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Cosi, Inc. (NASDAQ:COSI)

Q2 2012 Results Conference Call

August 16, 2012 17:00 PM ET

Executives

Carin Stutz – President and CEO

Bill Koziel – CFO

Analysts

Chris Krueger – Northland Capital Markets

Howard Penney – Hedgeye Risk Management

Kyle Krueger – Apollo Capital

Operator

Good day, ladies and gentlemen and welcome to the Second Quarter 2012 Cosi Inc. Earnings Conference Call. My name is Keith and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later on, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, today's conference is being recorded for replay purposes.

And I would now like to turn the conference over to your host for today, Mr. Bill Koziel, Chief Financial Officer. Please go ahead, sir.

Bill Koziel

Thank you, operator. Good afternoon, everyone. I'd like to welcome you to Cosi's 2012 second quarter results conference call. Joining me on the call today is Carin Stutz, Cosi's President and Chief Executive Officer.

Cosi's earnings release was issued today at market close and is available in the Investor Information section of our website at www.getcosi.com. During this call, we will be referencing supplemental materials, which are also available in the Investor Information section of our website. If you haven't already done so, please access the materials at this time.

As we always do, we will address our regulatory housekeeping matters before we begin. So during our introductory comments and our responses to your questions, certain items may be discussed which are not based on historical fact; any such items, including expected results and any details related to expected performance should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

All such forward-looking statements involve risks and uncertainties that cause our future performance and financial results to differ materially and therefore you should not place undue reliance on these forward-looking statements.

We refer all of you to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results, our performance and our financial condition.

For the call today, Carin will begin with comments about the business and we'll update you on various initiatives for 2012. I'll then take us through a review of the results for the quarter and then we'll open the call for your questions.

So now, I'll turn it over to Carin.

Carin Stutz

Thank you, Bill and thanks to everyone for joining us on the call today. We feel it's been another good quarter of progress for the Cosi brand and we're really pleased what we've been able to accomplish in six months since I've been here with a focus on really stabilizing our core business, by improving our operations and the guest experience.

I'm most proud of our team for the efforts they've made in better operations, throughput, cleanliness and profitability. It is noticeable and I've heard from some of you that are on the call today that you've seen the progress. We're on track with our three 2012 initiatives. And the first initiative is a focus on our food, improving and simplifying our menu.

We spent the first six months working on current offerings, making sure that our most popular items are even more popular and done well, (inaudible) better ingredients to improve their flavor and appeal. We had some creative ideas to freshen up our recipes and ingredients and to leverage a key point of difference for us, more utilization of our stone-hearth ovens.

In order to supplement the work that we're doing, we've contracted Chef Charlie Baggs, a local Chicago culinary consultant and his team to help us with future menu innovations. As we've communicated on our last call, we've completed a 15% menu reduction. It is always a risk to make changes but often more of a risk to have a menu that you can't deliver well. These changes are setting us up to be stronger operationally for the long term and most importantly to increase guest satisfaction and guest count. We also introduced new menu boards that are cleaner, less cluttered, more contemporary and much easier to read.

Our second initiative was to further improve the guest experience with throughput initiatives and operations simplifications. We've completed several of the initiatives from optimizing our kitchen equipment for improved quality and reduced cooking time to upgrading our POS configurations to simplify and shorten the order entry process. Early results indicated an immediate improvement of 10 to 15 seconds per guests.

Now for the balance of the year, we're testing pagers to alert guests when their food is ready and we are in the process of completing the conversion of 10 more of our restaurants to the pay first model. This is what takes away the major confusion of how to use Cosi. All of these actions combined are improving the ambiance in our restaurants, further increasing our speed of service and reducing labor costs.

Our third initiative is controlling costs and it's also progressing. Our improved performance is coming from managing cost of goods in a difficult commodity environment, restaurant labor productivity with our guest satisfaction on the rise and continued reductions in G&A. And we have taken a modest price increase of 1% for the year.

For the results of these initiatives, in the second quarter Cosi achieved a profit and was cash flow positive. Yes, that's correct. Cosi achieved a profitable quarter after six months with this new leadership team. The Company earned $77,000 which is our first step in getting the core profitable and establishing a solid foundation for future growth in the business.

This is an improvement of over $700,000 from the previous year when we reported a loss of $634,000, the same quarter of last year. This team has really worked hard to achieve this performance and is digging in to continue making improvements.

