The Second Cup provides business update
June 11, 2020, Mississauga, Ont. – The Second Cup Ltd. has provided a business update which is required by regulators as a result of its previously announced use of provisions to postpone the filing of its interim financial report for the first quarter of 2020, the associated management’s discussion and analysis and related certification filings.
The company anticipates being able to complete and file the interim documents on or before June 19, 2020.
The update states that the following material developments of the company have occurred since March 12, 2020. Certain of the developments were previously disclosed by the company in a May 11, 2020, press release:
- 83 of the company’s 244 Second Cup cafés and five of the company’s 19 Bridgehead coffeehouses have temporarily suspended operations in response to the COVID-19 pandemic. In addition, five Second Cup cafés have closed pending conversion of those locations to cannabis retail stores and five other locations have closed permanently.
- The company has deferred the collection from franchisees of the accrued royalties and cooperative advertising fund contributions for the periods of Feb. 23 to March 21, 2020, March 22 to April 18, 2020, and April 19 to May 16, 2020. The company does not currently intend to collect deferred royalties and contributions from franchisees that are in good standing.
- The company is engaged in discussions with landlords, both on its own behalf and on behalf of its franchisees, to request abatements, deferrals and/or reductions of rent, and, where appropriate, to discuss potential amendments to or the termination of lease agreements for certain underperforming café locations. The company is also supporting conversations on behalf of its franchisees with financial institutions to request deferrals of loan repayments, as required. The company is assisting its franchisees to access applicable relief programs that the Canadian government has introduced in response to COVID-19, including the Canada Emergency Commercial Rent Assistance program for small businesses.
- The company is working with the full network of Second Cup suppliers to arrange deferred payment terms to provide franchisees with additional flexibility to manage cash and payroll.
Second Cup cafés across Canada and Bridgehead coffeehouses that remain open are currently only offering take-out, delivery and drive-thru service.
The company stated that it continues to expect the ongoing COVID-19 pandemic and events and circumstances resulting from the pandemic to have a material impact on its business, operations and financial performance through 2020. However, this impact can not be quantified at this time because of the significant uncertainty associated with the ultimate extent, duration and severity of the pandemic itself, and with the government restrictions, effects on consumer behaviour and other factors associated with or resulting from that pandemic, many of which are beyond the company’s control.
The company has postponed its annual meeting of shareholders beyond July 23, 2020 to a later date in 2020 and will provide further information on the meeting at a later date.
Founded in 1975, The Second Cup Ltd. is a Canadian specialty coffee retailer operating franchised and company-owned cafes across Canada.