Company Update: Spicy Pickle (SPKL) is Still Tasty If you didn't see it already, you may want to take a look at the latest update from our favorite eatery, Spicy Pickle Franchising Inc. (OTC:SPKL). The company's been laying low as the recession's kinks have been worked out. 'Laying low', however, is nowhere near the same thing as laying down or giving up. Indeed, this company continues to have a refreshing number of things working in its favor.  The candid look - both pro and con - from the company is at the bottom of this newsletter. We'll add our two cents before we get to that though.    Rising Up To Meet The Challenges You've gotta' love a company that tells it like it is. Too many CEO's are standing at the company's front door saying everything is hunky-dory, while the CFO is selling the company's furniture out of the back door. Investors don't know what to think. Spicy Pickle, however, is putting it all on the table... the challenges, the victories, the setbacks, and most importantly, what they're doing about all of that. I think that's crucial for investors right now - to know exactly what they own. It's a matter of trust.  In any case, if I had to grade the SPKL update, I'd give the company a B (which is not a bad grade, all things considered). I'd be willing to give 'em a higher score, but the shrinking economy has somewhat stifled their expansion. I can't score them any lower though, because they've basically done all the right things to preserve shareholder value in this terrible environment. Here's a list of the major actions/changes implemented by the company over the course of the last few months.  1) Financing for small businesses is tougher to get, which means new restaurants are not being added as briskly. So, rather than devote resources to fight an uphill expansion battle, Spicy Pickle has focused on widening the margins created by existing units.  Specifically, travel costs (which tend to be high when real estate is being shopped) have been greatly reduced, and food costs have been negotiated to better prices. In short, overhead has been reduced. The top line may not be getting bigger, but the bottom line can when expenses are lower. 2) Not all restaurateurs or franchisees necessarily need to borrow, and some can still obtain a loan. So, for those who don't have a financing issue but rather a total cost issue, the start-up costs have been reduced.  How so? Construction costs have been lowered for new builds, and the kitchen line has been restructured to be more cost-efficient. Other in-store changes are being worked out that will reduce the franchisee's total cost. So, selective expansion can continue. (And, lease terms for real estate are outstanding right now.) 3) Attracting customers to the stores is not as easy as it was in 2007, and even early 2008. So, local franchisees are becoming savvy and efficient marketers. Many stores have started to cultivate more catering business.  The point is, Spicy Pickle took action. While some other companies were frozen like a deer caught in headlights, Spicy Pickle responded to the challenges. I saved the best for last though...   More Than Just a Few Bright Spots It's kind of hard to imagine any corporation could have something exciting to talk about now, but Spicy Pickle does. Above all else, it's worth mentioning Canada isn't experiencing the same recession the United States is. As such, Spicy Pickle's Canadian-counterpart Bread Garden Urban Cafes are doing just fine. In fact, their expansion is still on track. There are five new Bread Garden's currently in the works, most of which should be operating by the middle of this year.  Despite some Spicy Pickle store closings here in the United States (two, by my count), I count five new units on the way, and three more that are now under new - and likely more profitable - management.  In other words, the company is doing pretty well despite multiple reasons not to. A lot of investors may have assumed the worst based on the stock's trend, but Spicy Pickle is fine. Speaking of the stock... So is it time to buy? I guess that's the million dollar question, isn't it? The corporation is certainly doing its part, but the stock was beaten up late last year. It fell about 60% between September and December, in fact. I think that may have been overdoing it though. The company adjusted to the recession; it wasn't crushed by it. Personally, I don't think the current price of 23 cents reflects the future opportunity here. Aside from not wasting current resources and getting a poor ROI on dollars spent in the wrong environment, the company is actually becoming lean and mean. Ultimately, when the economy recovers, Spicy Pickle will be well positioned to run fast and far. I don't know if that will help in the short run, but for long-term investors I think there's a great deal of upside from this undervalued small cap. Anyway, here's the official investor update from Spicy Pickle Franchising Inc.   Spicy Pickle 2009 Corporate Update  Denver, CO - February 11, 2008 - Spicy Pickle Franchising, Inc. (OTCBB: SPKL) fast casual restaurants serving all natural premium meat and poultry and other fresh products provides this update on current business activity in both its Spicy Pickle and Bread Garden Urban Cafe chains.  Development has slowed considerably for the Spicy Pickle chain in the United States, but some expansion possibilities continue to exist. Bank financing for new franchise opportunities is simply not available in the current climate, and expansion will continue to be limited until capital becomes more readily available.  The following is a summary of existing expansion possibilities for the remainder of 2009 and possibly into 2010:  Our Houston franchisee has signed a lease for their first site and is actively pursuing additional locations. The first site will open in the spring of this year. Our Las Vegas franchisee is finalizing lease negotiations for a second location. After a long negotiation our San Antonio franchisee terminated their first lease when the landlord refused to accept the previously agreed to terms, and is actively looking again for a first location. Our Los Angeles franchisee continues to seek a first location for this market. The Naperville Illinois franchisee has signed a lease and has architectural drawings underway for the location which will open in the late spring. The Chicago location in Lincoln Park, which was a Company owned restaurant was sold to a new franchisee, and they are now operating that location with improved sales due to the local ownership. The restaurant that closed in Sioux Falls, South Dakota is still in an operational state, and an interested party is negotiating with the bank and landlord to reopen the location if their offer is accepted. A new franchisee is in the Denver area is in training and plans to relocate an existing restaurant that will offer a breakfast grab & go menu due to its location near the light rail which is Denver's commuter rail system.  