Drive-Thru coffee has driven Financial Year 2021 (FY21) same store sales growth for Retail Food Group (RFG), the parent company of Gloria Jean’s, Donut King, and Michel’s Patisserie, even as COVID-19 restrictions hurt the Australian retail economy.
Despite a year of COVID-19 lockdowns and trading restrictions, RFG’s same store sales grew 3.2 per cent from FY20 to FY21, with a stand out including Gloria Jean’s Drive-Thru outlets growing 17.8 per cent.
The 2020/21 financial year generated underlying Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $26.9 million, down on the FY20 result of $31.7 million but consistent with consensus forecasts. Statutory Net Profit After Tax (NPAT) for FY21 was $1.5 million, a 136.6 per cent increase on FY20’s statutory loss of $4 million and represented the Group’s first statutory profit since FY17.
The business lines most affected by COVID-19 during the 2020-21 financial year included the 590-store International Division, and RFG’s domestic coffee brands primarily located in major shopping centres within metropolitan New South Wales and Victoria. Despite the metropolitan impact, Gloria Jean’s experienced 6.6 per cent same store sales growth in regional Australia.
RFG Executive Chairman, Peter George, says the FY21 results for the group were creditable and not unexpected given the trading conditions that RFG’s eight retail brands and roughly 750 domestic franchised outlets had to endure.
“The year’s results reflect periodic suppression of customer traffic in the major East Coast cities, store closures, and the challenges experienced by franchise partners who had volatile revenues but significant rental overheads,” Peter says. “These have been tough and unavoidable trading conditions and we believe that hard-working franchise partners, strong brands and ongoing promotional support from RFG has kept the impact to a minimum and built a strong base for FY22. We are cautiously optimistic.”
He adds RFG worked hard during FY21 to engage landlords and negotiate additional rental abatements and deferrals on behalf of franchise partners. The company had also invested in programs to support businesses at the store level, with new brand loyalty programs, product innovations and extensive marketing campaign support.
“Over the past two years we’ve worked hard on becoming a more nimble, consumer-focused organisation and that has been an advantage to us as we’ve responded to changing consumer behaviour during COVID,” Peter says.
He says RFG had also placed itself in a stronger position to respond to the challenges of FY21 by addressing financial and balance sheet issues in FY19 and FY20.
“We have significantly streamlined the company’s business, selling non-core assets and restructuring debt and overheads. It has allowed RFG to better pursue a ‘franchisee first’ business model, investing primarily in those things that drive successful stores: products, brands, marketing and support services,” Peter says.
“An encouraging outcome in FY21 was a 5.7 per cent increase in Average Transaction Value across our domestic network. The bright spots that we see in the FY21 results are largely a product of the ongoing commitment to an agile ‘franchisee first’ approach, which we are pursuing into FY22.”
For more information, visit www.rfg.com.au