Retail Food Group (RFG), the Australia-based operator of Gloria Jean’s and Donut King banners, is planning to close 250 domestic stores by 30 June 2019.
The company has announced this decision after it reported a statutory loss of $306.7m for the financial year ending 30 June.
According to the company, the loss was impacted by various factors such as difficult retail trading conditions, domestic store closures, effectiveness of tactical initiatives, decline in new store growth and investment in business turnaround initiatives.
As part of its business-wide review efforts in March, RFG identified around 160 to 200 domestic stores as unsustainable for the business.
High market rents and shopping centre performance are other factors that forced the company to make this move.
By the end of next financial year, RFG is estimating to close around 250 domestic stores, including 123 domestic stores closed in the second half of this year, or end their leases.
The company is also currently planning to seek improved rental outcomes where possible, as well as minimise store closures and work with affected stakeholders.
RFG chief executive officer Richard Hinson said: “While RFG’s performance in FY18 has been disappointing for the company and its shareholders, we are beginning to realise opportunities to better capitalise on the scale and scope of our operations, to support a more sustainable business model for the Group and our franchise customers.
“These initiatives include streamlining our organisation and supply chain so that we deliver quality products for our franchisee customers at prices that better allow them to compete successfully and profitably in challenging retail trading conditions.”
During the financial year 2018, the company’s international franchise network opened ten new locations and signed seven new master franchise agreements for Donut King and Crust in the UK as well as for Gloria Jean’s in Germany.