There will be no breaking bread between fast casual food chain Cosi and Brad Blum, Cosi shareholder and restaurant brand turnaround expert.
Blum is best known known for his turnaround of Burger King while he was CEO and his track record of 33 quarters of continuous growth in restaurant sales and profits as President of Olive Garden.
He is now the founder and owner of the BLUM Growth Fund, which owns nearly 7% of the Cosi. The restaurant's stock performance has been as unappetizing as fly in your soup. In March of 2006 the stock was $11.21 a share and now the stock is trading around 69 cents.
The company missed its second quarter estimates significantly, reporting a loss of one cent per share versus street consensus of three cents a share. The loss is a reflection of the restaurant chain's continued loss of market share from Panera and Chipotle .
More recently, Cosi was notified by NASDAQ that the stock is in danger of being delisted.
Blum told me he has had enough and its time for Cosi to warm up to his proposal of ousting the present board members and putting him as Chairman and CEO of the company for a $1 salary for his first year of service.
BB: I feel the company had no succession plan when the resignation of its latest CEO. The stock price has dropped precipitously. This is something I can help this company with. I am familiar with the brand.
I have spoken with the former CEO.
In January of this year I have prepared various proposals on what I would do to turn the company around. The first proposal in January of this year was having me as executive chairman and lined up various investors with "patient money" who would invest in the company if I got involved with it. This proposal was rejected by the board.
Now, in the latest proposal, I suggested that I serve as chairman and CEO for $1 a year. They felt in the best interest of the shareholders to get an executive search firm. I started buying shares in April at $1.30 a share. The stock unfortunately went very much the other way. I felt something needed to be done. I want shareholders to know the truth of this company and my expressed concern.
LL: This is not a proxy contest.
BB: That's right. Since my 13-d went out, a number of Cosi franchisees, investors, analysts, and restaurant professionals have agreed with me that we need a new board.
LL: With those measures, how quickly can you turn Cosi around?
BB: One doesn't know for sure but given my past experience I would be able to make significant move or two to turn a company around. It happened at Olive Garden. I have a clear, compelling vision for the brand. We need to get Cosi out of danger. The crisis needs to be stabilized. There are a number things we can do to increase sales, increase customer satisfaction. The company needs positive pr not much talk around it. Operating excellence does not cost much money. People need to be energized more.
LL: What was the biggest missed opportunity the Cosi board has missed?
BB: Mistakes in the past would start with on poor choices on sites and leases. I think the complexity of the menu for the staff to deliver.
Too much on their menu, how it is presented and the quality is being impacted. Cosi is complex. Its complicated, cumbersome and needs to be greatly simplified for both ordering and preparing.
When you compare to Chipotle up 58% Panera up 15% those two brands are simpler and clearer in their products. I believe in the potential of Cosi. I have spent almost $4 million of my own net worth into it and I would work for a dollar. I believe in this brand. It would be a crying shame if the company can't turn around.
LL: Who would you want to be CEO if it wasn't for you?
BB: If we get to that point I would be honored to be asked. If the stock price was two or three dollars I would be one happy shareholder and not doing this.
I am looking for a CEO who can deliver results with integrity in the short term and the long term. I'm not looking for a job. I suggested myself because of the dire situation the company faces. They have to focus on results. This is not about experience or personalities. It is about results. Cosi has seen a 95% decline in stock price under its leadership. The board does not have the sense of urgency. I would want to do both things. I would want to attract a healthy, results oriented and engaged board. That would be the best in the interest of the Cosi shareholder.
A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."
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