News

Spicy Pickle provides franchise update

October 17, 2010

Spicy Pickle Franchising Inc. (SPFI) has reported on its outlook for the remainder of 2010 and through 2011.

"The results from our efforts so far have gained traction faster and better than anticipated," said Spicy Pickle president Mark Laramie. "Virtually every aspect of the company has improved and is showing meaningful progress. We have reduced our cash burn other than for new investment spending on advertising and store remodeling. For example, we are investing about $320,000 right now into the Canadian operations to transform them into [Bread Garden] Urban Cafe locations, with a new image and menu redesign. We have also invested approximately $150,000 in newly created advertising campaigns, which are driving Spicy Pickle sales.”

Year-to-date and 2011 changes include:

• Consolidation of its supply chain and purchasing power in North America with Sysco Corporation for a reduction in cost of goods sold;
• Increased store level profitability;
• Reached an agreement with Premium Brands Operating Limited Partnership, owner of the Bread Garden trademarks, to permit the re-imaging of current Bread Garden locations. Upon completion of the re-imaging, SPFI will have full and independent brand rights and revenue streams for all existing and future locations and channel development;
• Begin a brand re-imaging program for Canadian locations into Bread Garden Urban locations with a fresh new look and menu;
• Launch a location-focused advertising campaign for Spicy Pickle stores that has already resulted in positive same store comp sales and increases in average unit volumes;
• Continue company reorganization;
• Secure funding that should carry us well into 2012;
• Visit all franchisees in their individual stores and developed a program of increased franchisee support;
• Embark on new menu development at both chains and began improvements in products, per consumer surveys taken; and;
• Shore up new franchisee recruitment efforts and prepared for accelerated expansion.

"We are filling key executive positions with industry veterans who have proven extremely successful in closely related restaurant businesses. Some are initially consultants who will become full time as soon as possible and others are on staff now,” Laramie said.

Positions recently filled include: branding and chief marketing consultant Rob Elliott, CFO Clint Woodruff, VP/GM for Canada Jeff Branton, and supply chain and business development consultant Peter Fowler.

"Regarding the Spicy Pickle franchise restaurants, we reviewed the entire program from top to bottom in view of the current economic climate. ... We improved store economics and we talked to all franchisees about what else we could do to help them," Laramie said. "Part of our improved store economics directly results from our new vendor and supplier alliances noted above. While our prior U.S. and Canadian suppliers are fine companies who provided admirable services, the consolidation into a single North American supplier has led to a marked improvement in our overall economy of scale.

"Many of these changes are just beginning to take effect, and we expect to see the results over the next several quarters and more so as we move through 2011. Moreover, while we have cut ongoing general and administrative expenses, we are investing in the company's operations infrastructure in order to help franchisees become more successful and to create a more attractive opportunity for prospective franchisees. That means having successful, top notch restaurants that are very attractive to prospective business partners.

For the remainder of 2010, the company plans to add a few franchise restaurants with several more to open in 2011. "We believe the funds we now have available, plus the cash generated from our various revenue streams should be sufficient well into 2012," Laramie said.