RFG appoints turnaround specialist as chairman
Retail Food Group (RFG) has appointed ‘turnaround specialist’ Peter George as its new chairman, after laying out a three-pronged strategy to stabilise, optimise and reinvest in the business at its annual general meeting (AGM) on Thursday.
George, who joined the board as a non-executive director in September, was elected chairman on Friday. He takes over from Stephen Lonie, who stepped into the role vacated by previous chair Colin Archer, who announced his retirement from the board at the end of September after RFG reported a $306.7 million full-year loss.
Lonie admitted in the company’s annual report on Thursday that RFG, which owns a portfolio of food brands including Gloria Jean’s, Donut King, Crust Pizza, Brumby’s Bakery and Michel’s Patisserie, faced several challenges in FY18, which contributed to its poor performance.
Increased scrutiny of the treatment of franchisees, specifically those within in RFG’s network, contributed to a decline in new store growth, resale and renewal activity and the number of outlets being passed to management in FY18.
The cumulative impact of domestic store closures, combined with challenging retail trading conditions, particularly in shopping centres, and the increased complexity of the business, forced RFG to write down $402.9 million in impairments in FY18, pulling the company’s $374 million revenue into the red.
Lonie said the directors identified the need for a turnaround strategy to stabilise the business and improve profitability. This includes better integrating and streamlining the group’s operations and right-sizing the operational base across RFG’s businesses to support a more sustainable model for the company and its franchisees.
Lonie noted that management has implemented a re-engagement program with franchisees to better understand and effectively respond to the challenges facing their business.
Group CEO Richard Hinson noted that he met with approximately 700 of RFG’s franchisees during a national roadshow to listen to their feedback and to explain some of the steps that RFG is taking to enhance the profitability of their businesses, including delivering $4.5 million in cost of goods savings, discounting new store and franchise renewal fees, investing an additional $1.5 million in field support per year and $1.2 million in wage entitlement audit and compliance activities per year.
Hinson said the response to the roadshow was “overwhelmingly positive”, with 79 per cent of franchisees who responded to a subsequent survey professing support for the company’s future direction, 18 per cent remaining neutral and 3 per cent being unsupportive.'
George previously led the restructuring and merger of integrated marketing solutions provider, PMP Limited, as managing director from 2012-2017, and was executive chairman of Nylex Limited from 2004-2008.
“RFG has strong foundations in its business model and retail brand systems. My focus is on effectively executing the already developed turnaround strategies to return RFG to stability and profitable growth, and add further impetus to the group’s efforts to restore value for shareholders,” he said.
Lonie announced his retirement as chair and non-executive director on Friday, alongside non-executive director Russell Shields, who has also stepped down from the board. David Grant has joined the board as a non-executive director.
Author: Heather McIlvaine
This article first appeared on Inside Retail, a sibling publication to Inside Franchise Business.