Donut King owner rebounds from crippling trade blow
DONUT King franchisor Retail Food Group says there are signs customers are coming back to its stores following steep 50 per cent declines in late March and early April.
The Robina-based company, which in late March stood down or reduced the hours for a majority of its 500 staff, provided a market update this morning to investors.
It comes as the Australian Competition and Consumer Commission prepares to hand down the results of its investigation into RFG next month for possible breaches of Australian Consumer Law and the Franchising Code of Conduct relating to alleged mistreatment of franchisees.
RFG this morning said trading across its Australian network was gradually improving as Covid19 restrictions were eased.
Executive chairman Peter George said customers were starting to return to shopping centres in greater numbers and there was "limited scope" for people to dine in.
"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.
Mr George said 60 stores that had temporarily closed following COVID-19 restrictions had now reopened and he was "cautiously optimistic" trading conditions would continue to improve.
Thirty stores remain closed.
"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."
The company previously criticised landlords for not offering rental relief in an early April market update.
RFG said its international network remained impacted by Covid19 with 350 outlets still closed and 157 restricted to takeaway only.
However, 126 mobile coffee stores had resumed trading within the UK and New Zealand.
"It is anticipated that many of those outlets which have temporarily closed will start to reopen through June as local government restrictions ease, albeit c. 20 outlet closures are considered permanent."
Mr George said the company's strategy to reduce costs, including restructuring its wholesale coffee operation, would provide scope to offer more support to franchisees.
Shares were steady at 7.2 cents this morning.
Originally published as RFG rebounds from crippling trade blow