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Freshii Q1 benefits from free advertising

Healthful fast-casual chain generates strong same-store sales

Freshii Inc.’s ability to make healthful menu items, and get free advertising, helped the newly public fast-casual chain generate growth, both from new locations and same-store sales, in the first quarter. 

On Thursday, the Toronto-based chain said its same-store sales increased 6.4 percent in the period ended March 26. That was the 16th straight quarter of same-store sales growth for the chain.

On a three-year basis, company executives said, same-store sales are up 21 percent. 

“That’s one of our strongest quarters, historically,” Matthew Corrin, Freshii’s founder and CEO, said on the company’s earnings call Thursday. “I’ve never felt more energized about our momentum.”

Freshii went public in Canada in January, a culmination of rapid unit growth in recent years. The company expects that unit growth to continue for some time. The chain expects to add 150 to 160 locations this year, which would enable Freshii to grow nearly 60 percent on the year. 

The chain has 301 locations now, after adding 23 in the quarter, and it expects to finish the year with as many as 440 units, systemwide. The company expects to have as many as 840 locations by the end of 2019. 

One thing that has helped Freshii generate that unit growth has been its ability to get attention, tapping into its founder’s marketing background. Over the years, Corrin has made offers to allow frozen yogurt franchisees to convert their stores to Freshii locations. He sent an open letter to McDonald’s Corp., suggesting they cobrand locations. 

More recently, Corrin sent an open letter to Subway, suggesting converting some of its locations to Freshii units.

The letters generate “a large amount of free press,” which helps generate franchising applications, Corrin said. The Subway letter, for instance, generated “a tremendous amount of press coverage,” said Corrin, who did not mention Subway by name. 

He suggested that the letter generated “significant traffic growth” at Freshii’s locations in Canada, and he also indicated that the letter generated franchise applications from the other brand’s franchisees. And he said the letter “strongly resonated with” multi-unit operators of other brands. 

He said many of the applications will likely result in deals. Still, he said, “Just because you operate 50 units of a large restaurant brand doesn’t make you qualified to be a steward of the Freshii brand.” 

The company last year received 4,000 franchise applications. Corrin said Freshii accepted 2 percent of those applications.

Freshii is also working on a program that will enable store employees become operators themselves. Corrin said that Freshii operators have long helped workers become owners. 

This program “formalizes the playbook to enable our franchise owners to inspire team members and help them become equity owners in a Freshii store over time,” Corrin said. 

Other chains, including “one large pizza chain,” have such programs, but Corrin said it’s important to have such a plan early in his chain’s life cycle, so it could have “a compounding impact on our growth” over time.

The company has also generated consistent same-store sales growth. Corrin suggested several reasons for Freshii’s success in that area.

“There’s no silver bullet,” he said. “We truly are positioned to benefit from the accelerating global health and wellness trend, where people decide that today is the day they are going to have something healthy.”

He also said the chain’s innovation around its menu has helped continue to draw customers in part because “they’re going to get something different.”

For instance, Freshii launched a Bamboo Curry Bowl with broccoli, carrots, cabbage, coconut, mushrooms, a green curry sauce and a lime wedge over brown rice. 

Corrin also said that the chain has improved its operations. The company has worked to get more guests through the line during peak periods at high volume stores, for instance, and has worked to drive sales at different dayparts at slower locations.

“This is just a tool box of parts that come together to allow us to achieve these results,” he said.

Contact Jonathan Maze at [email protected]

Follow him on Twitter at @jonathanmaze

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