Coffee franchises Cafe2U and Gloria Jean’s add value to Retail Food Group’s financials as new MD announced for the group

By Sarah Stowe | 26 Feb 2016 View comments

It will be business as usual when Retail Food Group Limited’s new managing director succeeds the long-standing Tony Alford. Current CEO Andre Nell joins the board on 1 July 2016 and takes over from Alford’s 17 year tenure as MD.

The announcement of Nell’s appointment coincided with the release of the company’s half yearly report.

Retail Food Group is the franchisor of Brumby’s, Cafe2U, Crust Gourmet Pizza Bar, Donut King, Esquires, Gloria Jean’s Coffees, It’s a Grind, Michel’s Patisserie, Pizza Capers and The Coffee Guy.

The group achieved record underlying Net Profit After Tax of $32.1m, a boost of 27.1 percent over the previous corresponding period.

The group also recorded half yearly EBITDA of $53.3m, a 36.4 percent increase on the previous year’s corresponding six months.

“We had record new outlet commissions across all of the brands,” Nell told FranchiseBusiness. “Of the 142, 73 were international, which is going from strength to strength.”

The revenue increase of 90.2 percent lifted the group from $78m to $148.3m. This figure includes the full contribution from acquired franchised models Cafe2U and Gloria Jean’s Coffees, and the wholesale coffee brand Di Bella.

However this was offset by a $3.3m decline in revenue from the Michel’s Patisserie, Brumby’s and Donut King systems.

Nell said the closure of lower performing outlets in these traditional brand systems contributed to a lower like-for-like sales result in the first half of 2016. However the year on year same store sales were seeing some growth, he said.

Andre Nell told FranchiseBusiness, “I’m very focused on our three year strategy. We have significant opportunities in our key divisions: franchising, international and commercial.”

Nell is currently responsible for the group’s domestic and international franchise systems, including integration and international growth of recently acquired concepts.

He joined RFG in 2007 following the company’s acquisition of the Michel’s Patisserie Brand System, where he was the incumbent general manager. Before that he held roles as head of commercial and chief operating officer.

“My career, experience and understanding of RFG’s unique business model have placed me in an excellent position to lead the group during its next chapter of growth. It is truly an exciting period for the company, with an accelerated growth plan established during 2015 and garnering increased traction, evidenced by the company’s strong 1H16 performance,” he said.

“I have every intention of maintaining that strategy, preserving the performance based culture inherent in the group and its brand systems, and driving the growth opportunities at RFG’s disposal.”

Outgoing MD Tony Alford said “RFG’s 1H16 performance bears testimony to the complementary nature of FY15’s acquisitive program, with the group enjoying synergistic benefits across its traditional business as well as acquired assets.”

He is confident of the group’s overseas expansion too.

“RFG’s international operations are delivering the company a multi-faceted platform for relatively low risk, sustainable growth. Significant opportunity for penetration of new markets remains, with the company focused on extending its presence within India, Asia, Europe, the Middle East and the US.

“In that respect, RFG continues to engage with a number of interested parties and is confident of realising new master franchise partner relationships in the near term.”

Alford is this year celebrating 20 years with RFG: the first three as chief financial officer, the remaining 17 years as managing director. He will transition to a non-executive director’s role.

RFG chairman Colin Archer said Alford had transformed the business from a relatively obscure and challenged business with some 100 franchised outlets, to an international coffee and retail franchise powerhouse and a global network of more than 2,500 outlets.

“Tony led RFG through strong growth as a private company, before successfully listing in 2006. RFG has continued to flourish as a public company under his leadership,” he said.

“We are fortunate to have a successor of Andre’s outstanding calibre. Andre is an exceptional leader and strategist, who under Tony’s guidance and mentorship, has played an integral role in driving RFG’s success in recent years.

“Importantly, Andre will be supported by a strong and experienced executive management team, developed over the last three years in anticipation of the present transition,” he said.