RFG to axe re Michel’s cafe brand after class action settled

Retail Food Group is moving to retire its troubled Michel’s Patisserie brand less than a year after settling a class action brought by its former and current franchisees.

Last drinks for Michel’s cafe chain.

Retail Food Group is moving to retire its troubled Michel’s Patisserie brand less than a year after settling a class action brought by its former and current franchisees.

Gold Coast-based RFG said it had been working with Michel’s franchisees to convert their cafes to another of its brands “as these present the best opportunity for their future.”

RFG, which also operates the Brumby’s Bakery, Donut King, Gloria Jeans and Pizza Capers brands, has 19 Michel’s outlets across NSW, Queensland and Victoria.

Michel’s has struggled to rebuild its reputation after franchisees were controversially supplied with frozen goods instead of fresh by RFG’s former management in 2015 and 2016 resulting in customer complaints and a significant drop in quality of the food.

“This process (converting from the Michel’s brand) will take place in collaboration with our franchise partners, with the timing of any conversions based on the individual circumstances of each partner to ensure the best outcome for them and their customers,” said RFG.

“We continue to support those franchise partners consistent with the terms of their existing Michel’s Patisserie franchise agreements.

“We are working with all Michel’s franchisees in connection with the conversion opportunity. That includes an offer of financial and other support.”

Michel’s Patisserie franchisees encouraged to shift to other RFG brands.

RFG last year entered into a binding deed to settle a class action filed by some of its former franchisees. The settlement involved a dismissal of the proceeding without RFG making any admission or payment, the company said.

However, as part of the agreement, RFG will see some franchisees in the class action released from historical debts alleged in the proceeding. The company affirmed this move had no impact on its annual financial results.

RFGs ‘fresh to frozen’ policy implemented between 2015 and 2016 required some franchisees to drive long distances to collect frozen cakes they would need to decorate themselves, and during a period of heavy cost-cutting at the group there were complaints about quality.

RFG has recovered from most of its past challenges, which include losses and a probe from the Australian Competition & Consumer Commission over its dealings with its franchisees.

The ACCC accepted a court-enforceable undertaking from RFG in 2022 that will see the company pay $5m to Michel franchisees who paid levies into a marketing fund between 2012 and 2017. RFG said its cafe, coffee and bakery operations, including Brumby’s and Gloria Jeans, provide almost 90 per cent of its revenue. The company said the operations had performed well in tough economic conditions

In the year to June 2024, it generated a $5.8m net profit after generating a loss in the previous corresponding period.

RFG shares have slumped 21 per cent to $2.02 so far this year.

Originally published as RFG to axe re Michel’s cafe brand after class action settled