Update buoys RFG

Shares up 16.3pc on food group resilience

SHARES in Gold Coast food franchisor Retail Food Group soared 16 per cent higher yesterday after a trading update where it outlined more landlord rent concessions and earnings of $35 million for this financial year.

The company in a statement to the ASX said it had seen an increase in customers returning to its stores, which include Donut King, Crust

Gourmet Pizza and Pizza Capers, within shopping centres as COVID-19 restrictions have eased. It also said it expected net debt to be about $25 million by the end of the financial year.

Investors responded positively, sending shares up 16.3 per cent to close at 7.1 .

Executive chairman Peter George said recent trading data showed customer numbers 13.76 per cent lower for the week ending June 21 compared to the previous period ending June 23 last year.

He said the “limited number of outlet closures” so far was evidence of a “resilient” franchise network.

The company said last month that 60 temporarily closed stores had reopened.

“Of the remaining 17 outlets temporarily closed as a consequence of the pandemic, we are working with impacted franchisees to facilitate reopening, however, anticipate c. 7 will be permanent closures,” Mr George said. “These were forecast to close in the near future, and COVID-19 has simply expedited that outcome.”

Last month RFG said it had obtained rent relief for franchisees for 290 outlets for the April and May periods. It now says that figure has increased to about 415 outlets. The company previously took aim at landlords, saying rent deferral would achieve nothing.

“This is a positive outcome for both franchisees and RFG which provides both cashflow support and added certainty,” Mr George said.