Spicy Pickle Franchising Inc., the franchisor of the fast-casual Spicy Pickle sandwich concept, defaulted on loan obligations earlier this month, resulting in the closure of six out of seven corporate-owned locations in Colorado.
According to filings with the U.S. Securities and Exchange Commission, the publicly traded company was unable to make payments due on Feb. 3, and lenders demanded immediate payment of $4.8 million in loans.
Filings indicate that certain assets will be auctioned on Feb. 21, as lenders attempt to recover some of their losses. The Denver Post reported that those assets include the furnishings, fixtures and equipment from closed company-owned locations.
Officials of the Denver-based Spicy Pickle Franchising Inc. did not respond Monday to Nation’s Restaurant News’ request for comment.
For the most recent third quarter ended Sept. 30, 2011, Spicy Pickle operated seven locations and franchised another 22 across nine states, with most in its home state of Colorado. At the time, the company also had eight franchise agreements.
In addition, the franchisor operated and franchised 11 locations of a secondary bakery-café concept called BG Urban Café in Canada.
Last year, Spicy Pickle officials said they had signed a letter of intent with a franchisee who planned to bring the fast-casual chain to the Middle East, which was to be the sandwich concept’s first foray outside North America.
In early 2011, the company also debuted a new prototype location in Houston with new décor, an updated menu, and plans to add catering and online ordering.
The chain, however, suffered from declining revenue in recent months.
For the third quarter, the company reported a net loss of $671,017, or 1 cent per share, compared with a loss of $802,429, or 1 cent per share, for the same period a year ago.
Revenue for the quarter was $1 million, down from $1.1 million a year ago.
Year to date through September, the company reported a loss of $2.6 million, compared with a year-ago loss of $1.8 million.