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RFG eyes global expansion

Donut KingThe company behind Donut King and Brumby’s bakeries is focusing on major overseas expansions.

The Gold Coast-based Retail Food Group, which recently acquired Gloria Jeans, wants about 70 per cent of its new outlet growth to come from overseas markets by 2018.

RFG’s executive MD, Tony Alford, says the group, which has a stable of 12 brands, has significant opportunities to expand overseas.

“Our focus is turning to international acquisitions and international brand system opportunities and that is because with the Gloria Jeans and Cafe2U acquisitions, we now have 58 international licensees,” he told AAP.

“For example, Gloria Jeans is licensed in Turkey and in the UAE and those licensees not only have the Gloria Jeans brand system, they also have an appetite to take up our other brand systems.”

He said there was particularly strong interest in its donut franchise, which operates in Australia, New Zealand, Papua New Guinea, and Saudi Arabia.

“The most attractive brand for the international markets is Donut King followed by Brumby’s and, in third place, Crust,” he said.

RFG is establishing a dedicated international division to support the expansion of its brands overseas and has had a management restructure to better manage the growing business.

The retailer, whose other brands include Michel’s Patisserie, Pizza Capers, and Di Bella, is confident of lifting its annual profit and has reaffirmed a net profit guidance of $55 million; up 50 per cent on a year ago.

Alford said on top of increased earnings from recent acquisitions, the group had also accumulated more expenses, including $18.5 million in asset writedowns as it closes corporate offices and removes duplicated systems and facilities.

He said the group was experiencing solid same stores sales growth due to company initiatives and not because of a positive federal budget in May.

“I don’t think there’s any retailers out there saying the budget has resulted in their cash registers ringing anymore,” he said.

“You’ve got a conservative consumer still.”

He said improvements in consumer sentiment no longer resulted in more spending.

“What it does result in is increased savings and we are still seeing evidence of that,” he said.

“However, there was a drastic negative effect from last year’s budget and I don’t think (the retail sector) has really recovered from that.”

Shares in RFG closed 13 cents, or two per cent, lower at $6.36 amid wider market falls.


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