Restructuring Risks Loom as Retail Food Group Shifts Focus to Growth Brands
Retail Food Group Limited reported steady FY25 growth, underpinned by brand modernization and expansion plans including the upcoming launch of Firehouse Subs in Australia. The company is also restructuring its company stores to sharpen focus on high-growth brands.
- FY25 underlying revenue up 13.6%, underlying EBITDA rises 1.7% to $29.6 million
- Beefy’s Pies network expands with strong same-store sales growth; target of 50 outlets by 2028
- Signed 20-year agreement to launch Firehouse Subs in Australia, first store expected mid FY26
- Company store portfolio being restructured to focus on growth brands; exploring divestment of Brumby’s Bakery
- Strong balance sheet maintained with minimal net debt and capital-light business model
Solid Financial Performance Amid Market Challenges
Retail Food Group Limited (RFG) has delivered a solid financial performance for FY25, navigating a challenging market environment with a modest 0.3% increase in domestic network sales and a notable 13.6% rise in underlying revenue to $102.7 million. Underlying EBITDA grew 1.7% to $29.6 million, reflecting operational improvements despite a statutory net loss after tax of $14.9 million, largely due to non-cash impairments and restructuring costs.
Strategic Brand Enhancement and Growth Initiatives
The company’s Enhance strategy has progressed with a focus on modernizing core brands through refreshed stores, product innovation, and digital channel expansion. Notably, Crust Gourmet Pizza rebounded in Q4 with a 5.5% increase in network sales, while Beefy’s Pies demonstrated robust growth with a 16.6% increase in network sales and 5.1% same-store sales growth. Beefy’s has expanded its footprint to 14 outlets and aims for 50 stores by 2028, with franchising set to commence in FY26.
RFG also signed a landmark 20-year agreement to introduce Firehouse Subs to the Australian market, with the first restaurant slated to open in mid FY26. This move represents a significant growth driver, supported by a committed investment of US$4 million annually over the first three years and experienced leadership under GM Tracy Steinwand.
Restructuring Company Stores and Portfolio Optimization
In a strategic pivot, RFG is restructuring its company-operated stores to concentrate resources on high-growth brands Beefy’s Pies and Firehouse Subs. The plan involves transitioning existing Gloria Jean’s and Donut King company stores to franchise partner ownership or closing underperforming outlets. This restructuring includes provisions totaling $10.4 million for lease obligations and a non-cash impairment of $5.3 million on property, plant, and equipment.
Additionally, the company is exploring divestment options for Brumby’s Bakery, a legacy brand acquired in 2007, to reallocate capital and management focus toward faster-growing segments. While Brumby’s remains profitable, outlet numbers have declined, and a $12.2 million non-cash impairment was recognized in FY25.
International Expansion and Digital Innovation
RFG’s international operations showed improved financial outcomes, supported by a new supply hub in Turkey and the appointment of a new Head of International. The company sees significant growth potential in expanding Gloria Jean’s and Donut King internationally, leveraging a capital-light model. Digital initiatives continue to gain traction, with digital transactions growing substantially and new digital menu integrations enhancing customer engagement.
Outlook and Capital Management
Looking ahead to FY26, RFG anticipates continued momentum with core brand growth driven by customer-led innovation and store refurbishments. Beefy’s network sales are already up 18% year-to-date, and the Firehouse Subs rollout is expected to accelerate. The company aims to improve cash flows by over $5 million through company store restructuring and maintain a strong balance sheet with minimal net debt. RFG also targets a return to fully franked dividends when appropriate, supported by a franking credit balance of $51 million.
Bottom Line?
RFG’s FY25 results set the stage for accelerated growth through strategic brand focus and international expansion, but execution risks remain around store transitions and new brand launches.
Questions in the middle?
- How will the Firehouse Subs launch impact RFG’s revenue and profitability in FY26 and beyond?
- What are the potential outcomes and timing for the divestment of Brumby’s Bakery?
- How effectively can RFG manage lease obligations and costs during the company store restructuring?
