Richard Hinson, a former Metcash state manager who had only joined the business as Australian CEO in January, will serve as RFG’s new group chief, effective immediately.
He will replace managing director Andre Nell, who left the business on Monday after presiding over a period of unprecedented turbulence for the business, including several high-profile media scandals late last year.
RFG’s share price has declined more than 80 per cent in the months since allegations of unscrupulous business practices driving franchisees out of business surfaced in the media. Hinson will work with Di Bella Coffee chief Darren Dench and CFO Peter McGettigan to urgently implement the findings of a recent strategic review, which occured in the wake of the scandals last year.
This will include improving the performance and sustainability of RFG’s franchise network, simplifying its operations as well as improving product range and quality over the next 12-18 months.
Announcing the appointment on Tuesday morning, RFG chairman Colin Archer claimed there were green shoots appearing in the franchisor’s domestic business since Hinson joined at the start of the year.
“[Hinson] is gaining the confidence of our franchisees and has restored some momentum to the business by delivering immediate benefits and focusing on longer term strategic plans for each brand system,” he said.
RFG, which owns the Gloria Jeans, Donut King, Crust Pizza and Michel’s Patisserie brands, has seen its financial performance wane in the wake of the scandals, reporting an $88 million interim loss in March.
Its domestic coffee business has been struggling for some time, amid disruption from new competitors and unfavourable rents in legacy shopping centres. Hinson said in a statement on Monday that RFG’s core business remained “fundamentally sound” and that work was being done to improve franchisee profitability.
“We are revitalising the network to focus on our customers first; improving performance, driving innovation and improving communication and transparency with our franchisees,” he said. “This is a 12 to 18-month turnaround of the RFG business.”
RFG said on Monday that it has already begun work on improving its business since February, delivering franchisees reduced cost of goods, renewal and store fees. It also said it was kicking off a range of improvement initiatives within its network under the new senior executive team, including new products, supply chain improvements, a group customer loyalty program and other promotions.
Hinson’s apparent right hand Dench joined RFG amid the unfolding of the scandals last December and has previously held senior positions at Colgate, Mars, Ferrero and Lavazza. Hinson will be paid a fixed salary of $600,000 a year, with $198,000 in potential annual bonuses.