Retail Food Group has growth on the menu

Retail Food Group has growth on the menu

August 16, 2011 – 4:12PM

The Age – Retail Food Group, the company behind brands such as Brumby’s Bakeries, Donut King, and Michel’s, has overcome natural disasters and a challenging retail environment to establish 40 new outlets and a small rise in net profit.

RFG, which also has the bb’s cafe and Esquires Coffee Houses franchises, reported today that net profit rose 4.6 per cent to $27.9 million for the year to June 30 compared with the previous financial year.

Revenue from operations fell 6.4 per cent to $125.65 million.

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Chief executive Tony Alford said the company’s performance was testament to the effectiveness of its business model and franchise systems.

“Notwithstanding the natural disasters and not insignificant retail headwinds, combined franchise system network sales increased $10.5 million over fiscal 2010 to $651.1 million,” Mr Alford said in a statement.

“Forty new outlets have been established, thus validating the continued relevancy of our franchise systems to the consumer as well as the new franchisee candidate market.”

Mr Alford said the Michels’ franchise system “exceeded expectations”, while the first Queensland Esquires outlet would be commissioned by November.

The company recently acquired 47 Esquires Coffee Houses, bringing the number of RFG outlets to 1,148.

At 1521 AEST shares in RFG were up 20 cents, or 9.3 per cent, at $2.35.

The company’s share price is 57 cents below the 12-month high of $2.95, on April 27.

Mr Alford said the company’s board was optimistic that the recent diminution of RFG’s share price would be temporary.

“It is neither reflective of the value position of the company nor the sustained positive results delivered by a unique business model,” he said.

RFG declared a final dividend of 7.5 cents per share, up 15.4 per cent, from 6.5 cents a year earlier.

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