By Frank Chung

Copyright news

Retail Food Group (RFG), took another blow on Friday with the sudden resignation of its chief executive after just two years in the job.

RFG announced the departure “effective immediately” of Matt Marshall in a statement to the ASX on Friday.

Non-executive chairman Peter George will step back in as executive chairman while the board conducts a global search for a new CEO, the company said.

“Since joining RFG, I have been privileged to lead a dedicated team through a period of transformation,” Mr Marshall said in a statement.

“We have redefined our culture to be purpose-led and have relentlessly focused on delivering quality improvements in all areas. These foundations will benefit franchise partners, our team and all stakeholders into the future. I am deeply proud of the progress we’ve made and grateful to the team who have made it possible.”

RFG, the country’s largest franchisor, owns the Donut King, Gloria Jean’s, Brumby’s Bakery, Crust Pizza and Beefy’s Pies brands, as well as Firehouse Subs — with the first location set to open this year — Pizza Capers, Cibo Espresso and Rack ‘Em Bones.

The Queensland-based company has faced a turbulent few years, with “challenging” trading conditions and regulatory woes sending its share price plummeting.

RFG shares have plunged 35 per cent in the past month, and are down 46 per cent since the beginning of the year to trade at $1.50 on Tuesday.

In March 2015, RFG shares peaked at nearly $8.

Last month, RFG reported a statutory net loss after tax of $14.9 million for FY25, down sharply from a $5.8 million profit a year earlier.

The change was driven by a $12.2 million impairment from the ageing Brumby’s brand and restructuring costs — with RFG announcing it was looking to offload the struggling bakery chain it acquired in 2007.

It followed RFG’s decision earlier this year to phase out Michel’s Patisserie and convert remaining locations to either Gloria Jean’s or Donut King stores.

Marketing expert Professor Gary Mortimer from the Queensland University of Technology (QUT) said RFG was in a tough spot with a portfolio of “third-tier players” competing against giants like Domino’s and McDonald’s in categories like pizza and coffee.

“Pizza Capers and Crust, it’s like the third option a consumer will think about when buying a pizza,” he said.

“Gloria Jean’s seems to be a good product but obviously up against the ilkes of McCafe as well. Then you’ve got Donut King — obviously you’ve got to sell a lot of doughnuts to pay for your leasing costs. The value of purchase tends to be quite low — a cup of coffee and a doughnut or muffin.

“So you’ve got brands that aren’t top of mind, you’ve got a franchise model which adds significant costs to owner-operators, then underneath just increasing costs of doing business. We’ve seen the price of coffee double over the last 12 months.”

Dr Mortimer said RFG’s large portfolio presented a similar problem to the collapsed Mosaic Brands, which operated Millers, Rockmans, Noni B and other fashion chains before entering administration last year.

“You had a lot of brands essentially all competing for a similar customer and competing against and essentially cannibalising themselves,” he said.

“The [franchisee] that’s got a Pizza Capers is competing against Crust, Gloria Jean’s competing against Donut King. In a big shopping centre you might have two franchisees competing against each other.”

Dr Mortimer said he would “get rid of those businesses that are directly competing with one another — pick your flagship brand and get out”.

And in the case of the pizza category, RFG should cut its losses altogether, he suggested. “You just wouldn’t play in that space [against Domino’s],” he said.

Mr George, who joined the board in 2018 and served as executive chairman with CEO responsibilities until Mr Marshall’s appointment in July 2023, said the outgoing CEO’s tenure had seen “significant progress … resolving legacy issues and sharpening [RFG’s] focus on core brands with the greatest growth potential — Gloria Jean’s, Donut King, Beef’s Pies, Crust and now Firehouse Subs”.

“The board will commence the search for a new CEO with substantial franchise experience and the ability to build and maintain strong relationships with internal and external stakeholders, including our franchise partners,” he said in a statement.

The company said the departure of Mr Marshall meant no changes to its outlook or priorities, which include expanding its core brands to at least 200 domestic outlets each.

RFG currently operates roughly 1250 outlets across 30 countries, and recorded domestic network sales of $505.4 million last financial year, with 37 new local stores opening.

The company said it had continued to divest the bulk of company-owned sites in older brands so it could concentrate on Firehouse Subs, with plans to open 165 locations over the coming decade, and the booming Beefy’s Pies brand.

RFG was taken to court by the Australian Competition and Consumer Commission in 2022 over claims it sold franchises knowing they were operating at a loss.

While RFG was not made to admit the allegations as part of a court settlement, it was ordered to either repay affected franchisees or wipe their debts in full.

— with NewsWire