RFG reported a net outlet growth of +44 in the first six months of FY24, marking a transition from turnaround to growth.
Domestic Network Sales grew by 4.7%, with Same Store Sales (SSS) increasing by +1.8% on the prior comparative period (PCP).
The company achieved an Underlying EBITDA of $15.4M, up 4.0% on PCP, with guidance for FY24 set between $28M - $32M, indicating an 11% - 26% increase on the previous year.
The Café, Coffee, Bakery (CCB) segment showed resilience in tough economic conditions, contributing approximately 70% of Group Network Sales, while the Quick Service Restaurants (QSR) segment faced challenges due to competitor discounting.
RFG expanded its Board with the appointment of Jacinta Caithness, enhancing franchise strategy expertise.
70 new outlets were opened in 1H24, significantly up from 29 in 1H23, with newly opened outlets performing 22% better in Average Weekly Sales than those closed.
The launch of the virtual brand, Rack 'em Bones BBQ Ribs, in FY23 has shown rapid growth, with sales up 141% on the 30 June run rate, and expansion plans include a direct to customer e-commerce site in 2H24.
The acquisition of Beefy’s Pies was completed, contributing EBITDA of $0.1M in 19 days, with early synergies and growth opportunities identified.
The company's corporate store portfolio expanded quickly, from 31 outlets at the end of June 2023 to 56 by the end of December 2023, though this rapid expansion created short-term profitability challenges.
Underlying Revenue increased by 2.2% on 1H23 and 7.8% on 2H23, with stable underlying Gross Profit margins despite a greater mix of corporate stores.
Significant progress was made in reducing onerous lease provisions by $5.8M, contributing to an improvement in EBITDA margins and a statutory NPAT of $5.1M, a turnaround from a loss in 1H23.
The balance sheet strengthened with an increase in the senior secured debt facility by $20M to fund acquisitions and strategic growth, alongside an improvement in operating cash conversion to 79% in 1H24.
RFG is focusing on growth strategies including non-core brand consolidation, launching new incentive plans for franchise partners, and expanding its outlet portfolio.
This announcement is a summary of the company approved ASX announcement on 20/2/2024.