On a morning visit to Cosi at Grand Avenue and Rush Street, CEO Carin Stutz checked out the prep area where salads and sandwiches are made, practiced her Spanish with the baker rolling out dough for afternoon flatbreads, and told the general manager to keep an eye on the amount of espresso coming out of the machines.
Stutz, who joined the company in January, also stepped from behind the counter to greet incoming patrons — and boast a little about the floor.
"I remember walking in here one time and thinking these floors were filthy — and now look at 'em, they're spotless," she said. "You've got to scrub floors."
To underscore the point, Stutz, 55, flips through her iPhone for photographs of the floor at another Cosi before and after her scrubbing mandate.
"You can just see the difference in cleanliness in the restaurants," she said.
As Stutz attempts a dramatic turnaround at the troubled Deerfield-based fast-casual chain known for its Signature Salad and Tuscan Pesto Chicken flatbread, the Aurora native is thinking large and small. After logging 34 years in the restaurant industry, she began her first CEO job in January and started examining her stores one by one.
On the broader level, Stutz is also wrestling with a perilously low stock price. On Friday, Cosi stock closed at 85 cents, and the company said it had received its third delisting notice in as many years. The chain has until Nov. 21 to get its stock price above $1 for 10 consecutive business days or be dropped from the Nasdaq.
Cosi's 2002 initial public offering was priced at $7.
Under Stutz, company stock rose above $1 in March, only to drop in April after news of her plan to raise $15 million from shareholders to update restaurants and get the chain growing again. Analysts have complained the move would dilute shareholder value too much.
It has been a tumultuous year for Cosi, a 135-unit chain that went from hot commodity to has-been in less than a decade. In August, the last time Cosi was threatened with a Nasdaq delisting, CEO James Hyatt quickly resigned, and activist investor Brad Blum began lobbying for the job, offering a cash investment and promising to work for a $1 salary.
Stutz is no apologist for the restaurants, where she believes waits are too long, the menu is too complicated and operations need improvement. She's trimming the menu, simplifying the ordering process and looking for a new chef to make the menu more innovative.
"A lot of times, somebody sits in this office and creates things for the restaurant and they don't think about the implication that it has," she said. "That's why, when I got here, the first thing I did was, I came in, I met the team and I said I'll see you in five weeks — because I wanted to go learn the business."
Darren Tristano, executive vice president of Technomic, a Chicago-based restaurant industry consulting and research firm, described Cosi as "really far behind" competition like Panera Bread, Corner Bakery Cafe, Au Bon Pain and even Bruegger's.
Growth in the fast-casual segment — where there is generally no table service but where prices are higher, food is prepared to order and decor is more upscale than at traditional fast-food restaurants — has been outpacing the overall restaurant industry. In 2011, the sales in fast casual increased 5.2 percent, to $17.5 billion, while total restaurant industry sales increased 2.5 percent, to $370 billion.
Tristano pointed to other "first-generation" fast-casual players that "continue to fail," like Boston Market and Fuddruckers.
"You could consider those to be first-generation fast-causal concepts that peaked and then declined and lost relevance," he said. "Cosi appears to be headed in that direction."
Cosi reported first-quarter earnings last month, narrowing its net loss by nearly half, to $1.13 million from $2.14 million the year before.
"This is a great little company, and you know, yes, you always wish it was in different circumstances," Stutz said. "But this is the hand I've been dealt, and we're figuring it out."
William Koziel, Cosi's chief financial officer, who has been with the company since 2004, described his new boss as "a breath of fresh air."
"What she's brought for us has been a renewed focus on the business," he said. "She clearly has a sense of urgency."