Our goal for the year is to be EBITDA profitable and we continue to feel optimistic about achieving this objective in 2012. For this quarter, we were EBITDA positive, just over $1 million. This is more good news as we added cash to our balance sheet, net of capital expenditures. Again, we are pleased with our progress.

But we also -- we've got a lot of work in front of us. As reported, our sales were relatively flat for the quarter. We own this. We are making changes to our existing business model, while at the same time working even harder on setting ourselves up for the long term. We're always learning challenges and feedback when you make changes, but we must continue to try new ideas into even operating platform that works well and our guests are satisfied.

Operationally, we knew that our menu was too broad with too many SKUs to execute consistently well. We recognize that the mitigation process would have an impact on sales as each item on the menu, as we've heard, is ultimately someone's favorite.

Again, our focus is on the long-term success as Cosi participates in the fastest growing segment of the industry, fast casual. We've accomplished quite a bit in our first six months and throughout this time, I'm beginning to see the underpinnings of a cultural shift, with pride in Cosi again and a strong belief in our future.

But I'm sure you're more interested in where we go from here. Well, this quarter we completed our rights offerings and we're pleased to have raised $12.8 million of capital and I want to thank all of you who participated for your support.

Let me give you a general idea on how we plan to use these funds. First, I'll address our existing portfolio of restaurants. We've previously discussed the condition of our restaurants and the equipment in our restaurants, which were not up to standard. We knew that we would have to invest to be competitive, to bring them up to a level that we feel comfortable inviting you in.

Well, there's good news here too. We challenged our teams to think differently about improving their restaurants and you know what? They took the entrepreneurial message to heart. With little to no money, before we raised capital, our teams in the restaurant put a heroic effort into improving the conditions in the restaurants.

For example, our teams in New York City accomplished a great deal on their own, with some painting and patching and creativity and they made a huge difference in the appearance of their restaurants. I'm so proud of our teams for stepping up and accomplishing an incredible amount in a very short time, and it's catching on as we're seeing that same effort and pride continue to take hold in our other markets.

Again, we knew that we have to approach the business differently to get closer to delivering the Cosi promise. And because of their efforts, this has significantly reduced the near-term need for capital expenditures in our Company restaurants. All of these efforts have addressed a number of repair and maintenance issues at a much lower than anticipated costs.

Now remodels will still be in our future. We're in the process of refining our new look and feel for Cosi. By these remodels in Chicago are a visible improvement and continued to outperform this system, we think it's prudent to finalize our design work before expanding remodels further.

Secondly, we've identified some restaurants for closure. Some of the restaurants are lagging the system from a cash flow standpoint. The ones that we don't feel can achieve an acceptable level of profitability through improved operations and increased guests' satisfaction, we intend to close. It is a relatively small number. Some have leases coming due in the next 12 months that we won't renew and the remainder will require a negotiated exit strategy with the landlord.

Our last group of underperforming restaurants, honestly they have potential. They're on nice real estate. Our teams are working hard to increase guests' satisfaction, controlled costs and get them to an acceptable level of profitability. We already have examples of this where we saved restaurants that were previously discussed as potential closings.

Our third use of new capital is for concepts and product development. With appropriate respect to Cosi today, we can make it even more appealing to our guests. Our leadership team together with Stephen Edwards and Brad Blum has accomplished a great amount shaping the vision for Cosi. We've got a bit more work to do, but we are a long way down the path. We've a small but good team focused on what needs to be done and we will supplement our efforts by engaging a design and architecture firm to help us accelerate the process, tapping into their expertise to make sure we have the right look and feel for our building.

The primary use of new capital is intended for thoughtful new unit development with strong return. As we continue to focus on making our core profitable, our plan is to begin developing new restaurants within the next 12 to 18 months pending identification of the right real estate. The objective is to prove the successful returns of our revitalized concept.

We want a Cosi that can be replicated multiple times because there are so many more efficiencies to be gained by having like operating models and design. Once proven we are confident that this will reenergize our franchising opportunities. We will increase the priority then of actively pursuing franchise development.

What also helps is that several of our existing franchises are speaking to us about growth – growing Cosi again now. They are ultimately our best sales people to jumpstart the franchise potential of our business. And Bob Sutton, our New Jersey franchisee had a successful opening in Hackensack in June. This restaurant has a great look and feel with very positive guest feedback.

