Rising Costs and Store Impairments Deepen Oliver's Real Food Losses

A Challenging Year for Oliver's Real Food

Oliver's Real Food Limited has released its preliminary final report for the year ended 30 June 2025, revealing a mixed financial performance marked by a widening statutory loss alongside encouraging signs in core operational earnings. Revenues fell by 6.9% to $24.8 million, reflecting the tough competitive environment in the quick service restaurant (QSR) sector and broader consumer spending pressures.

Despite the top-line decline, the company’s EBITDA before impairments (EBITDAI) improved by 23.5% to $2.12 million. This metric, which the board considers the most critical indicator of operational health, benefited from strategic decisions including the closure of underperforming stores and a comprehensive restructuring of operations.

Store Closures and Impairments Weigh on Statutory Results

The statutory net loss after tax increased by 25.8% to $2.91 million, driven largely by significant impairment charges totaling $1.76 million. These impairments primarily relate to the Pheasants Nest Northbound and Southbound stores, as well as the Wallan Southbound location. The Northbound store was permanently closed in July 2025 after failing to meet sales forecasts despite marketing efforts and increased foot traffic, with the board citing unsustainable losses and an unlikely turnaround within an acceptable timeframe.

The closure of the Northbound store also involves a lease surrender agreement with Ampol, which retains the right to request the surrender of the Southbound store on 90 days’ notice. This introduces a degree of uncertainty around the future of that location, although it is currently forecasted to cover its operating costs.

Rising Costs and Competitive Pressures

Oliver's faced increased operating expenses during FY25, including higher wages and associated costs such as superannuation, payroll tax, and Workcover, alongside rising electricity and property outgoings across its store network. The QSR market itself has become more competitive, with major players aggressively discounting to stimulate sales. Oliver's has chosen not to engage in price wars, instead focusing on its healthier menu positioning, which involves higher raw material costs. This strategy, while differentiating, has coincided with reduced discretionary consumer spending, leading to softer same-store sales compared to the previous year.

Signs of Recovery in FY26

Looking ahead, the start of FY26 has brought encouraging momentum. July EBITDA rose 28% year-on-year to $210,000, with revenue reaching $2.04 million and same-store sales increasing by 2.5%. The company continues to implement cost-saving measures and enhance in-store customer experience, supported by data from customer feedback and mystery shoppers. Management remains focused on ensuring all stores achieve consistent profitability and is actively engaging with lenders regarding current facilities and future funding needs.

While the audit of the FY25 results is ongoing, with a material uncertainty related to going concern noted, the board expresses confidence in the strategic direction and operational improvements underway.