Improved Gross Profit and Margin
Total product and retail gross profit increased to $1.4M in 2026Q3 from $0.7M a year earlier (+100%), driven by pricing actions, improved product mix, and labor efficiencies. Gross manufacturing margin improved to 21.4% (vs. 10% a year ago and -0.6% in the prior quarter), representing an increase of 11.4 percentage points year-over-year and ~22 percentage points vs. the previous quarter.
Turnaround to Positive EBITDA and Reduced Net Loss
EBITDA was $400K in 2026Q3 versus negative $400K in the prior-year quarter (an $800K swing). Net loss narrowed to $200K (‑$0.02 per share) from a $800K loss (‑$0.11 per share) a year ago, a 75% reduction in the quarterly net loss.
Cost Structure Improvements
Total costs and expenses decreased to $7.5M from $8.6M year-over-year (down $1.1M, approx. -12.8%). Actions include SKU rationalization (elimination of hundreds of low-contributing SKUs), removal of temporary labor, large reductions in overtime, improved production scheduling, and the addition of a second production shift. Management estimates an additional $500K–$1,000K of savings available in the current cost structure.
Strengthened Balance Sheet via Equity Raise
Subsequent to quarter-end the company completed a $2.7M equity capital raise, used to pay down $1.2M of debt and retain $1.5M in working capital, providing greater flexibility to invest in operations, franchise development, and technology initiatives.
Franchise Development Momentum
Company reported 34 stores under area development agreements and 2 new stores currently under construction, reflecting growing interest from multi-unit and well-capitalized operators. Management highlighted focus on quality partners and expects build-outs to be completed over a 4–5 year timeframe.
Operational & Digital Enhancements
Technology and e-commerce progress includes DoorDash white-labeled storefronts live (zero-commission model for franchisees), unique store websites created for 100% of domestic locations, 120 stores live on the new POS system (improving data visibility), ongoing ERP customization, and loyalty program development and rollout plans.
Input Cost Tailwind and Hedging
Company expects reduced input costs following near-term cocoa developments: elimination of an approximate 10% cocoa tariff and lower cocoa futures (management locked in ~20% of expected annual consumption at favorable recent prices), which should provide margin tailwinds as chocolate costs normalize.
Encouraging Store-Level Performance
Selected company-owned and newer stores show strong trends: Corpus Christi remodel produced consistent growth with several days exceeding $4,000 in daily sales (benchmark for a $1M location is $2,800/day). New Chicago and Charleston stores meeting or exceeding expectations with favorable daily sales trends.