as its senior vice president of company operations. In 2005, she was promoted to executive vice president of operations, a position she held until 2007. She joined Brinker International in 2009 as president, global business development. She also is chairwoman of the Women's Foodservice Forum.

"I've held every position within the restaurant industry, but this one is by far my favorite," she said.