Rocky Mountain Chocolate Factory, Inc.

Rocky Mountain Chocolate Factory, Inc.

Company profile

• Legal entity: Delaware corporation.
• Core business: international franchisor, confectionery producer, and retail operator.
• Headquarters and primary production: Durango, Colorado.
• Founded: 1981.
• Brand and product focus: premium chocolate and other confectionery products, including gourmet caramel apples; most locations produce products in-store.
• Primary competitive advantages: brand recognition, product quality and variety, in-store ambiance with on-site preparation, merchandising and marketing capabilities, and store support infrastructure.

Store network (as of February 28, 2026)

• Company-owned stores: 3
• Licensee-owned stores: 111
• Franchised stores: 139
• Geographic spread: 34 states in the U.S. and the Philippines
• International presence: 3 operating units in the Republic of the Philippines under an active master license (since 2014; extended through November 2027)
• Co-branding partnerships:
  • Cold Stone Creamery: 101 co-branded locations
  • SWRL (U-Swirl) cafés: 10 co-branded locations

Production and facilities

• Primary production facility: 53,000 square-foot facility in Durango, Colorado (company-owned).
• Role: flagship for production, testing new products, and training.
• Production output (FY2026): approximately 1.33 million pounds of chocolate products (down from ~2.05 million pounds in FY2025, a decrease of about 35%).

Product scope

• Product count: over 200 chocolates and confectionery products produced in-house; many are packaged into assortments.
• In-store offerings: a typical store carries about 100 chocolate products year-round, plus more than a dozen varieties of caramel apples and other in-store prepared items.
• Seasonal offerings: substantial holiday packaging and seasonal items.

Specialty Markets

• Revenue contribution (FY2026): approximately 5% of total revenue from Specialty Market customers (outside the franchised/licensed store network).
• Durango plant sales to Specialty Market customers: about 7% of Durango plant sales in FY2026.

Revenue mix (FY2026; FY2025; FY2024)

• Sales of company-produced chocolates and confectionery to franchisees and other third parties: 71%; 76%; 74%
• Company-owned store sales of chocolates and confectionery (including company-produced items): 7%; 5%; 5%
• Franchise fees, royalties, and marketing fees: 22%; 19%; 21%
• Domestic sources: nearly all revenue; international revenue is less than 1% in FY2026

Financial snapshot (FY2026)

• Net income (loss): net loss of $4.6 million for the year ended February 28, 2026.
• Cash flow from operations: cash used in operating activities of $1.8 million.
• Debt and liquidity:
  • Credit facilities include a $6.0 million promissory note and related borrowings; a $1.2 million loan from RMCF2 Credit, LLC is also part of the financing arrangements.
  • As of February 28, 2026, the Company was not in compliance with the debt covenant requiring total liabilities to tangible net worth of no more than 2.0 to 1; the ratio stood at 3.8 to 1.
  • Lenders provided waivers through August 31, 2026; future waivers are not guaranteed.
  • Borrowings mature around September 30, 2027; interest rate on these borrowings is 12%.
• Going concern: the auditor issued an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern within one year, given losses, negative cash flow from operations, and covenant issues. The Company is pursuing funding sources and transactions to address liquidity.
• Financing notes: approximately $0.1 million of notes receivable related to franchisee financing; financing is generally limited and used sparingly.
• Leverage and collateral: total liabilities and related debt obligations exist under secured arrangements; collateral includes substantially all assets except retail store assets.

Operations and distribution

• Production and supply chain: all production occurs in Durango. Key ingredients include chocolate, nuts, sugar, corn syrup, cream, and butter.
• Major suppliers: Guittard Chocolate Company, Barry Callebaut, Batory Sweetener Solutions, Chase Pecan LP, and Blue Diamond, among others.
• Supply arrangements: multiple suppliers and agreements in place; cost pressures from inflation and supply chain disruptions have been experienced.
• Transportation: six company-operated trucks ship products from the Durango facility to stores and backhaul ingredients and third-party product where possible.
• Regulation and quality: product quality and safety program; compliance with FDA and other regulatory standards; routine audits of facilities; in-store preparation is a differentiator and subject to franchise standards.

People

• Employees: approximately 160 employees total as of February 28, 2026, including about 130 full-time employees.
• Workforce composition: most workers are hourly; temporary workers are used during peak periods.
• Labor relations: no collective bargaining agreements at the company level; franchise employees are not included in Company headcount.

Intellectual property and branding

• Trademarks and slogans: Rocky Mountain Chocolate Factory®; The Peak of Perfection in Handmade Chocolates®; America's Chocolatier®; plus other marks, slogans, and designs used across the system.
• Proprietary recipes: developed by master confectionery makers and maintained as confidential trade secrets.

Marketing and customer engagement

• Marketing approach: emphasis on in-store promotion, point-of-purchase materials, and local store marketing supported by in-house Creative Services.
• Media and digital: limited use of national traditional media advertising; social media and online presence support brand and local store marketing.
• Training and support: full in-store training center in Durango; Franchise Business Support Consultants provide ongoing guidance, store visits, and performance reviews.

Governance and compliance

• Policies and oversight: Code of Conduct, Code of Ethics for Senior Financial Officers, committee charters, and whistleblower procedures are publicly available.
• Risk oversight: governance framework supports oversight of operational and financial risk, including cybersecurity.