Cafe and restaurant franchise company Retail Food Group Limited (RFG) has sold its dairy processing and manufacturing subsidiary Dairy Country to New Zealand-owned Fonterra Brands (Australia).
RFG executive chairman Peter George said in a statement the move is part of the company’s 18-month restructure and transformation program. The company is focusing on its core franchising and coffee businesses as well as applying a new franchise system across its eight brands.
“Our focus must be on our franchisees. We are only as strong as our franchisees. This is part of our ongoing restructure that has included the sale of Hudson Pacific Foodservice earlier this year. The sale is part of our strategic decision to dedicate resources to increase our franchisees profitability and sales,” said George.
“In addition, we are providing additional financial and management support to our franchisee community, especially throughout Covid-19, in readiness for the economic turnaround that will ultimately occur. Each of RFG’s brands are now better able to be resilient during depressed economic conditions and the new ‘Covid normal’.”
He added that the company is in “a better position” than many retail groups, because its franchisees have the support systems to do better.
“Net proceeds from the sale will be applied to the extinguishment of Dairy Country’s working capital facility (around $13.7 million) and the balance will be used to pay down debt. This will free up cash in the short to medium term and provide RFG further capacity to respond to the challenges of Covid-19,” he said.
The deal includes Dairy Country’s processing and packaging plants in Campbellfield and Tullamarine in Victoria, along with related services, intellectual property and the trademark for the Dairy Country brand. Most of its permanent employees will be transferred to Fonterra facilities in the state.
RFG-owned businesses including Donut King, Michel’s Patisserie and Gloria Jean’s offer impulse or low cost purchases, placing them in a strong position during the Covid-19 pandemic. George said Brumby’s Bakery offers food and staple bakery range while its pizza companies Crust and Pizza Capers have no-contact delivery services.