Despite posting same-store sales growth of 4.2 percent in the second quarter, Freshii shares dropped by nearly 20 percent Thursday as the company posted a net loss of $227,000.
The Canada-based health food brand posted a profit of $1.1 million during the same quarter a year ago, and its shares are down to the lowest point since its IPO at the beginning of this year. Revenue for the quarter was flat year-over-year at $4.7 million.
During the quarter, Freshii completed the buyback of its master franchise agreement for the Chicago area at a price of $4.15 million, about $1 million less than expected, which will send all royalties back to the company.
“We believe we acquired this royalty stream at a highly attractive price for our shareholders,” Freshii founder and CEO Matthew Corrin said in a conference call.
The period was Freshii’s 17th consecutive quarter of same-store sales growth, and the company opened 31 new locations. Of those 31 restaurants, 11 were “enhanced openings” a new Freshii model that allows certain new locations to generate meal box, juice cleanse, and catering revenue in advance of being able to serve walk-in customers.
“Phase one of this new strategy will focus on new openings with existing franchise partners. In these markets, our existing partners will begin to build customer excitement, loyalty, and sales for a new store before it officially opens its front doors by fulfilling orders from the existing location,” Corrin said. “This allows our franchise partners to earn revenue and leverage a new asset prior to its traditional front-door opening.”
Freshii expects to open 130 stores in the second half of 2017 and to reach a total of 810 to 840 locations by the end of 2019 from its current count of about 332 restaurants.
