National bakery chain Michel's Patisserie faces a food safety investigation after deliberately selling batches of chocolate cakes, birthday cakes and edible decorations to customers months after their use-by date.
In a series of memos, obtained by The Age and The Sydney Morning Herald, the chain's owner, Retail Food Group (RFG), instructed Michel’s franchisees to ignore expiry dates on packaging and adopt a new shelf-life extension date, ranging between two and six months.
The move has caused an uproar among franchisees, who are forced to buy RFG products under the terms of their agreements. Most of the products are delivered frozen and then thawed out and sold to customers.
Franchisees complain that sales have tumbled in recent years as the price of products increased and the quality fell when RFG moved to a frozen food model from freshly baked cakes, rolls and pies.
A Michel's cake featuring coloured tiles that had its expiry date extended.
In one memo, franchisees were told that coloured, edible plaques with a use-by date of January 15, 2019 had been extended to July 15.
"If you receive coloured plaques from this batch number that still denotes the original January expiry date, please disregard this and ensure staff are aware of the new expiry date," the memo says.
Other memos extend the use-by date by three months on chocolate cakes, including tortes and birthday cakes.
Products including vegetable, and spinach and feta scrolls had their best-before date extended by two months on the original packaging.
The extensions have triggered the NSW Food Authority to refer RFG for investigation to its counterpart in Queensland, where RFG is headquartered.
A separate body that sets food standards, Food Standards Australia New Zealand, told The Age and The Sydney Morning Herald that food should not be eaten after the use-by date for health and safety reasons.
RFG acknowledges that there have been challenges in the Michel's network and is actively working to improve these.
RFG statement
It said it was illegal to sell a product after the use-by date, adding that while it was legal to sell foods that had passed a best-before date, the food may have lost some quality.
RFG refused to answer questions about the issue but said in a statement that any date extension was considered only after consultation with suppliers.
"RFG takes its food standard obligations extremely seriously and any potential breach of such standards would be investigated thoroughly alongside our suppliers," it said in a statement.
It said during the week it had met with franchisees to discuss ways to improve the network, including how RFG would source, develop and deliver products to franchisees.
"RFG acknowledges that there have been challenges in the Michel's network and is actively working to improve these," it said.
One of the suppliers listed on the memos that calls on franchisees to extend the use-by date of cakes, Homebush Cakes, failed to respond to questions.
A spokesperson for the NSW Food Authority said it had started an investigation into Homebush Cakes concerning the extension of use-by dates.
It is the latest scandal to hit RFG, which was singled out for special mention in a damning parliamentary report into the $170 billion franchise sector.
The March report said RFG’s success relied on extracting profits from its franchise systems with hugely deleterious results for franchisees, which operate under the Michel’s, Gloria Jean's, Pizza Capers, Brumby’s and Donut King banners.
It recommended the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission and the Australian Taxation Office investigate behaviour including possible insider trading, breaches of market-disclosure obligations and tax avoidance.
Wayne Hong, a former Michel’s franchisee who closed his store last year and suffered a massive financial loss, said he lodged many complaints to RFG about the poor quality of products.
Former Michel's Patisserie franchisee Wayne Hong in Melbourne on Friday. Credit: Eddie Jim
He said cakes regularly arrived at stores damaged, chocolate ganache cakes were cracked and the taste of some cakes was bad. "It was really dodgy," he said.
A message sent to a franchisee Whatsapp group about the issue resulted in a series of photos of cakes and other products taken in the past week after being delivered with human hairs stuck in the icing, sausage rolls broken or over cooked, one cake frozen and refrozen, split pies and chocolate cakes with icing stuck to the box, indicating problems with the quality of delivery.
Insiders claim the expiry time shift was an act of desperation by RFG to avoid writing off old stock, which would have an adverse impact on its finances.
Sausage rolls delivered to a Michel's franchisee.
One said RFG had thrown out hundreds of thousands of dollars worth of expired stock in recent years.
The insider said RFG ordered products from suppliers at agreed quantities and prices. The products were frozen and sent to distribution centres, then delivered to franchisees once an order was placed.
“They are now just extending the shelf life and forcing us to sell expired product, which is preposterous for a company that deals with food. I was going to ask a government agency about the legalities of this but was concerned about repercussions,” one franchisee said.
Another franchisee said store owners were being forced to buy old cakes and rolls at full price and each product sold attracted a royalty fee and a marketing levy.
"RFG could try to do right by their franchisees and reduce the cost of goods to entice us to purchase stock nearing its expiration date, but instead they don’t discount the product and force us to sell out-of-date stock. We cannot return the products, as the distributor refuses to issue a credit given the shelf-life extension," the franchisee said.
Illustration: Matt GoldingCredit:
In one memo, RFG directs franchisees to extend the use-by date on cakes, including shimmer tortes and an RFG happy birthday cake from April to July 2. A memo sent on March 15 says oven-roasted vegetable scrolls and spinach and feta scrolls with a best-before date of April should be extended to June. The memo says "the extension is on the condition that the products have been stored at the correct frozen temperature and handled correctly".
Some memos say RFG has received a shelf-life extension from the supplier based on their shelf-life testing protocols. Others have qualifications such as the extension is valid only if the cakes have been kept at or below minus 15 degrees, as stated on the supplier’s specification, for the duration of the shelf life to date.
A franchisee who leaked the memos said: "Ultimately we just want to be able to operate our business with pride in our product and our brand, and be able to make a comfortable living for the hard work we do week in and week out. But we have no faith or loyalty to RFG, it has been burnt out of us, so we are happy to help in any way to have more of their immoral conduct come to light."