Retail Food splurges on coffee, pizza chains
RETAIL Food Group has paid $31 million for mobile coffee franchise Cafe 2U as well as the franchise rights for the La Porchetta pizza restaurant chain in a move to accelerate earnings after booking a 15.2 per cent increase in net profit.
The retail food franchisor, which owns the franchises for chains including Donut King, Michel’s Patisserie, Brumby’s Bakery and Crust Gourmet Pizza, reported a net profit of $36.9m for the 12 months to the end of June, while revenue was up 10.1 per cent to $128.8m.
Chairman Colin Archer described the earnings as “exceptional results achieved in a challenged retail environment”, which he attributed to the acquisition of Pizza Capers and Crust in 2012, with both chains still having significant room for further expansion.
“Neither brand system has reached maturity, thereby affording the company significant potential for new outlet growth,” he said.
RFG is further expanding its presence in fast food, flagging the acquisition of the franchise rights to the Cafe 2U mobile coffee chain and the 70-strong La Porchetta restaurant chain for a combined $31m.
Chief executive Tony Alford said both acquisitions would have an immediate positive impact on earnings per share.
Meanwhile, New Zealand-listed dairy processor A2 Milk reported a net profit of just $NZ10,000 ($8967) for the past financial year, down from $NZ4.1m despite a 17 per cent rise in revenue to $NZ110m, as a slide in the Australian dollar against the Kiwi slashed the value of Australian earnings.
Managing director Geoffrey Babidge said the past financial year had been challenging, amid strong competition in the Australian market and regulatory hurdles interrupting the company’s expansion plans in the Asian baby formula market, while revenue growth in the Chinese and British markets slowed as the company struggled to build distribution and customer awareness.
A2 plans to use profits made in Australia to bankroll its expansion in to Asia, where demand for dairy is outstripping supply and Australian-made product has a strong reputation for safety. The company also flagged an entry to the US fresh milk market in 2015.
Source: The Australian - 29th August 2014
