Spicy Pickle Franchising, Inc. (OTCBB: SPKL), fast casual restaurant operator and franchisor of its Spicy Pickle U.S. and BG Urban Café Canadian brands, today announced results for its third quarter and nine months ended September 30, 2010.
For the third quarter, the first full quarter under new management, revenues increased to $1,132,631 from $954,188. For the nine months, revenues increased to $3,321,222 from $3,181,641. Revenues were higher due to increases in franchise fees, royalties and rebates which totaled $487,375 for the quarter vs $295,979 in the year ago quarter, and $1,383,206 for the nine months, up from $1,094,367 for the nine months the year before.
The loss from operations totaled $810,616 for the quarter compared with $608,190 for the year ago quarter and $1,851,663 for the nine months vs $1,570,875 for the nine months of 2009.
“Approximately $350,000 in expenses for the quarter was either non-cash or severance related and we have increased our investments in re-branding the Spicy Pickle and Urban Cafés concepts. Additionally, we have increased our advertising spending for both brands and have invested in strengthening our management team and board of directors,” reported CEO Mark Laramie.
“Most importantly, we are now seeing increased restaurant average weekly sales. Furthermore, we are beginning to experience improved unit level economics as a result of our new supply chain. However, company owned store revenue has been reduced due to closing one of our company owned restaurants pending relocation. Thus, we are now operating six rather than seven company owned units. A full discussion is included in our current 10Q report and we encourage interested parties to review it,” said Mr. Laramie.
The company had total assets of $5.3 million at September 30, 2010, versus $5.8 million at the same time a year ago. Current assets amounted to $1.13 million versus current liabilities of $1.45 million of which the $350,000 in deferred franchise revenue is a non-cash obligation. The company reported it has borrowed about $1 million on its $2 million line of credit.
Outlook:
“We are still somewhat dependent on the economy and consumer spending, but we believe we have accomplished a great deal in a short time. We believe that through the marketing and re-branding investments we are making, and will continue to make, we are positioning both of our brands for future growth and development. We are optimistic 2011 will be a very active year in terms of franchisee development activities,” concluded Laramie.