And lastly, and perhaps most important, this capital helped us attract and retain the best talent. We must invest in people by filling a Chief -- few key spots on our executive team and we are making a concerted effort to increase the talent and performance of our restaurant general managers. We are looking for talented people to help us bring the business to where it needs to be.

Having Cosi on solid financial ground will make it much easier to get people to join our organization.

So looking back we have accomplished quite a bit with the small amount of capital and a large amount of effort by our Cosi team. We are now focused on getting all of the pieces in place, putting the right people in place and presenting a clear vision of our concept, our menu and our customer. We feel that we are getting ever closer to that. We are keenly focused on getting the core profitable. And with that said, we are also preparing for future growth.

I am not ready to comment specifically about that yet, but we have analyzed our opportunities and we will focus our growth in a limited number of markets.

Again to be transparent, there is a lot of work to do on the Cosi business. We have made significant progress again this quarter. We are not taking of our entrepreneurial hats and we will be very prudent on how we invest our new capital. We are confident in the future and we are working with a huge sense of urgency to be successful.

I will now turn the call over to CFO, Bill Koziel to review our financial performance.

Bill Koziel

Thanks, Carin. Pages four and five of the supplemental information will guide you as I review our financial and operating performance for the second quarter. As Carin said, we are pleased to have reported a profitable quarter with net income of $77,000, which is an improvement of over $700,000 compared to the prior year.

Now let's look at the components of our results for the quarter. As announced, our system-wide comparable restaurant sales in the second quarter decreased by 0.5% as measured for the restaurants and operations for more than 15 months.

Franchise comparable restaurants sales increased by 0.8% in the second quarter as compared to the same period last year. For company-owned locations comparable sales decreased by 1.3% in the second quarter as compared to the prior year, due primarily to decrease in traffic of 2.1% partially offset by a 0.8% increase in average check.

The decrease in traffic was reflected primarily in the dinner daypart results of our non-urban locations in markets like Ohio, Michigan, Virginia and Connecticut. We also saw a decline in weekend traffic at many of our locations.

The increase in average check was largely driven by price increases taken in the second quarters of 2012 and 2011, which were approximately 1% overall and which were partially offset by the impact of a lower average check associated with our breakfast business that continues to grow.

Further, when reported on a like calendar week basis to the prior year, system-wide comparable sales increased by 0.4% with the change due largely to the shift of the July 4th holiday.

Total revenues for the second quarter were $26.3 million compared to $26.9 million for the prior year quarter. The contribution of franchise fees and royalties increased by $200,000 in the second quarter to $986,000 due primarily to the recognition of franchise fees related to two terminated area development agreements.

The 2012 second quarter decrease in company-owned restaurant net sales of $800,000 was due primarily to a decline in sales of $500,000 from locations closed during and subsequent to the second quarter of 2011, with the balance resulting from our 1.3% decrease in comparable restaurant net sales.

So at the end of the 2012 second quarter there were a 133 Cosi restaurants, of 54 were operated by franchisees, these as compared to 140 Cosi restaurants at the end of the 2011 second quarter, of which 59 were operated by franchisees.

Turning now to slide four. Cost of food and beverage for the 2012 second quarter increased by 10 basis points over the prior year to 22.9% of restaurant net sales. The increase was due primarily to higher costs on certain commodities primarily poultry partially offset by the impact of the price increases taken during the second quarters of 2012 and 2011.

Labor and related benefit expense as a percentage of restaurant net sales improved over the prior year by 60 basis points in the second quarter to 33.9%. The improvement was due primarily to the continued efforts to more effectively manage the deployment of hourly labor during peak and non-peak operating hours which was aided by the use of new performance metrics that enabled us to heighten accountability at the restaurant level.

We were also favorably impacted by savings on certain healthcare related benefits during the quarter. All of which were partially offset by the deleveraging impact on labor resulting from the decrease in comparable restaurant net sales.

Other restaurant operating expenses increased over the prior year by 40 basis points in the second quarter to 12.4% of restaurant net sales. The increase was due primarily to an increase in paper and packaging costs as well as higher cost for third-party credit card fees resulting from increased usage by our guests coupled with slightly higher bank interchange rates.

Occupancy costs for the second quarter of 2012 were 19.1% of restaurant net sales or 60 basis points higher than the same period last year. The increase was due primarily to higher year-over-year occupancy costs, which are primarily rent and real estate taxes as well as the deleveraging impact of the decline in comparable net sales on fixed expenses.

In addition, during the second quarter of 2011, we benefited from several one-time reductions in common area maintenance expense related to annual reconciliations associated with several of our leases. These increases were partially offset by lower year-over-year utility costs.

