Così Has Filed for Chapter 11 Bankruptcy
News this week that some locations of the pervasive sandwich shop, Così, had closed was a harbinger for bigger news from the Boston-based company. Così, Inc., filed for Chapter 11 bankruptcy today, executives announced.
With same store sales down 7 percent in the second quarter this year, following several months of plummeting stock prices, “This was a difficult step, but it was necessary to address our liquidity issues,” interim CEO Patrick Bennett, Sr. said in a statement. “We believe this process will allow the company to right-size its balance sheet, reduce its debt, and focus on improving the business and stabilizing the brand.”
The company started 2016 with 74 of its own outposts, but it shuttered 29 ahead of the filing. That includes one Boston location: Back Bay is down one sandwich shop, Boston Restaurant Talk reported earlier this week. Thirty-one franchise operations are unaffected by the filing. The major, company-owned markets now include Boston, New York/New Jersey, Philadelphia, Connecticut, and Virgina/Maryland.
Before filing for bankruptcy, Così secured $4 million in debtor-in-possession financing from three investment groups, AB Opportunity Fund, AB Value Partners, and Milfam. Executives considered selling the company outside a bankruptcy process, selling assets, and other money-making avenues, it has been working on improving sales and reducing costs, and it has closed some underperforming locations, board chairman Mark Demilio said in today’s announcement.
“It’s become clear that… the company cannot continue to operate in its current financial condition, and that the best alternative for the company and its creditors would be to accomplish a sale through the bankruptcy process,” he said.
The stores that were on the chopping block in light of the decision to file for bankruptcy have already been papered over, so Così fans shouldn’t fear their still-open, go-to store will shutter in the wake of the news, spokesperson Nikki Richardson said. Locations remain in downtown Boston, the Seaport, South Station, Logan Airport, and Kendall Square. In the press release, Bennett said Così has enough cash on hand to carry out the plan to restructure the company.
The stock market hasn’t taken the news very well, though: Boston Restaurant Talk notes the trading cost is down more than 65 percent from yesterday.