RFG’S future largely out of its control

THE coming year will be sink or swim for recovering Gold Coast franchisor Retail Food Group (RFG), with its future hinging on factors largely beyond the company’s control, according to its annual report.

Despite rigorous cost-cutting and a complete overhaul of its approach to franchisees, executive chairman Peter George said RFG remained at the mercy of Covid-19 restrictions and a looming unconscionable conduct case brought by the Australian Competition and Consumer Commission (ACCC).

Despite the setbacks, the group, which operates brands including Donut King, Gloria Jeans and Brumby’s Bakery, reported network same store sales growth of 3.2 per cent as it repositioned itself for the shift in consumer trends related to the pandemic.

The report was released days after a new class action was lodged by former franchisees of Michel’s Patisserie, who are seeking damages over RFG’S conduct and operations in 2015-16.

The company famously introduced a “fresh to frozen” model in its supply chain, a model it has since dumped.

In the report, Mr George said the past 18 months had been “tough” for franchise partners, customers and investors. “Despite this, we have made considerable progress in our turnaround and remain committed to those things we can control,” he wrote.

“The economy will open in full again, and we are positioning our brand systems and network to be in the right place to respond when it does.

“Pending that, the ongoing uncertainty associated with Covid-19 and the ACCC proceedings continues to make difficult the prediction of future financial outcomes.”

The ACCC matter is due back in court for an administrative hearing on November 5. The proceedings, lodged in December against RFG and five related companies, concern alleged misuses of marketing funds as well as the sale or licence of 42 stores.

RFG is pushing for an “early resolution” but says it will defend the matter if a settlement cannot be reached.

As well as RFG Ltd, respondents include Brumby’s Bakeries, Donut King, Michel’s Patisserie, RFGA Management and Jireh International Retail.