Speaking to investors at RFG’s Annual General Meeting on Thursday, Nell said Gloria Jeans would shift its customer proposition to focus on fast casual dining, including things such as all-day breakfast and fresh grab and go options.
Overall revenue for RFG was up 27 per cent to $350 million during FY17 while underlying EBITDA was up 12.1 per cent to $123.4 million. Underlying NPAT was up 14 per cent to $75.5 million.
“Consumer tastes and trends evolve, elevating coffee as a specialty product with a devout following focused on bean provenance, roasting processes and the skills necessary to achieve the perfect cup of coffee,” Nell said.
“Complementing this activity is the brand’s entry into fast casual dining, with an all-day breakfast menu and cafe offering including ‘made in store – fresh is best’ grab and go options and new ‘hero’ products,” he continued.
An unspecified number of pilot stores will launch domestically in the third quarter of FY18 before a broader roll-out thereafter. RFG’s coffee division posted FY17 EBITDA growth of 9 per cent to $40.8 million.
However the division has seen sales recently struggle, with Gloria Jeans, Cafe2U, Coffee Guy and It’s a Grind booking a combined 1.6 per cent decline in same-store sales in year-to-date (YTD) trading domestically.
The result was the worst of RFG’s retail franchise divisions, with total same-store sales up 0.7 per cent YTD. The group’s QSR division, Pizza Capers and Crust saw same-store sales up 2.7 per cent in what Nell said was a highly competitive market increasingly characterised by online service providers.
In RFG’s bakery division, Donut King, Brumby’s Bakery and Michel’s Patisserie same-store sales increased by 1.1 per cent. Nell said first half domestic franchise division performance is expected to be lower than the prior corresponding period, and that a cautious view was being taken on the full year. Despite that, Nell said the 6 per cent net-profit-after-tax guidance previously provided by the company stands.
“RFG retains an optimistic outlook despite the challenging domestic retail market, with domestic franchise division performance anticipated to be weaker than originally forecast, offset by new business gained across our other divisions, largely commencing in 2H18,” Nell said.
On the group’s global coffee ambitions, Nell said the establishment of roasting infrastructure to underpin hub platforms in Asia and Europe will complete its international strategy, tying its Aussie, US, New Zealand and soon to commence Middle East operations together.
This story was first published on Inside Retail.