Freshii has big plans for global expansion
Chain ‘not afraid to try new things’ with partnership plans as it sees solid Q1 sales
TORONTO Restaurant chain Freshii Inc. posted strong sales at locations open for more than a year in its first quarter as a public company as it pursues an aggressive global expansion plan.
The Toronto-based purveyor of healthy soups, salads and smoothies lost US$491,000 in the fourth quarter ended Dec. 25, or two cents per share, compared with profit of US$1.3 million, or (five cents per share) in the same period of the prior year. Costs related to going public and restructuring amounted to US$1.3 million in the quarter.
Freshii, which ended the year with 278 restaurants, wants to have 840 locations worldwide by the end of 2019, in traditional streetfront or mall-based real estate as well as less typical locales.
“We see a tremendous opportunity to partner with brands who are exploring ways to bring health and wellness into the four walls of their operation,” chief executive Matthew Corrin told investors and analysts on a conference call Wednesday.
Freshii, which has locations at a number of gas filling stations in Ireland, is looking at locations such as fitness centres and hospitals. “We are not afraid to try new things,” Corrin said, noting the fast-food chain is currently running a pilot program with a high school in Toronto that delivers meals to high school students who order lunch on Freshii’s mobile app.
The company announced last month it will open Freshii outlets in the United Kingdom, and has partnered with the business interests that first opened Starbucks in the U.K. It is also operating test pilot locations inside Walgreens and Target stores in the U.S., but Corrin had no further announcement about a possible rollout at those retail chains. “Those are two of many retailers we are in dialogue with,” he said.
Freshii’s results came days after founder and CEO Corrin made another splash by publicly calling out a corporate rival, issuing a public letter urging the Subway restaurant chain to convert some of its franchises into Freshii locations.
“Respected restaurant industry analysts agree that Subway has overdeveloped its retail base, with too many restaurants chasing fewer customers,” Corrin said in the letter, which stated Subway should have closer to 30,000 outlets rather than its current count of 44,600.
Subway has not commented on Corrin’s move.
In 2015, Corrin wrote a highly publicized “open letter” to McDonald’s CEO Steve Easterbrook, requesting the fast-food giant open a Freshii inside one of its restaurants, and vowing same-store sales at that location would jump 30 per cent in a year. McDonald’s never responded.
Shares were down about five per cent, or 69 cents, to close at $13 Wednesday. They finished the first day of trading on Jan. 31 at $12.22. That came after the fast-casual chain boosted its IPO pricing range on the Toronto Stock Exchange to between $10 and $11.50 from a previous level of $8.50 to $10 and generated gross proceeds of $125.4 million in the offering, the Canadian market’s largest since fashion retailer Aritzia’s $400-million IPO last October.
Freshii opened 100 restaurants in fiscal 2016, including 34 in the fourth quarter. Same-store sales, locations open for more than a year, rose 7.7 per cent in the fourth quarter and 6.8 per cent in 2016. The company ended the fiscal year with US$16.1 million in revenue, up from US$11.1 million the prior year.
After adjustments, Freshii’s net income fell 48 per cent to US$1.2 million, or four cents per share, compared with earnings of US$2.3 million (nine cents) a year ago.