Mr. Market dined at high-end luncheonette Cosi (NASDAQ:COSI) last week, and judging from his reaction, he found it tasty. Although the stock hasn't kept all of the initial gains it received after reporting profits that matched Wall Street's expectations, it's still up 4% from its pre-report closing price. Investors were apparently sated by news of higher quarterly and annual comparable sales. But this Fool found more than one bug in Wednesday evening's meal, and I'm here to point them out.

First, let's look at the those sales numbers. Comps rose 4.1% in the fourth quarter, but 6.9% for the year in total. That means that in the fourth quarter, sales growth among stores open more than 15 months slowed in comparison to to growth over the first three quarters.

Next, consider the relationship between the comps and total sales growth. In Q4, Cosi's firmly established stores grew sales 4.1% in comparison to their year-ago performance. Nice. But total sales for the firm were flat year over year, suggesting that the eight new stores Cosi opened in 2005 still aren't contributing meaningfully to the firm's total sales. With Cosi's comps starting to lag, one has to wonder whether competition from other high-end eateries like Panera (NASDAQ:PNRA), Potbelly, and Chipotle (NYSE:CMG) is beginning to bite into Cosi's market share. Panera just reported 7.7% same-store sales growth for its fourth quarter, and Chipotle did even better, reporting 10.2% growth in fiscal Q4.

Moving from sales to the profits they're supposed to generate, we see that Cosi lost $0.16 per share in the fourth quarter. Yes, I know they say that they really lost only $0.05 -- just as the analysts had predicted. But to reach that figure, you have to back out "one-time" expenses for stock options (about $0.01 per share) and asset impairment (about $0.10.) Also troubling in the announcement: the rapid rise in Cosi's weighted average share count, which increased 24% year over year as a result of last quarter's secondary offering.

Mind you, secondary offerings aren't bad per se. Although they reduce the ownership interest represented by existing shareholders' shares, secondary offerings don't always reduce the value of those shares, because they yield cash for the firm. Still, when shares outstanding rise, and per-share losses decline, you have to keep in mind that part of the decline owes to the firm's total loss being split among a greater number of shares.

Shareholders who read headlines declaring that Cosi reduced its per-share loss from $0.17 to $0.05 may miss the subheading, which clarifies that the firm's total loss only contracted from $6.6 million to $6 million. That sounds a whole lot less appetizing.

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Fool contributor Rich Smith has no financial interest, short or long, in any company named above.