2009 Contraction Development and Possibilities Include the Following:  The franchisee in Indianapolis has ceased operations and will not continue with any further development. The franchisee in San Diego has slowed development and will not move forward with any additional new restaurant locations for the time being. Currently, there are two stores operating in the San Diego area. The New York franchisee is working on an agreement to terminate their tenancy and close the restaurant due to its proximity to the Wall Street financial district, and is looking to possibly to transfer to another location on Long Island. One store in Colorado Springs has closed as a result of layoffs in its immediate vicinity.  The Bread Garden Urban Cafe chain in Vancouver is not experiencing the same credit barriers to expansion, and is therefore positioned for more rapid expansion. The following is a list of Bread Garden activity in the Vancouver area:  A new Bread Garden Urban Cafe will open at the University of British Columbia no later than mid March. A new space will be ready for occupancy in the Vancouver airport this spring, and is expected to open July 1, 2009 in time for the 2010 Winter Olympic Games. The concession for the Kamloops Airport in British Columbia has been obtained, and the existing restaurant will be converted starting May 1, 2009 into a Bread Garden Urban Cafe. The Bread Garden Urban Cafe in North Vancouver has closed and was replaced by the drive through location in nearby Cloverdale previously announced.  Bread Garden has signed a lease for the new Canadian Broadcasting Company Building located in downtown Vancouver which will be ready for delivery this spring. We have also signed a lease at Davie and Hornby streets. Construction will be getting under way upon delivery to us on May 1, 2009.  The Bread Garden Urban Cafe chain continues to grow. Existing restaurants are upgrading and refreshing their menu items.  Corporate Overview  Commercial real estate prices have come down substantially which bodes well for the long term profitability of future franchisees. Those with the financial strength to move forward are now in a position to negotiate very favorable terms in prime locations. The lack of financing for current and potential franchisees continues to be a roadblock to more rapid expansion and new franchise sales.  If the new stimulus package is enacted by Congress and financing become more readily available at the local level we could return to the previous growth levels we enjoyed over the past few years. In the meantime we continue to negotiate the best food costs we can while still maintaining our standard of delivering healthy and natural products without preservatives, MSG, additives, extenders or artificial colors or flavor. We are working on menu design that will provide choices to consumers of combinations and products that provide the same quality food but a prices that reflect the value that most consumers in the US are looking for today.  At the corporate level we continue to crunch numbers to reduce overhead. This included layoffs in the last part of 2008, restricted travel budgets, and other cost savings measures that reduce overhead but still leave the core infrastructure in place.  Our same store sales for 2008 compared to 2007 were basically flat, down only .02%. However 4th quarter sales were down 8.8%, reflecting the terrible fourth quarter for retail in general. Our sales statistics calculate sales net of sales taxes, comps and discounts and are not the only measure of performance and may not be comparable to other sales figures used by other companies. Additionally 20 restaurants opened during 2007 alone and therefore are not included in the yearly same store sales statistics. In our system we are much more focused on individual restaurants and cost control and marketing efforts at the local level that will establish the franchisee in his territory for the long run. Although times are obviously difficult for almost everyone we believe that times like these are also an opportunity to work hard and establish a foothold for better times ahead.  Marc Geman, CEO of Spicy Pickle Franchising, Inc., stated, "These economic times are bringing a lot of changes. Like most restaurants and other retail operations we are, for the first time in history, managing through a period of declining sales. Retail businesses in general will continue to struggle until consumer confidence returns. In our system many of our franchisees are working harder and more creatively to enhance sales and catering opportunities. We are working on efficiencies in the distribution system, store design, operations and other areas to bring costs down.  "We have reduced the start up costs for the restaurants going into construction and have reduced labor costs by reorganizing the kitchen line. The new designs have been tested in one of our corporate restaurant in Denver and we will continue to build in efficiencies that will enhance margins to help offset lowered revenue expectations while maintaining excellent customer service."  Currently, there are 50 Spicy Pickle and Bread Garden Urban Cafe restaurants operating in British Columbia and 13 different states.  Our investors and shareholders are always welcome to call or write in for additional information.  About Spicy Pickle(tm):  Founded in 1999, Spicy Pickle Franchising, Inc. (OTCBB: SPKL) 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(r) restaurant is quality, service and an enjoyable atmosphere. The company is headquartered in Denver, Colorado, with restaurants open or under construction across 13 states and more in development nationwide. Spicy Pickle Franchising, Inc. also operates as franchisor for Bread Garden Urban Cafes, a concept with restaurants in the metropolitan Vancouver, Canada area. Bread Garden Urban Cafes 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 (OTCBB: SPKL), 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.  Company Contact:  Marc Geman  Spicy Pickle Franchising, Inc.  marc@SpicyPickle.com  www.spicypickle.com  (303) 297-1902