Spicy Pickle Franchising Inc. has announced results for the year ended Dec. 31, 2009.
For the year, total revenue decreased 6.68 percent when compared to 2008. Revenue from company-owned restaurant operations decreased about 14 percent, primarily as a result of having one less restaurant operating in 2009. This restaurant was sold to a new franchisee at the end of 2008, according to the company earnings report.
Bakery sales decreased about 13 percent as a result of having fewer customers at both franchise- and company-owned restaurants as well as general economic conditions. For the year, restaurant sales decreased 14.3 percent, down from $2.6 million in 2008 to $2.2 in 2009.
The decrease is principally due to the number of restaurants operating in each period as well as the changes in economic conditions. In 2009, the company had seven restaurants operating. In 2008, it had eight restaurants.
To offset losses, the company significantly reduced corporate overhead by about 65 percent, which brought the net loss down about $3.6 million. The decreases also were partially offset by a 10 percent increase in franchise fees and royalty revenues.
"2009 was a difficult year for almost anyone in the franchise restaurant business. Without readily available financing it is very hard to grow a franchise system, and in a time where sales have declined overall, it is also hard to attract interest in retail operations," said company chairman and CEO Marc Geman. "Nonetheless, we took this opportunity to significantly reduce expenses, particularly in personnel and related travel, which has resulted in our recognizing a loss of about $2 million versus $5.6 million the year before. We also closed some underperforming restaurants, some of which extended into early 2010. We ended the year with about $810,000 in cash, and while we believe we have the necessary funds to continue to execute our plan, we will continue to explore fund raising activities."
Spicy Pickle's management feels it reached two major milestones in 2009. First, it reduced its operating loss to $2 million from $5.6 million, and secondly, it arranged for the redemption of a portion of its convertible preferred stock and the conversion of the remainder. The company issued just under 7 million shares of common stock for the conversion and paid $800,000 cash for the redemption.
