Australia’s multi-brand retail food company Retail Food Group (RFG) is planning to close nearly 200 retail outlets in the country by the financial year 2019 due to a lower shopping centre performance and unsustainable rent.
The decision to close the retail outlets was announced last week in RFG’s half year report.
After conducting a business-wide review, the company decided to focus on the quality of the domestic franchise business.
RFG operates a wide range of franchises in the country including Gloria Jean’s Coffee and Pizza Capers, Donut King, Crust Pizza and Michel’s Patisserie.
RFG managing director Andre Nell said: “We have had to make some tough decisions about our business model, our franchise network and the value of some of our assets.
“The key to improving our performance is to simplify what we do. We have all the assets we need to deliver our diversified business strategy – now we need to make sure we make the best use of those assets.
“The actions we are taking now will secure a sustainable long-term future for the company and our franchisees’ businesses, and drive future value for our shareholders.”
The company also intends to take a decisive action to address its under-performance and focus on growing a stronger balance sheet.
As a result of these actions, the company has decided to stop the dividend payments with an immediate effect, and the Company’s dividend payout ratio will be reassessed by the Board at an appropriate time in the future.
Nell further added: “RFG’s future profitability and growth is directly linked to the health and sustainability of its franchise network, and it is clear from the review process that RFG needs to reset its business model and enhance its support to franchisees, including accelerating the delivery of initiatives that increase their revenues, reduce operating costs, and provides them with more ‘hands-on’ assistance in the field.”
RFG, which has headquarters in Queensland, Australia, is reported to be one of the largest multi-brand retail food franchise firm that supplies coffee products across the country.