RFG “cautiously optimistic” for business in 2022
Retail Food Group is “cautiously optimistic” after FY21 reveals a statutory profit and same store sales growth driven by affordable premium pizzas, drive-thru coffee and fresh bread.
This is the first year since FY17 the company has shown a statutory profit with NPAT at $1.5m up 136.6 per cent on last year’s $4m statutory loss.
Results showed EBITDA of $26.9m, down on the FY20 result of $31.7m but consistent with consensus forecasts.
Despite a year of lockdowns and trading restrictions, RFG’s same store sales grew 3.2 per cent from FY20. The notable performers included Gloria Jean’s drive-thru outlets rising 17.8 per cent, Brumby’s Bakery growing 9.1 per cent, and the QSR brands (Crust and Pizza Capers) recording a rise of 4.3 per cent same store sales.
Regional areas lifted sales by 6.6 per cent for Donut King and Gloria Jean’s.
The impact of Covid-19 was seen most dramatically in the shopping-centre based domestic coffee brands (Gloria Jean’s, Donut King and Michel’s Patisserie) and the 590-store international division.
RFG executive chairman, Peter George, said the FY21 results for the group were creditable and not unexpected given the trading conditions affecting RFG’s eight retail brands and Australian franchises.
“The year’s results reflect periodic suppression of customer traffic in the major East Coast cities, store closures, and the challenges experienced by franchise partners who had volatile revenues but significant rental overheads,” said George.
“These have been tough and unavoidable trading conditions and we believe that hard-working franchise partners, strong brands and ongoing promotional support from RFG has kept the impact to a minimum and built a strong base for FY22. We are cautiously optimistic.”
George said RFG had worked hard during FY21 to engage landlords and negotiate additional rental abatements and deferrals on behalf of franchisees.
The company had also invested in programs to support businesses at the store level, with new brand loyalty programs, product innovations and extensive marketing campaign support which included re-launching the Crust pizza business with $11 pick-up pizzas and a new $5 sides menu.
“Over the past two years we’ve worked hard on becoming a more nimble, consumer-focused organisation and that has been an advantage to us as we’ve responded to changing consumer behaviour during Covid,” George said.
The company is now in a good position to respond to the challenges of FY21 by addressing financial and balance sheet issues in FY19 and FY20, he said.
“We have significantly streamlined the company’s business, selling non-core assets and restructuring debt and overheads. It has allowed RFG to better pursue a ‘franchisee first’ business model, investing primarily in those things that drive successful stores: products, brands, marketing and support services.”
Positive outcomes included a 5.7 per cent increase in Average Transaction Value across the Australian network.
The executive chairman said the Australian Competition and Consumer Commission (ACCC) action against Retail Food Group relating to historical conduct was still being addressed. The company has filed a comprehensive and detailed defence in response to the ACCC’s allegations.
“Given our focus on the positive initiatives which have and continue to be implemented under RFG’s new management, the company believes that the interests of franchisees are best served by an early resolution of the proceeding. However, if this cannot occur, the company remained committed to defending its position,” George said.