“Oooh is that a free spot?”
“Are these people leaving or arriving?”
These are the mutterings of many a shopper as they negotiate the parking situation at their local shopping centre lately, and it’s music to the ears of retailers.
Despite COVID accelerating ecommerce and online shopping, people are still flocking to shopping centres to get their fix, rebalancing the previous inconsistency to trade.
And, what’s a shopping trip without a coffee, or a cheeky donut?
Retail Food Group (ASX: RFG) are the owners of multiple brands easily recognisable by frequent shoppers including Gloria Jeans, Michel’s Patisserie and Donut King.
With life largely back to normal post COVID and the effects of the Omicron strain wearing off, the Company has seen their balance sheet bounce back and are now able to provide shareholders with EBITDA guidance for FY22. The Group anticipates that they will achieve an underlying EBITDA of $21.4 million.
Domestic customer count has increased by an average of 10.1% for 2H22. Average transaction value has marginally increased by 7.8% during the period, 19.7% higher compared to the Group’s pre-pandemic performance, giving credence to initiatives put in place by the business to drive sales.
The Company’s pizza brands have also performed well with Crust and Pizza Capers both growing indicated by same store sales numbers, up by 10.8% for Crust, and 6.3% for Capers.
Overseas, the Company closed the doors of 26 stores during the half year to date, but has opened 37 new ones. 5 more stores are expected to open by the end of June.
RFG believes they have a “strong value proposition” and “flexibility to better compete and manage retail prices” which will be useful as inflation continues to add pressure to individuals and businesses.
“The various positive indicators observed across the Group’s business during the 2H22 provides confidence that RFG continues to tread the right path in its turnaround journey, although with a clear appreciation of the challenging trading environment that continues to exist,” said RFG Executive Chairman Peter George. “Balancing these factors are the positive operational results we have achieved that service to illustrate the resilience of our multi-brand system portfolio and the strong value proposition each of our brands offer customers. Whilst we have significantly increased average basket size for our Franchise Partners over the past three years, ATV remains relatively low and therefore gives us scope and flexibility to better compete and more effectively manage retail prices in a challenging trading environment.”
Buried further down in their announcement was information regarding the pending class action against Michel’s Patisserie. According to The New Daily, a group of over 130 franchisees claim that their businesses suffered when RFG stopped delivering fresh food, forcing stores to sell frozen goods instead. There are also allegations of “unconscionable conduct, misused marketing funds and pressur[ing] struggling franchisees to invest more in failing stores.”
As of the time of reporting there has been no progression in the case with a Statement of Claim due to be filed by the plaintiffs by August 2022. The Company is also vehemently defending their position with the ACCC, filing an application “seeking certain orders as to the future conduct of the proceeding, which [RFG] considers will substantially narrow the scope and thereby increase the efficiency of the proceeding in a manager consistent with the pastries’ overarching obligations to the Court,” which the Commission opposed. The Company maintains their defence and are seeking resolution with the ACCC.
The announcement of EBITDA guidance of $21.4 million anticipated for FY22 represents a drop of 29% on their FY21 EBITDA of $30.5 million when it was also propped up by $3.7m in JobKeeper support.