Perhaps least surprising in the wave of 2016 restaurant brand bankruptcies is Cosi, which today filed for Chapter 11 protection in Massachusetts. This (recently) 104-unit brand has never reported a profit — never — and carries $300 million in debt. Operating losses over the past 3 years totaled over $40 million.
Cosi operates through Aramark, Sodexo and self-op agreements at Fordham, Temple, Purdue, Ohio Northern, Georgetown and William & Mary. The brand’s campus locations at UPenn and MIT appear to be operated independently.
The Cosi filing comes after years of reverse stock splits, weeks after yet another dismal quarterly report and just days after Cosi closed 29 of its 74 company-owned locations. In early September the Cosi board fired its chief executive and hired The O’Connor Company, a turnaround firm whose principals immediately took interim roles at Cosi.
Chapter 11 protection will allow Cosi to restructure its debt, walk away from the recently jilted landlords’ claims and sell the brand for pennies on the investor dollar. All presumably so Cosi can live to fight another day. A stalking-horse bid for the Cosi carcass is likely already in place, but for perspective: the brand’s pre-filing market cap works out to about $70,000 in value per restaurant. After the debtor-in-possession financier is paid (the DIP is always first in line) there can’t be much left for Cosi creditors.