PROFITS DOWN FOR FRANCHISOR

Written on the 9 February 2011

PROFITS DOWN FOR FRANCHISOR

BRANDCHISOR Retail Food Group (RFG) will likely settle on its acquisition of Esquires Coffee Houses (Esquires) in Australia and New Zealand later this month.

The company has downgraded its profit guidance as 56 of its Brumby’s outlets and 31 Donut King stores were shut temporarily due to floods, with 108 outlets across all of its brands affected.

RFG announced during its 2010 AGM that it anticipated NPAT to be $12.5 million as a result of deluge affecting its northern NSW and Brisbane outlets and increased wage costs brought about by the recently introduced Modern Awards under the FairWork Act.

RFG CEO Tony Alford says it would be naïve to suggest that normal trading conditions will resume as a matter of course.

“Many franchisees will experience a long period of revenue reduction, and in some cases, this may result in a permanent reduction in retail sales within those communities worst affected by flood. This may have long term adverse affects for those franchisees concerned”.

Retail Food Group is the franchisor and intellectual property owner of the Donut King, Michel’s Patisserie, Brumby’s Bakeries (including Big Dad’s Pies), and bb’s café franchise systems.


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