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Freshii Inc. Announces First Quarter 2022 Results and Executive Changes
Daniel Haroun promoted to CEO of Freshii Inc.; Founder Matthew Corrin becomes Executive Chairman
Victor Diab to join the Company as CFO
Q1 2021 Company-wide revenue up 162% vs. prior year, driven by growth across all business lines and Natura Market acquisition
North American franchised restaurant development pipeline of committed locations reaches over 100 units with more than 90% from
existing franchisees
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North American Franchised Restaurant Segment records Q1 2022 System sales growth of 11% and Franchise Revenue growth of 10%
vs Q1 2021
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Natura Market records 6% revenue growth vs. the corresponding period in 2021
CPG business records CPG system sales growth of 85% in Q1 2022 vs. Q1 2021
TORONTO, May 11, 2022 (GLOBE NEWSWIRE) -- Omnichannel health and wellness brand, Freshii Inc. (TSX: FRII) (“Freshii”, the
“Company”, “us”, “our” or “we”), today announced financial results for the first quarter ended March 27, 2022 (“Q1 2022”). The Company
also announced that, effective May 12, 2022, Daniel Haroun will be promoted to CEO of Freshii Inc., Founder Matthew Corrin will move to
the role of Executive Chairman and, as of June 13, 2022, Victor Diab will join the Company as CFO.
On the change in Company leadership, Matthew Corrin said: “Since founding Freshii more than 17 years ago, we've grown from a single,
salad-focused food court counter in downtown Toronto into a global health and wellness brand spanning 13 countries, now with
three distinct business units bringing healthy food to citizens of the world.
The omni-channel health and wellness brand that I’d envisioned for Freshii has become a reality and I believe that we are well positioned to
serve the health-conscious consumers of the future.
As the Company works to realize its full omnichannel potential, I believe that we will be best served by the appointment of Daniel Haroun
as our CEO. Daniel and I have worked extremely closely together during his years as Freshii’s CFO and I have come to rely on his
expertise and judgment in all areas of the business.
This expertise and judgment, combined with Daniel’s pre-Freshii leadership experience at global franchised-restaurant and
retail/grocery operators, give me great confidence that Daniel is the right person to lead Freshii through the next phase of
our omnichannel growth.
I want Freshii to have intergenerational relevance for our customers, our team members, our franchise owners and our shareholders, and I
believe this vision will be best realized by transitioning responsibility for the day-to-day leadership of the Company to Daniel and the
incredible team he has today and that he will continue to build around him.
In my role as Executive Chairman, I intend to maintain my significant shareholdings in Freshii, be our biggest brand champion, and our
most loyal guest - for the long term. I am confident in Daniel’s ability to lead our brand and culture on a path that is accretive to the
Company’s share value.
Thank you to all our team members, our franchise and retail partners, and our shareholders. I believe the best is yet to come!”
On his appointment to the role of CEO, Daniel Haroun said: “The opportunity to lead Freshii is a great privilege and I am honoured to build
on the foundation Matthew has created. Our industry's current operating environment brings both opportunity and challenges and I am
excited to work closely with our incredible franchise partners, team members, and supplier and retail partners to position our business to
embark on Freshii's next chapter of omnichannel growth. I want to thank Matthew and Freshii's board of directors for the opportunity to lead
this incredible organization and I believe the best is yet to come for our Company."
Victor Diab joins Freshii with more than a decade of finance and strategy experience at large Canadian public companies with retail,
franchising and ecommerce operations. Victor brings broad finance experience in supply chain, real estate and loyalty strategy as well as in
M&A and Corporate Development. On joining Freshii, Victor said: “I have long been a Freshii customer as well as an impressed observer of
the brand’s expansion to date. I am so pleased to be joining the executive leadership team here and I believe the Company has a significant
opportunity for growth in front of it. I am excited to work with Daniel, Matthew, the Board and all of our partners as we build the next phase of
Freshii’s omnichannel growth.”
On the changes in executive leadership, lead independent director, Steve Smith, said: “Over the years working closely with Daniel, I have
developed a great deal of confidence in his leadership and strategic abilities, as well as his focus on sustainable growth for our business.
With the addition of Victor to the team as CFO and the skills and experience he will bring to that role, along with the continued availability of
Matthew as Executive Chairman, I believe that Daniel and his team are well positioned to drive the Freshii mission forward, creating value
for our franchisees, partners and shareholders.”
Freshii’s Business Segments
Commencing in the fourth quarter of 2021 (“Q4 2021”), the Company began reporting using two new reportable segments, more fully
reflecting the evolving nature of our omnichannel business and helping to provide clearer insight into the results and performance of our
various business lines given their varying stages of development and their complementary but distinct key performance metrics.
As a reminder, our reportable segments are:
North American Franchised (“NAF”) Restaurant segment: This segment is comprised of our network of traditional and non-traditional
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franchised restaurants located in North America . North America encompasses our most well-established markets and represents
the significant majority of our franchised stores and royalty revenues.
