Chocolate lovers in Japan will soon be able to buy Durango-made chocolate.
Rocky Mountain Chocolate Factory, the Durango-based chocolatier, has rolled out plans for expansion into Asia, including Japan, Hong Kong and China.
Under the license agreement, the company’s Hong Kong-based partner will open 10 Rocky Mountain Chocolate Factory stores in Japan over the next year. The company also will open test stores in Hong Kong and Shanghai, China, later this year. Taiwan and South Korea locations are possibilities on the horizon, as well.
The expansion news, issued last week, came days before the company released its fourth-quarter and year-end report. Total revenues increased 11 percent compared with last year to $34.6 million, according to the report released Thursday.
“International expansion has the potential to significantly accelerate the growth of sales and profitability (of the company),” Chief Operating Officer Bryan Merryman said in a news release.
Japan will see an influx of 100 Rocky Mountain Chocolate Factory stores over the next 10 years, according to the terms of the license agreement.
The company decided on Asia because it already has a step up in that market, said Greg Pope, senior vice president of franchise development. Many tourists who visit the United States try Rocky Mountain Chocolate Factory products or bring them home as gifts, Pope said.
The company opened a test kiosk in a Tokyo mall in December and saw sales that were significantly higher than new stores in Canada or United Arab Emirates, the chocolatier’s other international locations, Pope said. Customers have taken to the store’s caramel apples and are fascinated by the “Rocky Mountain size” of the chocolates, he said.
If the kiosk’s sales continue at the same pace, company executives predict they could be two to three times the volume of domestic-store sales, Merryman told investors during a quarterly conference call Thursday.
All chocolate sold in Japanese stores will be made in Durango and then shipped to Asia, a cost-effective option because of a weak American dollar that also generates local factory revenue, Merryman said.
With a burgeoning Asian market on the horizon, the chocolate factory is looking to other international markets, as well. Beyond support, international expansion requires minimal effort from the parent company after it finds a foreign partner, Merryman said.
Domestically, the company was still struggling to lift its newest frozen yogurt venture off the ground.
The Aspen Leaf Yogurt segment of the company operated at a loss of $586,000 since it opened its first store in December 2010.
Growth in co-branded Rocky Mountain Chocolate Factory and Cold Stone Creamery franchise stores also slowed this year because the company stopped providing financing.
“Franchisees don’t have cash in bank to put in a co-brand store,” Merryman said. “They need financing, and that is difficult to get.”