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Retail Food Group (ASX: RFG) is pulling away from corporately running the brands of old as it turns its focus to Beefy's Pies and Firehouse Subs, including plans to divest the Brumby's bakery chain it has owned for almost 20 years.
The Gold Coast-based group has booked a non-cash impairment of $12.2 million for Brumby's, which alongside Gloria Jean’s, Donut King and Beefy's saw flat same-store sales growth in FY25.
RFG has also reported $15.7 million worth of provisions and asset impairments so that it can restructure the corporate store division.
For all brands except Beefy's, corporate stores will transition to franchise partner ownership or close, except for Donut King Burleigh Heads and Gloria Jean’s Robina which generated a combined underlying EBITDA profit of $3.3 million.
These impairments sent RFG into the red again with a $4.9 million loss after tax for FY25, following a long-awaited return to profit of $5.79 million in FY24.
Since then the company has exited Michel's Patisserie, acquired CIBO Espresso, and announced the introduction of US-born sandwich chain Firehouse Subs to the Australian market with the first of 165 planned locations expected to open later this year.
Following years of turmoil, the board also attempted to reinvigorate the company through a name change to 'Savora' - a proposal that was quashed at an annual general meeting (AGM) in November with only 65 per cent of shareholders supporting the idea.
Now with around 1,250 outlets in 30 countries for its brands, including Crust Gourmet Pizza Bars which delivered 5.5 per cent network sales growth in the June quarter, RFG plans to "enhance" its core brands "through prioritising retailing excellence and technology to expand them to at least 200 domestic outlets for each brand".
"During FY25 Retail Food Group maintained a steadfast focus on our strategy to enhance our core brands and grow our network," says chairman Peter George.
"A solid underlying EBITDA performance of $29.6 million, up 1.7 per cent on FY24, and the achievement of various milestones during the year, keep us on track in our pursuit of long-term sustainable growth for all stakeholders.
"These milestones include our agreement with Restaurant Brands International (RBI), cemented after a rigorous 12-plus months due diligence process, to introduce its fast-growing Firehouse Subs sandwich concept to Australia."
George highlights a "clear market opportunity" in the domestic fast-food sandwich category, with its growth plans to be partly funded by the corporate store restructure.
"Both domestically and internationally we have a clear strategy to focus on growth brands where we can deliver greater returns on our investment," he says.
"This has led to an FY25 strategic reset of our corporately operated stores in our Gloria Jean’s, Donut King, Crust Gourmet Pizza and Brumby’s Bakery brands to either sell outlets to franchise partners or exit the site.
"This will enable us to recycle capital into growth brands which require corporate support including Beefy’s Pies and Firehouse Subs."
George says RFG has also recognised that the complexity and inefficiency of its global supply chain has impeded international growth.
"The establishment of a new roasting, supply and support hub in Türkiye is expected to realise cost savings, improve order lead-times, mature our supply-side capabilities and enhance our Master Franchise Partner capability and experience," he says.
"This initiative is anticipated to unlock opportunities for our partners expansion in both existing and new markets."
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