Retail and Ecommerce segment: This segment is comprised of two distinct businesses: the third party retail sales of Freshii’s
consumer packaged goods (“CPG”) business and Natura Market’s ecommerce platform. Each business within the Retail and
Ecommerce segment offers a unique method of bringing health and wellness products to consumers.
In addition to the NAF Restaurant and Retail and Ecommerce segments, we consolidate revenue and expenses from other operations,
including Company-owned and international restaurant locations, as well as Freshii HQ enterprise costs that do not fit into either of the
reportable segments, in our Financial Statements in Enterprise & Other.
For more information on our reportable segments, please see our Q1 2022 Management’s Discussion and Analysis, available at
SEDAR.com.
North American Franchised Restaurant Segment
Despite COVID-19’s omicron variant ‘wave’ in key markets in Q1 2022, which was more acute in terms of impact in Canada than in the
United States, Freshii’s NAF Restaurant segment continued its pandemic recovery trajectory in the quarter, recording 5.4% same-store
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sales growth vs. the first quarter of 2021 (“Q1 2021”). Sales in the early part of the quarter were supported by strong performance of our
soups limited time offer (“LTO”), which exceeded our projections, but as supply chain challenges emerged for key ingredients, the positive
impact of the soups LTO over the quarter as a whole was muted. Also impacting sales has been a ‘return to office’ timeline that is
progressing at a slower rate than anticipated, with both suburban and downtown based employers in key markets seemingly taking a very
measured approach to the reintegration of in-person work.
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For context, the top performing 85% NAF Restaurant locations have AUV's that are on average more than double the AUV's of the bottom
performing 15% of such locations. This bottom performing 15% of our NAF Restaurant locations represented approximately 5% of overall
NAF Restaurant system sales and NAF Restaurant royalty revenue in Q1 2022.
NAF Restaurant hours of operation in Q1 2022 were down approximately 10% vs. the corresponding period in 2019. We intend to work with
our franchise partners to move closer to pre-COVID hours of operation in the coming quarters.
Freshii opened 6 new NAF restaurant locations during Q1 2022 (including 2 sites that had previously been marked as ‘closures’ during the
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pandemic but which have since re-opened) and closed 5 locations, resulting in 1 net new NAF system store in the quarter. As we first
disclosed last quarter, given the capacity we continue to believe exists for restaurant growth in North America, in late Q4 2021 Freshii
announced a performance-based incentive program for qualified existing Canadian franchise partners, providing certain fee reductions for
partners that committed to opening new locations during the program period. Between this ongoing program, previously signed deals and
the recently completed multi-unit deal for planned development in the state of Texas, Freshii now has an NAF unit pipeline representing over
100 new locations. More than 90% of these locations are attributable to current Freshii franchise partners, including the six new multi-unit
agreements that were signed during Q1 and to date in 2022 representing 40 new locations. As we prepare for the opening activity we
expect this pipeline to generate, particularly in 2023, we intend to make investments in Freshii’s franchise development, real estate, store
design and store opening teams in the second half of 2022.
Freshii continues to promote programs across the restaurant network that are aimed at assisting franchise partners in improving
operations and efficiency. Our updated food cost management program continues to have a positive impact and is now rolled out across
almost 90% of our NAF Restaurant network. Restaurants that have been enrolled in the program for over 90 days are seeing more than a
200 basis point reduction in their monthly food cost, exceeding our expectations and driving savings for our franchise partners. Our updated
Customer Experience (‘CX’) program is now live across the NAF system and we are able to measure customer response to our various in-
restaurant actions through the impacts on Freshii’s ‘net promoter score’; a helpful tool as we continue to be a customer-data driven brand.
In Q1 2022, Freshii continued to invest in accelerating our digital growth. Our technology and loyalty teams continued their planning and
development of tools aimed at further digital growth, including a new loyalty plan with improved features for our guests as well as Freshii
app updates, that we intend to roll out in the coming quarters. Following our soups LTO in Q1 2022, we have recently re-launched and new
and improved version of our popular tacos LTO. We’ve brought back the favourites from last year’s iteration of the taco’s program and
added the new BBQ Ranch taco, which features pulled chicken, fiery BBQ sauce, greek yogurt ranch and salsa fresca. We expect version
2.0 of our tacos to be well-received by our guests as we move into the summer months in North America.
With positive same-store sales in Q1 2022 despite ongoing challenges, a strong new store development pipeline of over 100 planned
locations, further technology and loyalty updates on the horizon and the Freshii menu innovation and operations teams continuing to drive
improvements, we believe the NAF Restaurant segment is well-positioned for the future.
Retail and Ecommerce Segment
As previously disclosed, Freshii acquired a majority interest in Natura Market Ecommerce Inc. (“Natura Market”) in Q4 2021. Natura Market
is a growing, founder-led online retailer with a Freshii-aligned mission of making on-trend, healthy products available for delivery at scale
across Canada. We are excited about the growth of Natura Market to date and its viability as a platform for the further expansion of our
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ecommerce business going forward. In Q1 2022, Natura Market revenue grew 6% as compared to the corresponding period in 2021 . As
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