Retail Food Group Limited · ASX:RFG
Retail Food — FY2023 Earnings Presentation
50 slides from Retail Food's earnings presentation, Aug 23, 2023
Slide 1: FY23 Results Presentation
Retail Food Group Limited Level 4, 35 Robina Town Centre Drive Robina Qld 4226 23 August 2023 FY23 Results Presentation Please find enclosed for release to the market Retail Food Group Limited’s FY23 Results Presentation. This announcement has been authorised for release by the Board of Directors. E
Slide 2: FY23 Results Presentation
RETAIL FOOD FY23 RESULTS PRESENTATION . 5 . GROUP
Slide 3: Disclaimer
DISCLAIMER This Presentation contains summary information about the current activities of Retail Food Group Limited ACN 106 840 082 and its subsidiaries (RFG, the Company or Group) as at the date of this Presentation, unless otherwise stated. The information in this Presentation is of a general natu
Slide 4: Executive Chairman quote on turnaround
FY23 RESULTS PRESENTATION “The heavy lifting in terms of the turnaround has been accomplished. We have a stable earnings base and a stronger balance sheet which, together with the resolution of legacy regulatory issues in December 2022, provides a firm platform to pursue growth opportunities” Peter
Slide 5: Key Highlights, FY23 Financial Performance, Strategy & Outlook
FY23 RESULTS PRESENTATION 1. Key Highlights 2. FY23 Financial Performance 3. Strategy & Outlook Matt Marshall Chief Executive Officer 4. Q&A 5. Appendices Results Webinar Wednesday 23 August 2023 10:00am AEST Rob Shore Conference call: https://registrations.events/direct/OCP61299 Webinar: https://we
Slide 6: Our Guiding Principles
OUR GUIDING PRINCIPLES FRANCHISEE CUSTOMER PEOPLE FUTURE FIRST OBSESSED MATTER FOCUSED We recognise that the success of We understand that our We are committed to fostering a As we journey forward, we our franchise partners fuels our customers are the driving force supportive and inclusive embrace i
Slide 7: FY23 Highlights
FY23 HIGHLIGHTS Network Sales Same Store • RFG has transitioned out of turnaround into growth under a new Growth Sales Growth management team with appointment of new CEO and CFO in H2 7.2% 12.1% alongside continuity and new skillsets on the Board • Successful launch of first virtual brand, Rack ’em
Slide 8: FY23 Financial Performance
RETAIL FOOD FY23 FINANCIAL PERFORMANCE . 5 . GROUP
Slide 9: Domestic Network Metrics
DOMESTIC NETWORK METRICS $502m Network • Return to normalised post-covid trading conditions vs PCP Sales (1) • Improvement in network health, finalised closures of underperforming trading outlets 7.2% vs FY22 FY22: $469m demonstrated by AWS improvements across all brands except QSR $449m FY22: $401m
Slide 10: Domestic Bakery / Café Division
DOMESTIC BAKERY / CAFÉ DIVISION Customer counts improved vs PCP which was impacted by Covid restrictions. We proactively managed pricing across all brands to drive ATV improvements and offset inflationary cost pressures. • Strong growth of +27% in Network Sales (‘NS’) due to +19% CC and +6.5% ATV FY
Slide 11: Domestic Coffee Retail Division
DOMESTIC COFFEE RETAIL DIVISION Customer counts improved vs PCP which was impacted by Covid restrictions. We proactively managed pricing across all brands to drive ATV improvements and offset inflationary cost pressures. FY23 FY22 % Change Trading Outlets at EOFY (1) 188 218 (13.8%) Average Transact
Slide 12: Franchise International Division
FRANCHISE INTERNATIONAL DIVISION(1) FY23 FY22 % Change • Strong pipeline for continued growth in key international markets operated by Master Franchisees(2) New Master Franchise Agreements - 2 • International network predominantly Gloria Jeans, other brands will be New Outlets 51 77 investigated dur
Slide 13: Di Bella Coffee
DI BELLA COFFEE FY23 FY22 % Change • Lower external revenue due to the FY22 exit from low margin branded product supply contracts and decline in independent food service channels Revenue(1) $5.6m $7.3m (24.2%) due to lasting impacts of Covid-19 on CBD customers • During FY23, Di Bella purchased 94.8
Slide 14: Domestic QSR Division
DOMESTIC QSR DIVISION The QSR Division saw SSS growth of 0.7% vs PCP, despite cycling out of high prior year FY23 FY22 % Change comparatives influenced by consumer preferences for takeaway and delivery during the COVID-19 pandemic. The full launch of our first virtual brand, Rack ’em Bones BBQ Tradi
Slide 15: Income Statement
