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A bakery chain that has been serving Australian customers since 1980 will soon be no more after Gold Coast-headquartered Retail Food Group (ASX: RFG) decided to call it quits on Michel's Patisserie, with aims to convert existing stores to other brands in its portfolio like Gloria Jean's and Donut King.
RFG also owns iconic Sunshine Coast-born chain Beefy's Pies and Brumby's, which were not cited as alternative options by the group.
The update affects 19 remaining Michel's Patisserie stores across Queensland, New South Wales and Victoria - a significant reduction on a 350-strong location count at its peak, having grown from one store founded by French pastry chef Michel Catteon in Sydney more than four decades ago.
Soon after buying Brumby's, RFG acquired the Michel's Patisserie franchise system and its intellectual property for a $46 million mix of cash and scrip in 2007, also absorbing the previous owner's $54 million in corporate debt.
The acquisition made Michel's Patisserie RFG's largest brand by store count at the time with 350 outlets spread across Australia and New Zealand, generating adjusted earnings of more than $13.25 million.
Cracks started to show however when the group implemented 'fresh to frozen' changes at franchise stores between 2015 and 2016, with alleged losses from the strategy prompting a class action from around 130 claimants which was settled in May this year.
A Retail Food Group (RFG) spokesperson says Michel's Patisserie franchise partners have been engaged in conversations regarding the brand's future and network opportunities for current franchisees.
"These conversations form part of our organisation’s evolution to be closer to our customers, focusing on elevating customer experience to drive growth, and increase franchise partner profitability," the spokesperson says.
"While Michel’s Patisserie has a long history within Australia’s retail food market, a brand assessment has confirmed a variety of barriers to driving future brand growth; limitations that have been assessed while also considering how we as a network can better invest and help deliver lasting positive change for our franchise partners and stakeholders.
"In light of this assessment, we are engaging with all Michel’s Patisserie franchise partners to explore the opportunity for them to convert their business to the Gloria Jean’s brand, or where that outcome is not feasible, the Donut King brand."
The spokesperson says the group believes each of the Gloria Jean’s and Donut King brands provide "exciting opportunities and a compelling option" for MIchel's Patisserie franchise partners "considering their immediate or longer-term business futures".
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