Investors lifted Cosi
OK, so increasing marketing expenses when a company is still posting a net loss may seem a bit extravagant. But there could be good reason for a little evangelizing.
When Cosi went public back in April 2002, it was in the right place at the right time. Fast food's popularity had plateaued, a situation most clearly reflected in McDonald's
Cosi helped shake up the quick-service segment by responding to changing consumer palates. Through convenience, fresh ingredients, and innovative entrees, the newcomer filled a niche largely ignored by fast-food companies.
However, traditional fast-food outfits have adjusted. McDonald's has vigorously rebounded with salads and other new premium items. Wendy's
Hence, Cosi needs to let consumers know what it has to offer. The restaurant operator has already shown that it can deliver strong same-store growth at long-established locations. But as it expands, Cosi will be confronting tougher competition from a revived fast-food industry. Given this new dynamic, a few extra bucks on marketing might be a wise investment.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.