INCOME STATEMENT • Consistent conversion of Revenue as a % of network sales on normalized, higher, post Covid volumes FY23 FY22 GROUP PERFORMANCE (1) % Change Underlying Underlying • Corporate store numbers increased from 25 to 31 and delivered revenue of $15.2 million (FY22: $9.9 million). Our corp
Slide 16: Analysis of Non-Core Expenditure to Complete Turnaround within FY23
ANALYSIS OF NON-CORE EXPENDITURE TO COMPLETE TURNAROUND WITHIN FY23 • Consistent definition of Underlying EBITDA with prior periods, H1 FY23 and guidance • Resolution of ACCC proceeding without admission of fault, paying a pecuniary penalty or being subject to any injunction, disclosure or adverse p
Slide 17: Balance Sheet
BALANCE SHEET FY23 ($m) FY22 ($m) • Unrestricted cash on hand of $17.9 million (FY22: $22.3 million) corresponds to net Assets debt of $2.1 million (FY22: $14.9 million) Cash Reserves 22.3 29.2 Trade Receivables 11.1 7.7 • Borrowings decreased by $16.7 million with the re-financing and partial repay
Slide 18: Cash Flows
CASH FLOWS • Total lease payments includes $5.9m for active corporate leases resulting in an FY23 FY22 CASH FLOW EXTRACTS underlying EBITDA to underlying cash conversion of 65%. ($m) ($m) Underlying Net Operating Cash Flows before Interest & Tax 22.7 28.8 • Cash outflows include $22.8m in payments f
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Slide 20: About Retail Food Group
ABOUT RETAIL FOOD GROUP Retail Food Group is a global food and beverage company headquartered in Queensland, Australia. RFG is Australia’s largest multi-brand retail food and beverage franchise owner with a portfolio of quality franchise brands under its ownership. 33 >40m COUNTRIES CONSUMER TRANSAC
Slide 21: Leadership team
LEAH SOUTAR TOM ELLIOTT NICOLA SWARBRICK ROB SHORE BREN GRAY KHLOE CANERIS Head of Growth Chief Financial Officer Head of Procurement Head of KATE MCGRATH. MATT MARSHALL ADAM BAILEY Head of Executive Office: orate formation Officer
Slide 22: Franchising at Scale
FRANCHISING AT SCALE Retail Food Group redefines adaptability on @ global scale. The Group's model gives us the power to plug in an improvement and watch it . : resonate across a diverse network of food retail _ : aay businesses worldwide. This is the unique : \ \ (we Zi aS advantage we offer — the
Slide 23: Our Growth Recipe
OUR GROWTH RECIPE for 3-5 years 22
Slide 24: Executing the Picture of Success
EXECUTING THE PICTURE OF SUCCESS RIGHT RIGHT ASSORTMENT 1v 3v PROMOTION Have the right range of products to meet the Brand promotions that positively change needs of customers tailored by market customer behaviour RIGHT RIGHT CUSTOMER PLACEMENT 2v 4v COMMUNICATION Defining optimal location, space sh
Slide 25: Executing the Picture of Success: Right Assortment
EXECUTING THE PICTURE OF SUCCESS 10 HOT BEVERAGES 43% OF SALES RIGHT 1v 10 ASSORTMENT Have the right range of products to meet the COLD needs of customers tailored by market. BEVERAGES Sales in Gloria Jean’s are generated through three main categories. 32% OF SALES Ensuring the right product assortm
Slide 26: Executing the Picture of Success: Right Placement
EXECUTING THE PICTURE OF SUCCESS RIGHT 2v PLACEMENT Defining optimal location, space share and display layout for the cabinet. HOT SPOT PRIORITY ZONE ALL OCCASION FLEX ZONE 25
Slide 27: Executing the Picture of Success: Right Promotion
EXECUTING THE PICTURE OF SUCCESS RIGHT 3v PROMOTION Brand promotions that positively change customer behaviour 26
Slide 28: Executing the Picture of Success: Right Communication
EXECUTING THE PICTURE OF SUCCESS RIGHT CUSTOMER 4v COMMUNICATION Have clear customer communication messages along the path to purchase to impact awareness, engagement and trigger purchase 27
Slide 29: Creating a Seamless Omni-Channel Experience
INFLUENCERS AND COLABS IN APP ORDERING CREATING A SEAMLESS OMNI-CHANNEL EXPERIENCE INSTORE KIOSKS eCOMMERCE & PHYSICAL VIRTUAL STORES DRIVE THRU FORMATS
Slide 30: Creating a Seamless Omni-Channel Experience
CREATING A SEAMLESS INFLUENCERS eCOMMERCE PHYSICAL OMNI-CHANNEL DRIVE THRU INSTORE IN APP AND COLABS & VIRTUAL STORES EXPERIENCE FORMATS KIOSKS ORDERING CUSTOMER DATA OMNI-CHANNEL CREATE A UNIFIED 1v PLATFORM 2v MARKETING TOOLS 3v SHOPPING EXPERIENCE Unifies customer data from fragmented sources Uti
Slide 31: Our Recipe for Success
RETAIL FOOD GROUP OUR RECIPE for success VALUE PROPOSITION Franchising offers a platform that reduces risk & complexity for new business owners, affording them opportunity for success. RFG's franchise value proposition is underpinned by: + Our franchisee first’ mindset and values which drive focus o
