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Mark Twain, The Pickle, and Restaurant Stocks

Mark Twain, one of our great American treasures and a humorist for all ages, once stated, after reading his own obituary in a faulty newspaper report, "The Reports of My Death Have Been Greatly Exaggerated".

The US based fast casual restaurant space is a lot like Twain- the reports of its death from the doom and gloom naysayers who believe this economy is killing them are greatly exaggerated as well. In fact, if anyone is getting killed, it's the short sellers who are getting their brains beat out right now in this sector.

Here's some charts to look at. Let's start with PF Changs- earnings were out yesterday, and do you think, based on the way the stock is trading, that it's possible that once again- the analysts had it wrong? They had the company's profit picture ratcheted so low it had nowhere to go but up when these geniuses were proven wrong by the numbers.

How about Brinkers- look at the easy double in this stock the last month. This company owns Chilis, Macaroni Grill, and On the Border. $8 to $20 since early February.

There's one more. Check out Dardens. Red Lobster, Olive Garden, and LongHorn Steakhouse. They blew away the analysts number for calendar Q1. The stock gapped from $30 to $33, and never looked back. The stock was a little under $25 two months ago and closed over $40 yesterday.

So, is it possible companies in the fast casual restaurant space aren't doing quite as badly as the media and the analysts would have you believe? Based on the way these stocks are trading, one would certainly think so.

Now, moving on to small restaurant stocks. There's no question- smaller restaurant chains without unlimited capital have a tougher time in a recession. My two restaurant ideas: SpicyPickle (OTC BB: SPKL) and Ufood Grill (OTC BB: UFFC) have both taken a beating. Earlier this year a couple of Spicy Pickles closed or changed hands. Ufood Grill was cash starved until the recent injection of $5 million.

Spicy Pickle has now jumped cleanly back on to the expansion bandwagon. The company is gaining momentum again, but it hasn't been reflected in the stock price....yet. Investors are going to wake up to this soon, and the stock is going to start charging up the charts.

Here's the list that was disclosed today:

A new Spicy Pickle has opened in Houston, Texas (the first of 10 with a second lease in negotiation)
New franchise agreements have been signed for Temecula, California, and Owensboro, Kentucky
New locations for the Las Vegas, NV and Naperville, Il franchisees are under construction right now and will be open in the next several months.
Bread Garden Urban Cafe has a new franchise location going in at Granville and Georgia in downtown Vancouver.
Another Bread Garden Cafe will be going onto a Mall location at Whistler Village at the Whistler ski area- home of the 2010 Winter Olympics. The store will be open in time for the Olympic Games. This will complement the new store at the Vancouver Airport.
A third new Bread Garden Urban Cafe will be opening in Burnaby, Vancouver.

Add it up folks. That's three new stores in Western Canada, 2 new franchisees stateside, two new locations under construction, and one new opening. Does this sound like a highly distressed company? These are all new disclosures as of today. Like Mark Twain- the reports of SPKL's death have been greatly exaggerated.

We're back on the expansion bandwagon, and as capital frees up, I expect expansion to accelerate. Future store owners are going to want to lock in leases while rental properties are still cheap, and that will bode well for their future profitability.

The chart doesn't tell us a lot other than the stock has been bumping along the bottom for about three months now.

One of these days there will be a volume surge and the stock will start trading up. The positive news flow should increase, and the share price won't look back at this $.15 to $.20 level.

I believe this stock will return to $.50 before too long- when, I can't say. Neither could anyone say when they were looking at Brinkers, Dardens, or PF Changs three months ago. The big boys are rocketing. The more growth dependent, smaller ones will be close behind.

For the very first time since the company went public, CEO Marc Geman loosely predicts the company will be cash flow positive by year's end. In light of the current recession, a welcome possibility for shareholders.

Here is the complete text of today's release for your review:

Press Release Source: Spicy Pickle Franchising, Inc.

Spicy Pickle and Bread Garden Urban Cafs Continue Growth With 5 New Restaurants

Thursday April 23, 2009, 9:20 am EDT

DENVER, CO--(MARKET WIRE)--Apr 23, 2009 -- Spicy Pickle Franchising, Inc. (OTC BB:SPKL.OB - News), fast casual restaurants serving all natural premium meat and poultry and other fresh products, provides this update on current business activity at its Spicy Pickle and Bread Garden Urban Café chain.

On April 19, Spicy Pickle opened its first Houston, Texas location at 11611 Katy Freeway, Suite B. The restaurant hours are Monday to Saturday from 11:00 am to 8:00 pm and Sunday from 11:00 am to 7:00 pm. The telephone number is (281) 679-9300 and the fax for catering is 281 679-9301. The family that owns the franchise and development rights for the greater Houston area is excited to open the first restaurant out of 10 in their development agreement. A second location is already under lease negotiation.

