Donut King, Gloria Jean's see improved trading as restrictions ease
The company is “cautiously optimistic” that this will improve in the next weeks.
ASX-listed Retail Food Group (RFG) said trading conditions experienced by its domestic franchise network were “gradually improving” as restrictions due to COVID-19 further ease.
RFG executive chairman Peter George said the group observed “increased numbers” in customers starting to return to shopping centres.
“This trend was best evidenced by recent trading data for the Company’s Donut King, Gloria Jean’s and Michel’s Patisserie networks where customer count declines versus the previous corresponding period had approximately halved since a peak decline exceeding 50% during the reporting week ending 2 April 2020”, he said.
George noted the franchisor was buoyed by the reopening of 60 outlets that were temporarily closed, cautiously optimistic that trading conditions “will continue to improve in coming weeks.”
“Increasing traction has also been observed in terms of procuring rental relief for franchisees, with concessions having been obtained in respect of c.290 outlets, predominantly in relation to April and May rental periods. In many other cases negotiations are advanced, and we anticipate that this process will be an ongoing one as the pandemic period persists and a reasonable recovery period is provided for,” he added.
The group’s international franchise network, meanwhile, was described as “significantly impacted” by COVID-19 restrictions.
Whilst 126 mobile units had recommenced operations within the United Kingdom and New Zealand markets, 350 traditional outlets remain closed, with a further 157 restricted to takeout only.
RFG anticipates that many of those outlets which have temporarily closed will start to reopen throughout June as local government restrictions ease, whilst some 20 outlet closures are considered permanent.
George noted that trading conditions remained “challenging”, with the company having anticipated the continuation of measures implemented to support its franchisees to remain in place at least for the remainder of their financial year.
“The strategies previously advised to the market regarding the Company’s efforts to reduce its cost base, including restructure of RFG’s wholesale coffee operations which was now substantially complete, provide the Group with increased scope to further support its franchisees during these unprecedented times”, he said.
