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Struggling franchise operator Retail Food Group (ASX: RFG) has wasted no time in putting the wheels in motion for a major restructuring flagged last week, with group chief executive officer Richard Hinson resigning after just six months in the job.
Hinson started heading up the company's embattled Australian franchise operations in January before assuming the role of group CEO in May, replacing Andre Nell after the company failed to pick up from a battering by the media and investors.
The man who has been tasked with the company's turnaround, executive chairman Peter George, will assume CEO responsibilities for the time being.
RFG, which operates food franchises such as Donut King, Gloria Jean's Coffee and Pizza Capers, Crust Pizza and Michel's Patisserie has been in the news for all the wrong reasons ranging from disgruntled franchisees and concerns over its business practices, including its level of disclosure to new franchisees.
"Under Richard's leadership, relationships with franchisees have improved and a range of actions have been taken to stabilise the business and improve performance," George said.
"Richard has driven positive change at RFG, and on behalf of the Board, I would like to thank him for his efforts during the early stages of the turnaround and wish him well in his future endeavours."
In parallel with the restructuring, RFG plans to renew its focus on serving franchise and non-franchise customers through brand promotion, product innovation and superior service.
The group had a market capitalisation of more than $1 billion at the end of 2016 but is now languishing with a worth of under $70 million.
RFG capped off FY18 with a $306 million bottom-line loss, it's first annual loss in 12 years as an ASX-listed company. The result came on the back of $402.9 million in impairments related to goodwill and store closures.
The group has undertaken a comprehensive review of its operations, which it says could lead to the closure of 250 underperforming stores across its network.
RFG has conceded it is facing hurdles in securing new franchisees as a result of the negative publicity received.
The FY18 underlying profit of $33.3 million was 56 per cent lower than a year earlier, although group revenue rose seven per cent to $374 million.
While RFG was rocked this year by potential class actions on behalf of shareholders, a class action on behalf of franchisees was dropped in July after the law firm representing them failed to secure litigation funding.
Dividend payments have been suspended as part of the review process and to strengthen the balance sheet.
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