Retail Food Group to cut product range and distributors in an effort to stem losses

AFTER its worst eight months on record, RFG has unveiled its latest weapon in its arsenal as it looks to get itself back on track.

Richard Hinson, the boss of troubled franchise operator Retail Food Group, is planning to tender for the company’s food distribution business.

INVESTORS in struggling food franchisor Retail Food Group have been buoyed by news the Gold Coast company will tender for its food distribution business.

Shares rose 9.8 per cent to 44.5¢ after CEO Richard Hinson said the company wants to cut the number of distributors from 16 to two, and the number of products from 15,000 to 3000.

Since his appointment in May, Mr Hinson has moved to cut costs to help franchisees. It has come after a flood of criticism over its treatment of financially stressed franchisees, with claims that it prioritised profits for shareholders over the livelihoods of franchisees.

RFG operates a number of brands including Brumby's Bakery.

Since December, RFG’s share price has plunged more than 90 per cent since last year, with the company warning its underlying net profit will fall 54 per cent in the past financial year.

Mr Hinson said the cut to its range of products, which are delivered to franchised stores including Brumby’s Bakery, Donut King, and Michel’s Patisserie, would enable it to leverage the group’s buying power, cut costs and improve product quality.

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The tender process is still six months away, with offers from large food service companies expected to be finalised by the end of the year.

Mr Hinson gave examples of the current complexity involved, including the company’s eight current suppliers for banana bread across Australia.

Andre Nell headed Retail Food Group until May, when Richard Hinson took over. Picture: Richard Gosling

An RFG spokesman said the consolidation of its distribution operation is not likely to effect food wholesaler and distributor Hudson Pacific.

“Hudson’s customer base is hinged largely on independent food services and is not dependent on RFG’s franchise business as the core of it’s business model,” he said.

The news comes as RFG attempts to offload its Molendinar properties, which were once earmarked for the company’s global headquarters.

RFG has two lots, comprising 4 Industrial Ave and 385 Southport-Nerang Rd, on the market, with the freehold for sale on the former and the leasehold available on the latter, which is State Government land.

RFG is believed to have spent millions cleaning up the sites, including removing asbestos from the former Bulletin building.

CBRE’s David Corke and Luke Brechin are marketing the properties.