Turning to restaurant, total restaurant cash flow for the 2012 second quarter was approximately $3 million. This resulted in a cash flow margin rate of 11.7%, that compared to $3.2 million or 12.2% in the 2011 second quarter. As part of our continued efforts to control costs, general and administrative expense decreased by 13.6% or approximately a $0.5 million to $2.9 million or 11.1% of total revenues in the 2012 second quarter. This compared to $3.4 million or 12.6% of total revenues in the prior year period.

The year-over-year improvement was due primarily to lower third-party professional fees as well as lower marketing related expenditures. Cash, cash equivalents and short-term investments were approximately $5.6 million as of July 2, 2012 and Cosi virtually in no debt. After the close of the quarter, we completed the rights offering which provided $12.8 million of gross proceeds to the company.

Finally, as Carin stated earlier, our goal for 2012 is to be EBITDA profitable. To that end, net income after excluding depreciation and amortization and non-cash stock-based compensation expense was almost $1.1 million for the six months ended July 2, 2012. This reflects an improvement of over $1.5 million as compared to the same period last year.

On slide five, we have provided a reconciliation of the non-GAAP measures from slide 4 to our reported quarterly results.

This concludes our brief presentation portion this afternoon, Carin and I look forward to answering your questions. Operator, please open the line for questions.

Question-and-Answer Session

Operator

Certainly. (Operator Instructions) And your first question is from the line of Chris Krueger, with Northland Capital Markets. Please go ahead.

Chris Krueger – Northland Capital Markets

Hi, good afternoon.

Carin Stutz

Hi, Chris.

Bill Koziel

Hi, Chris.

Chris Krueger – Northland Capital Markets

Just starting off with the sales trend, only comps were a little bit lower, clearly lower than you had the last couple of quarters but little bit lower than I thought they would come in at. Month-to-month, was it consistent throughout, and how about current quarter trends, you're half way through the quarter right now?

Bill Koziel

You know, it was – that wasn't consistent throughout, May was probably the toughest month we had of the three. But and we haven't given specific numbers but, wasn't. It wasn't necessarily consistent of it, April was fairly good, May was little tough and then June kind of bounced back.

Chris Krueger – Northland Capital Markets

Okay, and then in the current quarter is it kind of bouncing back and forth, so far as it's kind of sustain what you were doing in June?

Carin Stutz

Really we've seen kind of the same headwinds, starting out in our third quarter that we saw in the second quarter. We're just going to continue to focus on our execution and innovation and try to fight this out. It's been an interesting time I think we're seeing some of the same things that other people are reporting out there. But we've really taken the position that we own it. As I said before making some of the changes in the restaurants, but we're still confident and staying focused on the long term.

Chris Krueger – Northland Capital Markets

Okay, now when you look at the menu changes with the reduction in the SKUs, were you trying to say on the call that, essentially it's – in the near term it's probably hurting your comps and do you think it's hurting comps by a couple of percentage points for first quarter or two – or how should we look at that.

Carin Stutz

I'm not sure I can quantify that but obviously we're looking at our guest feedback pretty closely and you know I think if we try to make decisions on what items to remove and – we all knew that we had to do that. That is to – as we made the final decisions, I think we started taking away items that there might have been six to seven per day per restaurant. And that's when you start to hear from your guests, to say well you need to bring back my favorite, that's the only reason I come to Cosi, right. So sometimes we're creatures of habit. So we look at each one of those, we may have a couple that we have to bring back, and then try something else, but we do need to keep our menu smaller.

Chris Krueger – Northland Capital Markets

And then the whole idea then is higher volume products, you're hopefully make even better than you – that taste even better than they did before and you're able to push through the system faster than you did before. You know more focused and that kind of how a way of thinking about it?

Carin Stutz

That is the way of thinking about it. Obviously we are taking a look at our very best items, our signature salad, we're making sure that those are the best products they've ever been. Our TBM, we've made improvements to several of our core items. And we feel that's the right thing to do.

Bill Koziel

And Chris we've tried to be thoughtful as we done the menu mitigation as to – as we look at an item as to where that consumer possibly can (Inaudible) run the menu with a similar flavor profile.

