In its latest report to the Australian Securities Exchange (ASX) lodged on 3 June 2014, food and beverage company Retail Food Group (RFG) has reported seven consecutive years of Earnings Before Tax and Interest (EBIT) growth since first listing on the ASX 20 June 2006.

RFG’s earnings have seen massive growth in the seven years since its listing, from $9.8 million in the 2006 financial year to $55.9 million. It said its growth in earnings were a product of “resilient business model fortified by astute acquisitions”, which had been boosted by its acquisition of Crust Gourmet Pizza Bar in the first half of the 2013 financial year, as well as earnings from existing brand systems and coffee roasting activities.

The Group’s businesses include Quick Service Restaurants (QSR) Donut King, Michel’s Patisserie, Brumby’s Bakery, bb’s cafe and Esquires Coffee, The Coffee Guy, and non-QSRs Crust Gourmet Pizza, and Pizza Capers. RFG has more than 1,400 franchises across Australia, a number which has steadily increased from the 332 with which it began in 2006. RFG is also roaster and supplier of coffee, roasting in excess of 1.4 m kilograms annually from facilities in Australia and New Zealand.

Growth in all areas

RFG reported that franchise revenue and coffee revenue had continued to grow in consecutive years since the listing.

Franchise revenue grew from $21.1 million in 2006 to $95.6 million in 2013 while coffee revenue grew from $6.2 million in 2008 to $19.7 million in 2013. RFG said coffee revenue represented 22.1 per cent of its franchise revenue and 24.2 per cent of Group EBIT.

Growth pattern to continue

The Company reported that the pattern of growth was set to continue, with total revenue for the first half of the 2014 financial year coming to $64.6million, up 7.7 per cent on the corresponding period in the previous year. EBIT for the first half of the 2014 financial year was $27.4 million, an increase of 8.7 per cent on the corresponding period in the previous year.

RFG said it had a number of initiatives in place to increase growth. These include:

• Michel’s in-store frozen bakery transition to be commissioned in QLD and VIC.

• Donut King and Michel’s digital menu panel roll out

• Donut King digital loyalty app launch

• Brumby’s Bakery introduction of digital merchandising elements

• Launch of Michel’s Espresso coffee excellence

• FY14 new outlet organic growth of about 70 outlets

• Launch of Crust’s ‘Premium Starters’ category

• Pizza Capers relaunch of highly successful ‘Inferno’ product offer

• Execution of other initiatives which fortify market leading ‘Gourmet’ position

• Investment to further realise online and ecommerce engagement with non-QSR brands

• Pizza Capers responsive mobile ordering app

The Group also said it would commission a second Australian coffee roasting facility at Yatala in Queensland, incorporating chocolate blending capability and syrup production. Additionally, RFG said it was commissioning an Australian wholesale coffee division, which would launch RFG proprietary New Zealand brands Evil Child and Roasted Addiqtion into the Australian market.

FY14 Outlook

RFG said it expected to confirm its full year guidance for the 2014 financial year of about 15 per cent on the previous year. It said record organic new outlet growth was also on track with 80 QSR opening and 70 non-QSR.

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