Retail Food Group takes drastic measures

By Sarah Stowe | 27 Mar 2020 View comments

Retail Food Group is standing down or reducing working hours for most of the team as the multi-brand franchisor tackles the coronavirus crisis.

The announcement to the ASX comes as escalating government restrictions are put in place to help prevent the spread of COVID-19.

A spokesperson told Inside Franchise Business the measures announced today impact the majority of RFG’s team.

“However, we can confirm that RFG continues to maintain area managers who are in close contact with our franchisee community.”

Retail Food Group takes drastic measures

RFG chairman Peter George said “A large majority of our franchise partners are facing an extremely difficult trading environment, particularly within shopping centres, as consumers react to the increasingly onerous measures taken by government, and of course are focused on more immediate concerns such as their and their family’s health and safety.

“As a responsible franchisor it is necessary for us to take a long term and pragmatic approach to assure the future sustainability of our franchise network for all our stakeholders to ensure our costs are reduced to match our anticipated revenues in the foreseeable future, and to best position RFG and its franchise network for a return to less challenging times.”

The ASX statement referenced Brumby’s recent strong sales as consumers flock to buy bread and bakery products but hinted this may not last.

The spokesperson said “It is difficult to predict future outcomes given the inherent uncertainty associated with COVID-19.

“As the situation continues to evolve, we remain committed to providing practical and meaningful support to all of our franchise partners, regardless of brand.”

The coronavirus crisis is just the latest hit to the business over the last few years.

Latein 2019 a recapitalisation package for the troubled multi-brand hit $190m. It was a key part of the strategy to reduce the firm’s mountain of debt.

The debt restructure came after two successive years of dwindling profit, culminating in a $150m FY19 loss and bringing the net debt to $260m.