Rocky Mountain Chocolate Factory, Inc. today reported earnings per share of $.10 for the quarter ended May 31, 2000 compared to $.04 per share for the quarter ended May 31, 1999, representing an increase of 150%. The Company also reported record earnings before interest, taxes, depreciation and amortization ("EBITDA"), which increased $110,000, or 15%, to $823,000 in the first quarter of fiscal 2001 compared to $713,000 in the first quarter of fiscal 2000. Total revenues decreased 6.3% to $5.2 million in the first quarter of fiscal 2001 from $5.6 million in the first quarter of fiscal 2000.

The decrease in revenues in the first quarter of this year resulted primarily from decreased retail sales. The decrease in retail sales was attributable in part to a reduced number of Company-owned stores in operation in the first quarter of this year versus the first quarter of last year as the Company de-emphasized its Company-owned store program in favor of franchising. The Company intends to continue franchising selected Company-owned stores in order to focus on its franchise system.

Same store sales at franchised stores and Company-owned stores decreased 6.5% and 8.1%, respectively, in the first quarter of this year versus the first quarter of last year. Slower sales of Beanie Babies and related products in the children's/novelty section of our retail stores contributed significantly to the decrease in same store sales. Same store pounds purchased from the factory by the franchise system declined 1.2% in the first quarter of this year versus the first quarter of last year.

During fiscal 2000, the Company extensively evaluated its manufacturing processes, franchise support system and business strategy. As a result, the Company restructured its manufacturing and management processes and renewed its commitment and focus on growing its franchise system. The Company also decided to pursue new distribution channels on a more focused and selective basis. First quarter results in fiscal 2001 versus first quarter results in fiscal 2000 benefited from these efforts.

Factory margins increased to 41.7% in the first quarter of this year from 35.3% in the first quarter of last year. The improvement was due in part to certain changes to the Company's manufacturing processes and cost structure. Retail store margins in the first quarter of this year were consistent with the first quarter of last year.

Operating expenses (franchise support, sales and marketing, and general and administrative) increased approximately $20,000 or 2.0% to $1.0 million in the first quarter of this year compared to $980,000 in the first quarter of last year. Operating expenses were in line with the Company's business plan.

Franklin E. Crail, President and CEO remarked, "Fiscal 2001 will be a year defined by our continued commitment to growing the Rocky Mountain Chocolate Factory concept through the Company's core competency of franchising." Mr. Crail added, "Interest in new franchises remains strong and is accelerating, which should allow us to grow the number of domestic franchise units in a range of 10% to 15% in fiscal 2001. Expected unit growth combined with the buyback of over 660,000 shares, or approximately 25% of the Company's outstanding common stock should provide significant earnings per share growth in fiscal 2001."

This press release contains forward-looking information that involves risks and uncertainties, and the company undertakes no obligation to update any forward-looking information. Risks and uncertainties that could cause actual results to differ materially include, without limitation, seasonality, consumer interest in the company's products, general economic conditions, consumer trends, costs and availability of raw materials, competition and the effect of government regulation.

Rocky Mountain Chocolate Factory, Inc. is an international franchiser of old-fashion chocolate and confection stores and a manufacturer of an extensive line of premium chocolates and other confectionery products.


                    ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
STATEMENTS OF OPERATIONS
(in thousands except earnings per share amounts)

FOR THE QUARTER ENDED
MAY 31, 2000,
2000 1999

Revenues
Factory sales $2,431 $2,294
Retail sales 1,999 2,500
Royalty and marketing fees 717 727
Franchise fees 91 69
Total revenues 5,238 5,590

Costs and Expenses
Cost of sales 2,261 2,536
Franchise costs 260 226
Sales & marketing 288 338
General and administrative 453 417
Retail operating 1,153 1,360
Depreciation and amortization 327 403
Total costs and expenses 4,742 5,280

Operating Income 496 310

Other Income (Expense)
Interest expense (149) (155)
Cost of unsolicited tender offer -- (7)
Interest income 10 12
Other, net (139) (150)

Income Before Income Taxes 357 160

Income Tax Expense 138 62

Net Income $219 $98

Basic and Diluted Earnings per Common Share $.10 $.04

Weighted Average Common Shares Outstanding 2,243,913 2,599,599
Dilutive Effect of Employee Stock Options 13,837 3,590
Weighted Average Common Shares Outstanding,
Assuming Dilution 2,257,750 2,603,189

EBITDA $823 $713


ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
BALANCE SHEETS (000's)

AS OF
May 31, February
2000 2000

Current Assets
Cash and cash equivalents $216 $128
Accounts and notes receivable, less
allowance for doubtful accounts of $140 2,217 2,194
Refundable income taxes 63 77
Inventories 3,219 3,084
Deferred income taxes 189 189
Other 207 88
Total current assets 6,111 5,760

Property and Equipment, Net 8,251 8,976

Other Assets
Accounts and notes receivable 98 55
Goodwill, less accumulated
amortization of $623 and $584 1,239 1,278
Other 498 371
Total other assets 1,835 1,704

Total assets 16,197 $16,440

Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long-term debt $1,906 $1,931
Line of credit 1,875 75
Accounts payable 1,041 1,056
Accrued salaries and wages 582 653
Other accrued expenses 544 456
Total current liabilities 5,948 4,171

Long-Term Debt, Less Current Maturities 4,313 3,774

Deferred Income Taxes 62 62

Commitments and Contingencies

Stockholders' Equity
Common stock, $.03 par value; 7,250,000
shares authorized; 1,956,784 and
2,599,599 shares issued and outstanding 59 72
Additional paid-in capital 3,115 5,880
Retained earnings 2,909 2,690
Less notes receivable from officers
and directors (209) (209)
Total stockholders' equity 5,874 8,433

Total liabilities and stockholders' equity $16,197 $16,440

For Further Information, Contact Bryan J. Merryman, COO/CFO (970) 259-0554