Retail Food Group brews $14.7m turnaround, plans rebrand to 'Savora'

The profit result is RFG's highest in seven years, of which four were loss-making and included major setbacks from litigation, franchise closures, reputational damage from public franchisee complaints, and a COVID share price slump from which the group has never recovered. 

With its shares down 42.5 per cent on highs achieved in late 2019, but amidst a return to profitability with domestic network sales up slightly at $504 million, RFG is looking for a different flavour with the proposed name 'Savora Brands'.

The board is savouring the opportunity to refresh the corporate image of RFG, which is known for the franchise brands Donut King, Gloria Jean’s, Brumby’s Bakery, Michel’s Patisserie, Pizza Capers, Crust Gourmet Pizza and Di Bella Coffee.

The proposal will go to a shareholder vote at an annual general meeting (AGM) later this year.

"The change marks an important milestone in our company’s evolution, reflecting our commitment to a clear purpose: to strive for positive customer experiences in everything we do," RFG said in a statement to the ASX.

"The new name, Savora Brands Limited, symbolises our forward-looking vision and dedication to building on our strong retail brand heritage while pursuing growth and innovation."

The proposal follows name changes for other ASX companies that have been beset by controversy, such as IOOF rebranding to Insignia Financial (ASX: IFL) in 2021 and Ardent Leisure changing its name to Coast Entertainment (ASX: CEH) late last year. 

The move comes almost four months after RFG settled a class action brought by former and current Michel's Patisserie franchisees, and just over a year after Matthew Marshall was promoted to the role of chief executive officer (CEO) after leading the retail division through one of the company's most turbulent periods.

"In a tough macro environment, we are pleased to have delivered on the first year of our growth strategy whilst building organisational capability and a customer led culture," Marshall said in today's result.

"We successfully delivered the acquisition of Beefy’s Pies, the launch of our second ecomm platform Donut King Occasions, deployment of new customer facing technology solutions and network growth.

"We will continue to focus on the quality of execution in our core brands and unlocking profitable growth opportunities in the year ahead."

The company opened 92 new outlets in FY24, compared to 69 in the previous financial year, which the board notes is the first time RFG has seen net outlet growth in recent years.

RFG has some 1350 trading outlets of which the majority are franchised, with 131 franchises renewed in FY24. The company store portfolio more than doubled to 63 outlets by the end of June, including 10 Beefy's outlets.

When RFG acquired iconic Sunshine Coast pie brand Beefy's for $10 million it had  nine stores, but in June a new location was opened in Ballina, NSW.

The group plans to grow the Beefy's store footprint to 15 within the next 12 months, after the brand contributed $1.7 million to underlying earnings following the December acquisition, or around 6 per cent of total underlying EBITDA of $29.2 million.

A large chunk of the $14.7 million bottom-line turnaround can be explained by an $11.4 million reduction in onerous lease provisions, achieved through the re-opening, exiting, surrendering and negotiating with landlords on legacy lease liabilities.

Overhead expenses were up 11 per cent at $51.9 million and underlying gross profit margins remained stable at 70.6 per cent. 

At 28 June, RFG had unrestricted cash on hand of $18.3 million and net debt of $6.2 million.