Spicy Pickle is also pleased to announce two new franchise agreements for locations in Temecula, California and Owensboro, Kentucky. Site selection for those locations will begin shortly. The Naperville, Illinois and Las Vegas, Nevada locations of existing franchisees are also well under way and should be open between the spring and summer of 2009.

In Vancouver we have signed letters of intent on three new locations for our Bread Garden Urban Café concept, two of which are set to open this year. The first is with a new franchisee that will open at the busy intersection of Granville and Georgia streets in downtown Vancouver. The location was formerly a retail jewelry store and is at a very high traffic location and recently received landlord approval for the conversion. The second Bread Garden Urban Café will be located in the heart of Whistler Village, the preeminent ski area north of Vancouver, and will be opened by an existing franchisee. The location will be taken over in early May and will be fully operational in time for the 2010 Winter Olympics coming to Vancouver and Whistler. The new café is centrally located with a large patio seating area and sits next to the large gazebo that provides live music year around. The third location is in Burnaby, a busy part of greater Metropolitan Vancouver. The area is also where the existing Metrotown Bread Garden Café is located which is the second highest gross volume restaurant in the chain.

Marc Geman, CEO of Spicy Pickle Franchising, Inc., which is the franchisor of the Bread Garden Urban Café chain, said, "The expansion of our Bread Garden Urban Cafés throughout greater Vancouver including the airport, and now Whistler Village as well as additional downtown and surrounding area cafés, means that almost everyone coming to the Winter Olympics will be near a Bread Garden Urban Café. We will recognize our share of the consumer spending that this event typically brings to the host city. Our team is working hard on finishing building the necessary infrastructure of operations, marketing and culinary to bring Bread Garden Urban Cafés up to their full potential by the end of the year, which will result in significant positive cash flow for the entire organization. Spicy Pickle is known for its premium and flavorful food and we are bringing that through new menu items to the Bread Garden Urban Cafés as well."

Mr. Geman continued, "It has been awhile since we started up with new franchisees in new markets so we are particularly pleased to be working on these new Spicy Pickle Restaurants. The two restaurants in Houston, Texas, the restaurant in Naperville, Illinois and Las Vegas, Nevada demonstrate that we are resuming the expansion of the Spicy Pickle chain. These new Spicy Pickle restaurants in the United States and the explosive growth of the Bread Garden Urban Cafés in British Columbia, Canada, along with other planed openings which have already been announced, will push us very close to cash flow positive by the end of the year and really set us up for better economic times around the corner."

About Spicy Pickle(TM):

Founded in 1999, Spicy Pickle Franchising, Inc. (OTC BB:SPKL.OB - News) serves high quality meats and fine artisan breads, baked fresh daily, along with a wide choice of eight different cheeses, twenty-two different toppings, and fourteen proprietary spreads to create healthy and delicious panini and sub sandwiches with flavors from around the world. As a leading "fast-casual" concept, Spicy Pickle offers menu items that are far beyond traditional fast food but without the price point of casual dining. The hallmark of a Spicy Pickle restaurant is quality, service and an enjoyable atmosphere. The company is headquartered in Denver, Colorado, with restaurants open across 12 states and more in development nationwide. Spicy Pickle Franchising, Inc. also operates as franchisor for Bread Garden Urban Cafés, a concept with restaurants in the metropolitan Vancouver, Canada area. Bread Garden Urban Cafés serve coffee, pastries and breakfast items as well as lunch and dinner along with a wide variety of desserts. To find out more about Spicy Pickle (OTC BB:SPKL.OB - News), visit our website at www.spicypickle.com/.

Forward-Looking Statements:

Certain statements in this press release, including statements regarding the number of restaurants we intend to open, are forward-looking statements. We use words such as "anticipate," "believe," "could," "should," "estimate," "expect," "intend," "may," "predict," "project," "target," and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified franchisees and employees; risks relating to our expansion into new markets; the risk of food-borne illnesses and other health concerns about our food products; changes in the availability and costs of food; changes in consumer preferences, general economic conditions or consumer discretionary spending; the impact of federal, state or local government regulations relating to our franchisees and employees, and the sale of food or alcoholic beverages; the impact of litigation; our ability to protect our name and logo and other proprietary information; the potential effects of inclement weather; the effect of competition in the restaurant industry; and other risk factors described from time to time in our SEC reports.

Contact:
     Company Contact:
     Marc Geman
     Spicy Pickle Franchising, Inc.
     Email Contact
     http://www.spicypickle.com
     (303) 297-1902