Red Rooster, Oporto and Chicken Treat at risk of bankruptcy, submission claims

MORE than 500 Red Rooster, Oporto and Chicken Treat restaurants across Australia could be at risk of bankruptcy, as their owner comes under fire.

MORE than 500 Red Rooster, Oporto and Chicken Treat restaurants across Australia could be at risk of going bust, a report has revealed.

Craveable Brands, who operates the well-known restaurants, and its owner Archer Capital, have come under fire in a Senate inquiry submission.

The submission claimed two Red Rooster outlets in New South Wales, Mt Pritchard and Parklea, have already gone belly-up and many more were on the verge of bankruptcy.

The Franchisee Association of Craveable, formed a year ago “to protect the interests” of Craveable Brands franchisees, submitted to the inquiry, and have claimed the parent company’s high costs and tough operating restrictions have put many restaurants under strain.

“Many franchisees are in distress due to the poor business model of Craveable,” the submission claimed.

Owners of Oporto restaurants are also allegedly suffering. Picture: Google

It goes on to highlight that hefty costs and tough operating conditions have backed many franchise owners into a corner.

“The common complaint for Red Rooster chicken has been ‘it is the same chicken, which is available at the local supermarket for half the price’,” the submission claimed.

“The Franchisor has opened both brands within proximity to each other putting the franchisee at direct disadvantage.”

Exorbitant cost of goods also puts the franchisees at a competitive disadvantage, the submission claimed.

“Red Rooster (cost of goods) is suggested to be 30 per cent. This is significantly higher than our competitors, which has a direct impact on store profitability,” it claimed.

“Beverages can be bought at much cheaper prices ... at local supermarket. It begs the question ‘where is national purchasing power gone for Craveable?’.”

Inflated prices for packaging also came under fire.

Craveable Brands has also allegedly punished stores that have resisted introducing home delivery, the submission claimed.

It said the service was not disclosed as part of the business model when stores were sold, and those who didn’t sign up were made to miss out on marketing and media spend.

Just one year ago, the operator boasted of the company’s return to profitability and its investor appeal.

At the time, Geoff Dart of DGC Advisory said Red Rooster’s product offering was tired and outdated.

“I don’t think you will see them in five years, they will be gone,” Mr Dart predicted.

Chicken Treat is primarily based in Western Australia, with two restaurants in Queensland.

A Craveable Brands spokesperson said they had never been contacted by the franchisee association, Fairfax media reported.

“We don’t believe the submission reflects the views of the vast majority of Craveable franchisees,” the spokesperson said.

“It contains several inaccurate claims that omit vital context about the operation of the broader franchise system. In a business with more than 400 franchisees across three brands there will be a range of experiences, but our system is healthy and growing and we work closely with our franchisees to support their businesses.”

The trio of restaurants previously run by Quick Service Restaurant Holdings, which rebranded to Craveable Brands in 2017.

Originally published as Red Rooster, Oporto and Chicken Treat at risk of bankruptcy, submission claims