Rocky Mountain Chocolate Factory doesn’t expect its frozen-yogurt franchise Aspen Leaf Yogurt to turn a profit this year, and by next year, executives say they’re just hoping it won’t be losing money.
“I don’t see it happening this fiscal year, but by next fiscal year, we should have an operation that is at least not losing money,” RMCF Chief Operating Officer Bryan Merryman said in a conference call with investors Thursday
The company is expecting to spend less money on advertising for the yogurt franchise while opening eight to 10 new stores by the end of the year.
Merryman released RMCF’s operating results for the second quarter and first half of fiscal year 2013, which ended Aug. 31.
The franchise saw a 9.1 percent decrease in net income from $911,553 in last year’s second quarter to $828,782 in this year’s second quarter.
One investor asked company executives how RMCF plans to adjust its action plan given the decline in net income.
Merryman said the decrease is “more than 100 percent attributable to Aspen Leaf.”
“Aspen Leaf needs to continue to grow and turn a profit. Nobody is happy with putting a lot of work into a concept and have it lose money,” he said. “I think Aspen Leaf Yogurt is going to contribute in the future, or we won’t have it.”
Merryman warned investors not much time has passed since the franchise was launched in December 2010 and while the company hoped it would be instantly profitable, it takes time to acquire stores.
RMCF founder and president Frank Crail echoed Merryman and said the chocolate factory wasn’t profitable when it first launched with only 20 to 30 stores.
“We’ll be able to grow (Aspen Leaf) as a franchise concept just like we did the chocolate factory,” he said.
The companies total revenue for the first half of the year was about $17.4 million, a 7.4 percent increase compared with the $16.2 million of revenue in the first half of last year.
Retail sales increased 11.1 percent and factory sales increased 7.6 percent in the first half of this fiscal year.
In its international market, RMCF opened its third store in Japan last month, and the company expects to see that market continue to grow.