Sweeter Profits for RFG

Written on the 10 August 2009

Sweeter Profits for RFG

GOLD Coast-based retail food brand manager and franchisor Retail Food Group Limited (ASX: RFG) has defied a national retail slump to post a $23.4 million profit – up 33 per cent on 2008-09.

Underpinned by the strength of its brands Michel’s Patisserie (increased EBIT by 28.5 per cent to $15.2 million) and Donut King which achieved a 27.6 per cent increase (to $13.5 million), the company’s foray into China has paid dividends.

The brand manager behind the Donut King; bbs café, Brumby’s Bakeries and Michel’s Patisserie brands has announced a fully franked final dividend of 4.75 cents per share to be paid on October 9 following a record date of September 25 2009. The dividend will constitute an eligible dividend for the purposes of the Company’s Dividend Reinvestment Plan.

Total debt has been reduced by $21.8 million (or 18.5 per cent) to $90.6 million. With 59 new outlets commissioned this year and continued international expansion in China with the opening of a fifth outlet on Monday, growth is anchored on brand visibility in major shopping outlets.

CEO Tony Alford (pictured), says despite Queensland’s retail figures as being the worst in the country for the month after recording a -3.5 per cent loss, not all retail outlets are affected.

“Once again it bears testament to the fact that all retail is different. We are predominately in shopping centres and people don’t stop coming to shopping centres,” says Alford.

“They might decide they won’t venture into David Jones for example, but with our brands, a donut and a coffee is not considered secondary spending. We don’t care why they come to the shopping centres as such, as long as they come.”

When RFG acquired its coffee roasting facility in Sydney from JV partner Coffee Tek earlier this year, the move enabled the company to consolidate and set a consistent coffee price for its franchisees.

“We were able to take the quality control back. It wasn’t done so much to generate additional profit, but to regulate coffee prices for our franchises. 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.”

RFG chairman John Cowley, says the results enhance the company’s position as an innovative franchisor that delivers profitable and sustainable outcomes for stakeholders.

“The company has achieved a number of key milestones in 2009. Not only has the disposal of the Central Manufacturing Facility released capital and provided an additional revenue stream but as well secured long term quality product supply to our franchisee community,” he says.

“During the financial year, RFG has successfully re-branded and consolidated its coffee roasting operations, expanded coffee roasting and distribution to include New Zealand and China, while developing and commissioning ‘Royal Bean’, an exciting new coffee blend for the Donut King system.”

Adds Tony Alford: “The company has also focused on delivering further menu innovation and supply chain solutions. 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”.


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