Franchise group to cash in on Crust

RETAIL Food Group is looking to sell its Crust Gourmet Pizza chain but the embattled franchise operator has hosed down expectations about what price it will achieve.

The group, which also owns Michel’s Patisserie, Gloria Jeans, Brumby’s Bakery and Donut King, said it was looking to sell assets in order to lower a $260 million debt pile.

The listed franchise giant entered a trading halt yesterday after media reports suggested it was working on a deal to sell Crust for $100 million. Crust is the nation’s third-largest pizza chain with more than 150 outlets across Australia.

Retail Food confirmed it was considering selling the chain but denied a sale could raise $100 million.

Shares in the group had surged by more than 20 per cent in early trade ahead of it going into a trading halt.

“The company confirms it will seek to reduce its debt by various means including the investigation of the possible sale of assets,” it said in a statement lodged with the Australian Securities Exchange.

“Insofar as an amount for the sale of Crust Gourmet Pizza is speculated … that amount exceeds RFG’S expectations as to the sale price for that asset if it was to be sold as a part of that process.

“RFG will keep the market informed of any sale of assets or other steps taken to reduce its debt.”

Crust is the biggest part of Retail Food’s quick service restaurant division which also includes Pizza Capers.

The two brands delivered $10 million in earnings in 2017-18, about 14 per cent of the group’s total.

Private equity firm PAG Asia Capital and Pizza Hut Australia owner Allegro Funds are believed to be in talks to buy Crust, according to market speculation.

Retail Food’s debt pile stood at $258.9 million at June 30, its most recent financial filings show.

The franchisor posted a $306.7 million loss for the year to June as it wrote more than $400 million off the value of its brands. It plans to close 250 stores across Australia by the end of the year.