Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) Q3 2024 Earnings Call Transcript

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So, volume solves a lot, and margins get better with volume. We’ve been needing to ramp up volume for a couple of years, even preceding all of us that have joined in the last year-and-a-half or so. So, enabling to open up that volume capture without any limitation, that’s going to provide more of this solve with respect to operating margins. And I think anything else — Allen, anything to add?

Allen Arroyo: No, I think that covers it. I think the outsourcing of the packaging itself doesn’t improve it, but as Rob mentioned being able to increase throughput is what’s going to bring the margin improvement overall.

Unidentified Analyst: Okay. Very good. Thank you. And I’ll talk to you later. Thank you.

Rob Sarlls: Appreciate the questions, Jim. Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes from Roger Lipton with LFSI. Your line is open.

Roger Lipton: Yes, good morning, Rob and Allen.

Rob Sarlls: Good morning.

Roger Lipton: It sounds like you’re set up, I could say, finally. It hasn’t been so long, it just seems that way if you own the stock. But you talked about being set up now to deliver against the new demand, omni-channel demand and so forth. In particular, what are the omni-channels that you expect to see this increased demand from?

Rob Sarlls: Great question. And just for everybody’s benefit, realize that we have two primary businesses. One and the most important in our hearts is taking care of our franchisees and that is a super majority of our business as everybody knows. But we’ve had a long-standing multi-decade business of working with specialty retailers and also have a e-commerce opportunity that we’ve yet to fully hit the gas pedal on. And so, speaking backwards, e-commerce can be much better met and fulfilled when you have no ceiling on how much boxed chocolate you can make from a labor standpoint. So that will open up e-commerce at some point in the very near end future. With the specialty retailer, again, we’ve had multi-decade relationships.

We’ve had a particularly excellent fulfillment with a couple of them despite the challenges we had that would like to see us do more volume. And then, Andrew Ford and his team have been actively courting other retail opportunities where we are now a more attractive option than some heritage brands that are in the marketplace. And we continue to pursue those and look forward to having further updates in future quarters.

Roger Lipton: Okay. And you mentioned Steve Ells. Steve Ells, as I recall, was — built Chipotle. Is there a relationship there?

Rob Sarlls: No, it’s Steve Craig.

Roger Lipton: Oh, Steve Craig. Okay. I’ll use as Steve Craig. I could have sworn you said Steve Ells, but I could be wrong.

Rob Sarlls: No problem.

Roger Lipton: Okay. Thank you, gentlemen. I still would love to come to Durango one of these days and — or maybe Utah now to see the new package…

Allen Arroyo: Yeah, come to Durango.

Rob Sarlls: Come to Durango.

Roger Lipton: Well, that’s okay, that’s fine. It’s easier to get to Salt Lake City than Durango, but whichever. Thank you very much. Talk to you soon.

Rob Sarlls: Great, Roger. Thanks for the questions.

Operator: Thank you. There are no further questions. Thank you, ladies and gentlemen. This concludes today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Allen Arroyo: Thank you.

Rob Sarlls: Thanks, everyone, and thanks, Michelle.

Operator: You’re welcome.

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