Chris Krueger – Northland Capital Markets

Okay, and I guess then the whole guest experience initiatives to improve that – I've been Minneapolis, where we only have one location but it's just about a block away and about three weeks ago I was there, it's during a lunch hour, and I would say every seat in the restaurant was taken and I counted 35 of us waiting for our orders that took about 20 minutes to get down. And I'm wondering is that – something you're seeing in other places, I know you're improving your time. So is that abnormal or is that, what you're trying to fix?

Carin Stutz

Yeah, we're definitely trying to fix it. That's (Inaudible) for it. The markets we've rolled out all the initiatives we're seeing about a 10% to 15% second improvements as I said per guest. What that translates to is us being able to bring about 40 to 45 guests more per hour through our lines.

Chris Krueger – Northland Capital Markets

Okay. And after the rights offering, what share count should we us, is what 71 million shares?

Carin Stutz

That's pretty close.

Bill Koziel

That's pretty close. Chris I can send you that number, Chris.

Chris Krueger – Northland Capital Markets

All right. That's all I've got or now, thanks.

Carin Stutz

Thank you, Chris.

Operator

Your next question is from the line of Howard Penney with Hedgeye Risk Management. Please go ahead.

Howard Penney – Hedgeye Risk Management

Thanks very much. Carin, I lost you on the remodel strategy in terms of where you're going from here? You said -- I mean actually instead of asking that, can you just sort of explain that again what your intention is for remodeling? I was confused because you said -- you took a lot of initiatives before you raised money and that prevented you from doing things or stop you from doing things, so I was just a little confused on what you're thinking about remodels at this stage?

Carin Stutz

Yeah, I'm sorry, let me clarify that for you. So, Howard, you've known me for a while and it's really important for me, I think, from our reputation in the restaurant industry that you have a restaurant that you're proud of. It could be a little older, it could get a little warm but at the same time, there's a certain level of standard that you have bring in restaurants too. And as I was looking at our existing capital needs, I really felt out of the gate that we would have to invest more in our existing base of restaurants more immediately, right -- more immediate.

And what we found is by the restaurants like seeing more entrepreneurial and cleaning up the restaurants, painting, patching and some of things that they've done, that it's given us time not to have to spend all of that money in our existing restaurants right away. So I just want to say again from an entrepreneurial spirit, they did the work on their own. So what that's given us time to is just to take a look at the Chicago remodels that we've done. So let me be clear. We like those remodels and I think what we've learned over time is there's still -- it's still one of our best markets out there and still delivering some of the best numbers that we have.

But as we visit them and continued to get guest feedback, the one thing that we've heard is that the restaurants are still a little bit too dark. And that's primarily because of the ones that have a lot of store fronts that there's a lot of windows, the restaurants are nice and bright, but those that have a very limited store front and are deeper, just get a little bit too dark. So we've got to work on lightening those up. We need to work on maybe some additional lighting.

And the other thing that we've identified is we spent time on the inside of our restaurant where we still have Cosi's that people can walk right by and not even know that it's a Cosi. So we've got some work to do on the frontage of our restaurants as well.

Howard Penney – Hedgeye Risk Management

And how does that impact the new stores -- potential new stores?

Carin Stutz

For the looks that we would come up with obviously for the year, with the remodels or the new Cosi would be the same.

Howard Penney – Hedgeye Risk Management

So before you get the -- once you get the remodels program done, then you can think about opening new stores?

Carin Stutz

No, that's not what I'm saying. We're looking at doing that simultaneously. I'm saying the good news is, is that since we have -- we're in a position to not spend as much money on the remodels today as maybe we thought we needed to do in the past. More of that money can be diverted for new unit growth.

Howard Penney – Hedgeye Risk Management

To change this subject, I appreciate the need for wanting to close stores, which is great, but have you given any thought to maybe selling some of the non-core markets that are not contiguous to sort of where you have economies of scale?

Carin Stutz

We've looked at our entire portfolio and right now, we're not in a position that we want to sell anything. I can't envisage that wouldn't happen down in the future because we're in ten M&As with the number of restaurants that we have right now. We've got an opportunity to really penetrate markets that we're in.

My experience in my past has been -- and I love the franchising model and obviously that's where our most of our growth will come from in the future. But the best experience that I've had over time is when you bring a franchisee into the market that they demonstrate that they can build first and once they've build restaurants, then if there was an opportunity to sell them the restaurants that we have to add to their portfolio, I think that's a prudent way to go.

Howard Penney – Hedgeye Risk Management

And is there more turnover that you need to do at any -- whether it's a regional or store level manager, I mean in terms of where you think you are as a team?

