Retail Food Group (ASX:RFG) reports accelerated cost rationalisation lifting FY26 savings estimates, yet trims EBITDA guidance amid softening sales and tough retail conditions. The first Firehouse Subs restaurant launch remains on track for June 2026.
- FY26 cost rationalisation savings revised up to $2.3-2.5m
- Core Brand Network Sales down 4.8% in first 20 weeks of 2H26
- Underlying EBITDA guidance narrowed to $20.0-21.0m
- Firehouse Subs debut scheduled for June 2026 in Brisbane
- Operational and structural changes progressing as planned
Transformation Program Delivers Faster Cost Savings
Retail Food Group has accelerated its cost rationalisation efforts, now expecting FY26 savings of $2.3-2.5 million, up from prior guidance of $1.2-1.8 million. This improvement is driven by near completion of office consolidation in southeast Queensland and a reduction in management layers. The company maintains FY27 savings expectations at $5.0-7.0 million as it continues operational enhancements and structural alignment initiatives.
These changes include a refreshed marketing approach dubbed 'Back to Basics', with rolling promotional calendars for FY27, and a reset of the operations team to better engage franchise partners and boost store profitability. A completed procurement and supply chain review has identified further cost-saving opportunities at the outlet level. A brand-aligned leadership model is planned for rollout in early FY27 to enhance accountability and integrate marketing with operational support.
Sales Decline Amid Challenging Retail Environment
Despite the cost progress, RFG faces a tough trading environment. Core Brand Network Sales declined 4.8% in the first 20 weeks of the second half of FY26 compared to the prior corresponding period, largely due to reduced customer counts following café and coffee bakery outlet closures. Same Store Sales also fell 0.8%, reflecting pressure from multiple interest rate hikes, rising inflation, and historically low consumer confidence.
Executive Chairman Peter George emphasised the company's focus on simple, value-led marketing campaigns aimed at reconnecting with core customers and stabilising transaction volumes. These efforts are part of the broader transformation agenda designed to support franchise partners through difficult trading conditions.
EBITDA Guidance Tightened to Reflect Market Realities
Reflecting these dynamics, RFG has narrowed its FY26 underlying EBITDA guidance to a range of $20.0-21.0 million from the previous $20.0-24.0 million. This forecast incorporates the accelerated transformation savings, ongoing retail headwinds, wholesale coffee price increases implemented in March 2026, and contributions from the newly operational Türkiye supply hub.
Mr George expressed confidence that the second half of FY26 will mark an earnings inflection point, with the company entering FY27 on a more efficient cost base and with enhanced marketing and operational alignment. The FY26 results are expected to be released in late August 2026.
Firehouse Subs Launch on Schedule
In a key strategic milestone, RFG is set to open its first Firehouse Subs restaurant in Australia in June 2026 at Westfield Mount Gravatt in Brisbane. This launch follows significant groundwork, including establishing a domestic supply chain for the brand. Lease negotiations for additional sites are progressing, supporting the company’s broader rollout plans and growth aspirations across its core brands.
Bottom Line?
RFG’s accelerated cost savings provide a buffer against tough sales conditions, but the company’s ability to translate transformation efforts into sustained growth remains to be seen as it prepares for Firehouse Subs expansion.
Questions in the middle?
- Will RFG’s refreshed marketing and operational strategies reverse the sales decline in FY27?
- How quickly will Firehouse Subs gain traction in the Australian market following its June launch?
- What impact will ongoing inflation and consumer sentiment have on franchise partner profitability?