Strategy of Rocky Mountain Chocolate Facter

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Strategic
Expansion Strategy
Key elements of the Company’s expansion strategy include:
Unit Growth
The cornerstone of the Company’s growth strategy is to aggressively pursue unit growth opportunities in locations where the Company has traditionally been successful, to pursue new and developing real estate environments for franchisees which appear promising based on early sales results, and to improve and expand the retail store concept, such that previously untapped and unfeasible environments (such as most regional malls) generate sufficient revenue to support a successful Rocky Mountain Chocolate Factory location.

High Traffic Environments
The Company currently establishes franchised stores in the following environments: factory outlet malls, tourist environments, regional malls, street fronts and other entertainment oriented environments. The Company, over the last several years, has had a particular focus on regional mall locations. The Company is optimistic that its exciting new store design will allow it to continue targeting the over 1,100 regional malls in the United States. The Company has established a business relationship with most of the major developers in the United States and believes that these relationships provide it with the opportunity to take advantage of attractive sites in new and existing real estate environments.

Store Concept
The Company seeks to establish an enjoyable and inviting atmosphere in each Rocky Mountain Chocolate Factory store. Each store prepares numerous products, including fudge, barks and caramel apples, in the store. In-store preparation is designed both to be fun and entertaining for customers and to convey an image of freshness and homemade quality. The Company‚ design staff has developed easily replicable designs and specifications to ensure that the Rocky Mountain Chocolate Factory concept is consistently implemented throughout the system. Rocky Mountain Chocolate Factory stores opened prior to fiscal 2002 have a distinctive country Victorian decor, which further enhances their friendly and enjoyable atmosphere. Each store includes finely crafted wood cabinetry, copper and brass accents, etched mirrors and large marble tables on which fudge and other products are made. To ensure that all stores conform to the Rocky Mountain Chocolate Factory image, the Company’s design staff provides working drawings and specifications and approves the construction plans for each new store. The Company also controls the signage and building materials that may be used in the stores. The company established RMCF stores in five primary environments: 1) Regional centers,

2) Tourist areas,
3) Outlet centers,
4) Street fronts, and
5) Airports and other entertainment oriented shopping centers. Each of these environments had a number of attractive features, including high levels of foot traffic. The company, over the last several years, has had a particular focus on regional center locations.

Entertainment
RMCF shops were a blend of traditional and contemporary styles. The company sought to establish a fun and inviting atmosphere in all of its locations. Unlike most other confectionary stores, each RMCF shop prepared certain products, including fudge and caramel apples, in the store. Customers could observe store personnel making fudge from start to finish, including the mixing of ingredients in old-fashioned copper kettles and the cooling of the fudge on Large granite or marble tables, and were often invited to sample the store’s products. RMCF believed the in-store preparation and aroma of its products enhanced store ambiance, was fun and entertaining for customers, conveyed an image of freshness and homemade quality, and encouraged additional impulse purchases by customers. According to Crail, “We have a great marketing advantage with our unique in-store candy demonstrations. Customers can watch the cook spin a skewered apple in hot caramel or watch fudge being made before...
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