Moving to Boston is Cosi's recipe for success

Mass. executive takes reins, moves offices, shakes up network--and posts some gains

Posted in What They're Saying

By Jon Chesto
GLOBE STAFF
MARCH 18, 2015

Two days after RJ Dourney became the chief executive of cafe chain Così Inc. in a management shake-up last March, he was on a plane for Illinois to break some bad news.

Dourney gathered the corporate employees, about 30 at the time, into a conference room. The Chicago-area headquarters would close, he told them, and the company instead would be run out of Boston. Only a few of those workers, it turned out, would make the trip.

It was a tough call. But looking at the chain’s success today, Dourney argues it was the right one. Revenue is now heading upward at the 110-store chain, and Così’s stock price has nearly tripled in value since Dourney took over.

Dourney was recruited to run the company because of his success in Boston, as a franchisee with 13 Così shops in the area. He had bucked the Così corporate trend by enjoying year after year of rising sales. A big investor noticed and approached Dourney in January 2014 about turning the money-losing parent company around. Within two months, the board had installed him as chief executive.

For Dourney, a Massachusetts resident, moving the headquarters to downtown Boston wasn’t just about his personal commute. There are examples of successful stores nearby to show potential franchisees, he said, and it’s easier to recruit employees here.

The move was one of many changes. Dourney immediately closed 10 unprofitable corporate stores. He updated the menu, adding all-natural ingredients to the soups and antibiotic-free chicken. He made the Così leadership’s stock-incentive program more performance-based.

More important, the Boston Way became the Così Way.

Dourney rolled out his serving system across the entire Così chain, a system that lines up workers at specific stations to ensure the sandwich, salad, and checkout lines move at a brisk pace. Dourney calls it putting the “aces in their places,” a system akin to a factory assembly line.

“We took the operating model out of Boston,” he said. “You go into the Così on Federal Street [and] there’s a way the restaurant flows. ... We immediately began to deploy that systemwide.”

Dourney, the kind of guy who knows the names of everyone who works in his restaurants, also took pains to ensure that the Boston employees’ emphasis on positive customer experiences would be replicated elsewhere.

The results speak for themselves. Sales at comparable corporate stores in January rose 7.3 percent from a year earlier. In the February before Dourney took over, they were down 13.3 percent. Così stock trades around $2.60-per-share today, 160 percent more than a year ago.

Some changes will take time, however; in its most recent quarterly earnings report, for the three months that ended September, Cosi’s net loss widened to $4 million, partly due to corporate relocation costs.

Boloco chief executive Patrick Renna had a front seat to watch Dourney’s leadership skills after Dourney joined the Boston burrito chain’s board in early 2014. “His mentality was, ‘I have to be in the restaurants as much as I can,’” Renna said. “If you wanted to meet with RJ, [you had] to go to a Così. He wasn’t sitting in an office.”

Dourney’s career has prepped him well for the job. In the 1980s, he was part of Brinker International during its effort to expand the Chili’s chain. He worked for Applebee’s through much of the 1990s before joining Au Bon Pain in 2000 as chief operating officer, to help with that Boston chain’s turnaround effort. Dourney left to start his Così group, Hearthstone Associates, in 2005. When the board agreed to bring Dourney in as chief executive, it accepted a plan that absorbed Dourney’s stores in the corporate group.

Così is back on an expansion track. Seven franchise stores and one corporate location are opening in 2015 — including one that opened last month on Boylston Street.

But there’s still more work to be done.

Ani Collum, a partner at consultancy Retail Concepts in Norwell, said the operational changes make sense. But Dourney’s team needs to do more, she said, to build a unified brand message. She points to the different looks of the Così logo on its website and a Facebook page that’s more focused on quirky stories than Così promotions.

“If the goal is to be a totally recognizable brand that stands for something, I think they have a long way to go,” Collum said.

Così arrived in Boston in 1998, and the region has one of its largest concentrations of stores. As Così looks to expand again, it faces stiffer competition in the fast-casual restaurant category from the likes of Chipotle Mexican Grill Inc. and Panera Bread Co., said Lou Katz, a Boston lawyer who specializes in the restaurant business. “It may be harder for them now,” Katz said.

Dourney said he’s not daunted by competition. “It’s always a work in progress,” he said. “But there’s no doubt that it’s everybody’s goal that we become the best restaurant company in America.” 

Jon Chesto can be reached at jon.chesto@globe.com.

http://www.bostonglobe.com/business/2015/03/17/cosi-recipe-for-success-the-boston-way/3dFx7EaJKv10uGKW4FTIWJ/story.html

 

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