SPoT Coffee (Canada) Ltd.

SPoT Coffee (Canada) Ltd.

April 27, 2012 15:07 ET

SPoT Coffee Year End 2011 Results: Reports 29% Increase to Gross Profit and 16% Sales Increase

TORONTO, ONTARIO--(Marketwire - April 27, 2012) - SPOT COFFEE (CANADA) LTD. (TSX VENTURE:SPP) ("SPoT" or the "Company") released its financial results for the Company's fiscal year ending December 31, 2011. Complete audited financial statements and Management's Discussion and Analysis have been filed for public review at and are available on the Company's website at

All dollar values expressed in Canadian dollars unless otherwise stated.

Year End 2011 Highlights

  • Gross profit (measured as revenue less cost of sales) increased 29% to $3,810,269 from $2,946,153 when compared to the same period of 2010. SPoT's gross margin percentage (measured as gross profit over revenue) increased to 67% of revenue for the year ended 2011 and represents an 11% increase in the Company's gross margin percentage over the same quarter of 2010 which was 60% of revenue.

  • Reported revenue increased 16% to $5,697,288 million from $4,904,740 million when compared to the same period of 2010. For the 2011 year-end, SPoT's system-wide sales revenue (without elimination for any café operating partnerships) was approximately $6.4 million. For SPoT cafés open for two years or longer, the same-store sales increased from 2010 to 2011 by an average of 7.6% for each of these cafés. The Company operated seven cafés during this quarter including SPoT Hertel which opened for business only in late November 2011.

  • Cost of sales decreased 4% to $1,887,019 as compared to $1,958,587 for the same period of 2010 as the Company continues to benefit from increasing economies of scale, ordering and waste management efficiencies.

  • SPoT uses Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") as a measurement of the Company's internal operating performance and a closer indication of cash earnings. For the 2011 year-end, SPoT's EBITDA significantly improved by 72% from a negative EBITDA of $291,364 in 2010 to a negative EBITDA of $81,451. The Company's consolidated net loss increased to $992,282 from a loss of $707,835 for the same period of 2010. The increase to the Company's consolidated net loss for the year ending 2011 is in line with the overall expansion of SPoT's operations and include an increase driven by new café costs and to certain centralized corporate overhead costs, including non-cash expenses reflecting option issuance to key management, directors and employees of the Company, as SPoT invests into its expansion platform.

Commenting on the gross profit and sales increase, SPoT Coffee President, Anton Ayoub commented, "We have achieved major improvements to the financial operation of our cafés. For 2011, our average SPoT café sales exceeded the $1.0 million mark while average café costs have been noticeably reduced. Each café is contributing a return to the head office allowing us to move aggressively forward with the construction of new cafés and enabling us to move closer to generating targeted profit."

SPoT benefited from the following key factors over the year:

  1. Strength of same-store sales growth. For SPoT cafés open for two years or longer, the average annual same-store sales increase from 2010 to 2011 was 7.6% for each of these cafés. SPoT is focused on further integrating and engaging in the communities that surround the cafés by working with local festivals and events to implement promotions and continuing to increase overall brand awareness. Throughout the year, SPoT implemented various marketing and branding initiatives and is focusing on growing and developing its social media platform in order to further increase the SPoT brand.

  2. Growth through new cafés. SPoT announced the opening of the SPoT Hertel café in late November of 2011 which is centrally located in an historic North Buffalo community on Hertel Avenue. This café (owned 60% by SPoT) as well as the first full year of operations for SPoT Delray Beach (owned 49% by SPoT) have contributed to an overall increase in sales.

  3. Growth through commercial accounts. During 2011, SPoT focused on growing and expanding its commercial account business through increasing the wholesale distribution of its coffee and sales to local businesses and institutions. SPoT expects to have its new roasting facility operational during June 2012 which will create more roasting capacity and allow SPoT to further expand this area of business.

  4. Cost reductions. Over the course of 2011, SPoT has significantly narrowed its vendor base and put agreements in place with existing vendors to maximize cost control on all purchases and further take advantage of SPoT's increasing economies of scale. An improved café waste management process has enabled café managers to gain a more real-time understanding of waste costs and allowed them to implement procedures to minimize cost. Additionally, SPoT has continued to focus on efficiently utilizing labor and reducing overall labor expense where appropriate through a structured tracking system that allows the identification of the optimal labor needed to support operations as well as support a more streamlined scheduling process. SPoT also worked with its energy suppliers in order to better manage its energy costs and actively reduce monthly bills.

SPoT has identified new locations consistent with SPoT's location and demographic criteria and is continuing to strategically grow across Western New York and Southern Ontario. The Company's recently provided an update on its current cafés under construction, SPoT Concord Park Place in North York, Toronto, and SPoT Transit Road in Buffalo, which are both expected to open for business in the summer of this year. SPoT also announced that it will be receiving possession of its new café location in Saratoga Springs in July of this year at which time construction will commence immediately with a target date for completion in early fall.

About SPoT

SPoT ( designs, builds and operates community-oriented cafés that provide its customers from every lifestyle and culture with the highest quality service, signature light meals and in-house roasted gourmet coffee. The current SPoT management team and directors have been successfully operating company-owned cafés since 2004.

Each SPoT café is a popular and friendly gathering place for its community where specialty coffee, upscale beverages, fresh baked goods, signature sandwiches, soups, salads and gourmet pizza, cakes, pastries and home baked goods are offered and enjoyed by its patrons in a warm, friendly and home-like environment.

The Company currently operates seven cafés that range in size from 2,000 to in excess of 4,000 sq. ft. with three more cafés currently under development. SPoT is currently evaluating several locations as part of its North American expansion.

Unlike other conventional gourmet coffee houses and quick service restaurants that are built on uniformity of product and style, each SPoT café maintains several unique and key features, including:

  • Dedication to create a friendly environment that nourishes and intensifies a sense of gathering and of community;

  • In-house roasting and blending SPoT's own award-winning premium Arabica coffee;

  • Unwavering commitment to offer the customers of the Company the highest quality products and services;

  • Innovative and varying café designs that consider both the culture and flavor of the specific communities of each café;

  • Choice of corner locations for each SPoT café at the center of their neighborhoods;

  • Ability to offer intimate and warm ambiances in each café to suit the social and private moods of SPoT's patrons; and

  • Trained and dynamic service staff that are proud to call themselves "SPoTters" who enjoy serving their customers and make them feel at home.

Forward Looking Statements

Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Except as required by applicable securities requirements, the Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the release.

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