Michel’s, Donut King lift RFG to record result

Posted by Daniel Palmer on 6th August 2009

Retail Food Group, one of Australian’s largest retail food brand managers and franchisors, has today announced a 33 per cent surge in net profit after tax as consumer demand for comfort food fails to wane.

The owner of the Brumby’s, Donut King, Michel’s Patisserie and bb’s café franchise brands expects the growth to continue as menu innovation and store developments continue apace.

“The Company has … focussed on delivering further menu innovation and supply chain solutions,” RFG CEO Tony Alford said. “This, coupled with the recent reinvigoration of the Brumby’s Go! brand and establishment of new outlets in supermarkets and service stations, will position the Company to realise further growth opportunities outside of traditional locations.”

Mr Alford noted that the Michel’s Patisserie and Donut King contribution were particularly strong, with their contribution to the company’s EBIT rising by 28.5% and 27.6% increase, respectively.

“The structural enhancement of the Michel’s Patisserie system gained momentum during FY09, the resultant benefits from which are enjoyed by both RFG, with respect to additional cost synergies, and franchisees in terms of product offer, cost, and quality,” he advised. “System transitioning from a wholesale margin model to a traditional royalty based model has accelerated with over 100 franchisees now operating under the royalty based system.”

Total franchise network sales across all franchises grew to $632 million, an increase of $40 million on the previous corresponding period – driven by 59 new outlets which now sees 1,063 in the system.

“The fact that our franchise systems continue to enjoy consistent and sustainable growth is a credit to our franchisee community, RFG’s business model and our hardworking team,” Mr Alford added. “Ultimately, RFG enjoys a diversified revenue base and a strong cashflow delivery model which provides a resilient platform for future growth and increased shareholder value.”