Retail Food Group Reports 10.7% Revenue Drop and A$20.3m EBITDA in FY26

Profit Return Despite Revenue Pressure

Retail Food Group (ASX:RFG) navigated a challenging FY26, reporting a 10.7% decline in revenues to A$127.9 million. However, the company swung back to profitability with a statutory net profit of A$1.1 million, a marked improvement from a loss of A$14.9 million the previous year. This turnaround was underpinned by a strategic transformation program focused on cost rationalisation and operational efficiencies.

Underlying EBITDA dropped 31.4% to A$20.3 million but remained within the company's guidance range of A$20.0-21.0 million. Notably, the second half of FY26 saw a 20.9% uplift in underlying EBITDA compared to the first half, signaling emerging benefits from the transformation initiatives.

Strategic Reset and Brand Focus

The company continued its strategic reset, closing 35 outlets since December 2025, primarily low-performing and non-core stores, resulting in a net reduction of 29 domestic outlets to 665. Core brand network sales declined 1.7% to A$476.0 million, with a 0.7% decrease in same-store sales reflecting ongoing macroeconomic pressures and cost-of-living impacts on consumer spending.

Retail Food Group’s portfolio remains anchored by its core brands including Gloria Jean’s, Donut King, Brumby’s Bakery, Crust Gourmet Pizza, and Beefy’s Pies. The company’s focus on strengthening franchise partner profitability is evident in initiatives such as the rollout of the Glorange store refurbishment program at Gloria Jean’s, which delivered a 19% average uplift in sales during the first eight weeks post-refurbishment.

Firehouse Subs Launch and International Expansion

FY26 marked the Australian debut of Firehouse Subs, with the first store opening in Brisbane’s Westfield Mount Gravatt in June. The launch set a new international record for the brand with over 750 transactions served on the grand opening day, surpassing previous benchmarks by more than 50%. The company targets four stores by December 2026 and 15 stores by December 2027, underpinning its expansion ambitions in the Quick Service Restaurant segment.

Internationally, the new Türkiye roasting, supply, and support hub commenced operations in February 2026, enhancing service capabilities for master franchise partners across the region. The hub has already processed orders with 68% utilizing the new road freight option, reducing supply chain complexity and freight times.

Balance Sheet and Cash Flow Stability

In February 2026, Retail Food Group refinanced its senior debt facility with Washington H. Soul Pattinson & Company Limited, securing a 19-month, A$41.2 million facility maturing in August 2027. This refinancing included an additional A$7.5 million drawdown to support growth initiatives and transformation efforts. The company ended FY26 with unrestricted cash of A$14.4 million and net debt of A$26.8 million, maintaining compliance with all debt covenants.

Operating cash flow declined to A$9.3 million in FY26, impacted by first-half headwinds including transformation costs and strategic reset cash outflows. However, the second half saw a significant rebound to A$7.4 million, driven by working capital improvements and cost savings.

Leadership and Governance Developments

Following the completion of key transformation initiatives, the Board has resumed its search for a new CEO to lead Retail Food Group’s next phase of growth. Executive Chairman Peter George continues to oversee operations during this transition. The company welcomed three new non-executive directors in FY26, bringing diverse skills to support the refreshed brand-aligned operating model designed to enhance franchise partner engagement and accountability.

Outlook and Investor Considerations

Retail Food Group enters FY27 positioned to build on the momentum from 2H26. The company expects franchise partner unit economics to improve through operational and marketing enhancements, with gross profit margins benefiting from recent wholesale coffee price increases and stabilizing input costs. Cost-out initiatives targeting A$5-7 million in savings are planned for FY27, alongside continued rollout of Firehouse Subs stores.

Early FY27 trading has seen a modest 2.6% decline in core brand network sales, primarily due to ongoing network rationalisation, while same-store sales dipped 0.4%. The company’s back-to-basics marketing approach aims to support recovery and growth in key brands.

Investors should watch how effectively the company manages the balance between network optimisation and growth, the pace of Firehouse Subs expansion, and the delivery of cost savings to underpin sustainable profitability.