Spicy Pickle Franchising Inc. has updated its financial and franchise outlook for 2009 that includes the signing of a 10-unit development deal for the Houston region, and the planned opening of a location in Naperville, Ill.
Spicy Pickle CEO Marc Geman said in a statement that the company was impacted by a decrease in consumer spending during the fourth quarter of 2008 and the first half of 2009.
"Our reaction to the reduced spending and increasing unemployment was to reduce our overhead to prepare for a slower anticipated growth rate," Geman said. "We refocused on unit economics based on changing customer habits."
Spicy Pickle, Bread Garden expansion
In the beginning of Q4 '08, the company also completed the purchase of its Bread Garden Urban Cafe chain in Vancouver, B.C. Geman said the concept was purchased based on the belief that its growth rate would, in the short to medium term, outpace U.S. opportunities.
"That has been the case," Geman said. "The Bread Garden Urban Cafes continued to open new restaurants, and new locations are under negotiation. At this date, there are 13 Bread Garden Urban Cafes operating in British Columbia.
"Our reduced overhead along with the anticipated Spicy Pickle and Bread Garden Urban Cafe restaurant openings in the remainder of 2009 puts us in a much better position to continue to weather the economic storm. In addition, we expect to be prepared with new menu and restaurant features to address a more cautious and discriminating consumer, which we believe will be the customer of the future."
The company anticipates at least 42 Spicy Pickle restaurants and 17 Bread Garden Urban Cafs opened by year end.
In late May 2009 a franchisee in Houston opened its first restaurant; and another franchisee has completed construction on a restaurant in Naperville, Ill., slated to open in late July of this year.
The Houston restaurant is part of a 10-unit development deal for that market while the Naperville restaurant is part of a five-unit development package.
Additional restaurants are anticipated to open in 2009 in Las Vegas, Temecula, Calif., Chicago and San Diego. The company also has been negotiating for a location in the Pepsi Center in Denver, home of the Colorado Avalanche NHL hockey team and the Denver Nuggets NBA basketball team.
Restaurant closings
According to a June 8 article in the Indianapolis Business Journal, Spicy Pickle closed its locations there shortly after opening them last year. And Simon Property Group Inc. has filed suit against franchisee AJ Enterprises LLC, seeking more than $977,000 in unpaid rent for space at Castleton Square Mall in Indianapolis. Meanwhile, two other locations also closed in Michigan.