Carin Stutz

So I would say that I think the first quarter that I was here, we had an opportunity to talk about expectations and set goals. And the last quarter, I've had an opportunity to see who stepped up to the plate and who hasn't. So for the most part, I will tell you I'm really happy about who is on the team, but there will be -- we will make some changes going forward. It's always sensitive to talk about that on the call. But to the extent we need to fill the gap we aren't delivering solid performance, we'll make those changes.

Howard Penney – Hedgeye Risk Management

I guess that's kind of difficult to balance, less appropriate to talk on the call on what shareholders need to hear. I understand, and then just lastly and just from your prior experience that other concepts that you work for, it based to assume that, whether you don't know the impact of it, but you are seeing degradation in sales because of the changes to the menu, because of there's a reduction in the number of items on the menu?

Carin Stutz

I can't pinpoint and say that it's all of that. I think what we see is -- we've seen some weakness in dinner in weekends. We've seen growth in breakfast. And probably the biggest thing we've seen is just people not buying beverages, that's probably been the biggest impact to our business right now. So maybe there's a little bit of managing your check.

Howard Penney – Hedgeye Risk Management

Perfect, thank you.

Carin Stutz

Thank you for your questions.

Operator

Your next question is from the line of Kyle Krueger with Apollo Capital. Please go ahead.

Kyle Krueger – Apollo Capital

Can you talk about – you talk about closing some stores, current and you quantify the magnitude of that, in terms of what percentage of revenues might e slated for closure? And I assume that those stores are probably unprofitably, at least on our four walls basis so could you quantify the P&L impact associated with the closing the stores that you talked about?

Carin Stutz

Yeah, Kyle, I know you're trying to do the math and I guess I would just frame it this way, I've had the opportunity to visit a lot of locations, I haven't – I've forgotten to all of them yet. But as I said earlier I guess, I just somewhat said that it's a small number that we would look to close.

I think it – just little bit sensitive is, as was maybe saying the Howard in the past whenever you're talking about closing restaurant you've people that are working there so. I guess I'm somewhat sensitive to putting out a number, like I said, it's a relatively small number. You don't know me well but I'm such an optimist, as I go to most of the locations, I'm thinking, this is fantastic (Inaudible). We should be doing well here, our wounds are self-inflicted and I really believe we can fix it. So without quantifying it, it's not a meaningful number for us as far as spending money on closing.

Kyle Krueger – Apollo Capital

Okay, thank you and good luck. And appreciate the progress, so far in your first six months.

Carin Stutz

Thanks for recognizing that, Kyle.

Operator

Your next question is from the line of [Chad Heathwith] a private investor, please go ahead.

Unidentified Analyst

Hey guys, good afternoon. I had two questions. One question was the status of the Costa Rica locations. I think a location should have been opened by now?

The second one is, what's the Company's plan on the NASDAQ delisting that the Company is going to face coming up in November?

Carin Stutz

I'll take the Costa Rica, it's started under construction, we're targeting November for that opening.

Unidentified Analyst

Okay.

Carin Stutz

And Bill you want to talk about any effects?

Bill Koziel

Sure. Yeah, we recognized that we still have a deficiency on the bid price, although the market value share deficiency has been cured. Well we want to organically work to create performance in the P&L and confidence in the investors to drive this stock to $1. So we'll do that between now and November.

We do have the opportunity in November to put a plan together and approach NASDAQ with a plan, it could buy us an additional six months of time. But at that point we'll then have to crap the plan about what that structure is – that gets us back to $1. And we'll still have all – we're reading all the options on the table that are available to us but – first and foremost is fixing the business.

Unidentified Analyst

And as far as Costa Rica goes, it's only one location that's going to be open in November, or (Inaudible)?

Bill Koziel

It's the first, so they signed for five restaurants over a period of time, they'll be opening one this year.

Unidentified Analyst

Very nice. Thank you so much. We appreciate all your hard work and look forward to next conference call in a few months.

Bill Koziel

Thank you.

Carin Stutz

Thank you.

Operator

And we have no other question, so I'm going to go ahead and hand it back over management for any closing remarks.

Bill Koziel

Thank you, operator. Again, we want to thank all of you for joining us on today's call. And we really do look forward to continue to update you on our progress on the next call. Thanks again, have a good afternoon.

Operator

Ladies and gentlemen that will conclude today's conference. Thank you very much for joining us, you may now disconnect. Have a great day everyone.

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