Slide 32: RFG Generates Multiple Revenue Streams Through Support of Franchise Partners
RFG GENERATES MULTIPLE REVENUE STREAMS THROUGH ITS SUPPORT OF FRANCHISE PARTNERS Franchise Fees c. 37% revenues RFG supports our Franchise Partners with access to brands, leasing including initial site selection, Corporate Stores c. 13% revenues landlord negotiations, store design and fit out RFG op
Slide 33: Domestic Network Health Improving with Strong Pipeline
DOMESTIC NETWORK HEALTH IMPROVING WITH A STRONG NEW STORE AND FRANCHISE PARTNER PIPELINE 27 42 86 716 699 32
Slide 34: Rack 'em Bones BBQ Ribs Network Sales
Rack ‘em Bones BBQ Ribs demonstrates a Annualised significant opportunity to expand our eCommerce presence across all brands GROWTH ACCELERATING $4.1m Aiming for more than 100 outlets • In FY23 we trialled and subsequently launched July 2023 Network Sales(1) Rack ’em Bones as a new Brand System 100
Slide 35: Café, Coffee, Bakery (CCB)
HOW WILL WE SEGMENT OURSELVES IN FY24 CAFÉ, COFFEE, BAKERY (‘CCB’) Our CCB segment offers consumers a sub $10 purchase for habitual, coffee routine or impulsive occasions. Brand awareness is key to activate see, smell, buy All metrics refer to Domestic FY23 data relative to the PCP 34
Slide 36: Gloria Jean's
In FY23 we sold 1,388,173 Gloria Jean’s is a core brand within BRAND & HISTORY flat white our portfolio with significant • Great coffee has been the driving passion coffees opportunities for international for Gloria Jean’s Coffees since 1979 growth, select new sites domestically • Founded by Gloria
Slide 37: Donut King
In FY23 we served up Donut King is our fastest growing BRAND & HISTORY 25,297,710 brand and we’re excited about both • Since the first store opened in Sydney, cinnamon franchised and corporate store Donut King has been the shopping trip donuts growth opportunities treat for the average Australian ki
Slide 38: Brumby's
In FY23 we sold 40 hot cross Brumby’s is core to many BRAND & HISTORY buns per trading Australian communities and • At Brumby’s, we take pride in moulding minute over a consistent performer in the perfect creation born from simple Easter our portfolio ingredients. We share a passion and love for our
Slide 39: Quick Service Restaurants (QSR)
HOW WILL WE SEGMENT OURSELVES IN FY24 QUICK SERVICE RESTAURANTS (‘QSR’) Our QSR segment services the takeaway evening meal occasion, primarily for sharing – “I just don’t want to cook”. A quick and easy solution negating the need to cook All metrics refer to domestic FY23 data relative to the PCP an
Slide 40: Crust Gourmet Pizza
In FY23 we sold 746,613 peri peri Crust differentiates with an BRAND & HISTORY chicken pizzas obsession for quality. We pride • Born in 2001 from a dream to make ourselves on using real, fresh gourmet pizzas available to all, the first ingredients on every pizza. We call Crust Pizza store opened in
Slide 41: Category Expansion via Virtual Brands
CATEGORY EXPANSION VIA VIRTUAL BRANDS 40 9
Slide 42: Outlook
OUTLOOK Guidance for FY24 is not being provided at this time Same Store Sales growth of 2.4% in the first 7 weeks trading in FY24 despite impacts of weaker macro economic conditions on the retail environment Total network sales in FY24 will be impacted across both segments. by closures of legacy sit
Slide 43: Café, Coffee, Bakery Outlook
CAFÉ, COFFEE, BAKERY OUTLOOK Resilient weekly network sales with no deterioration evident in trading amidst rapidly increasing interest rates. • FY23 outlet closures impact FY24 network sales & customer FY24 METRICS counts offset by improvement in quality of outlets • Normal seasonal and weekly fluc
Slide 44: Quick Service Restaurants Outlook
QUICK SERVICE RESTAURANTS OUTLOOK QSR continued to experience tougher trading conditions but growth in Rack ’em Bones is now offsetting SSS impact despite roll out only being 1/3rd complete FY24 METRICS • Normal seasonal and weekly fluctuations around key events such as major sporting events in week
Slide 45: Key Takeaways
KEY TAKEAWAYS We can demonstrate resilient weekly sales We’ll focus on two We’ll lay the foundations for have continued into the segments (CCB & QSR) significant Franchise Partner initial weeks of FY24 with with simplified reporting expansion in our US and softness in QSR now and a focus on cash int
Slide 46: Retail Food Group
RETAIL FOOD GROUP.
Slide 47: Appendices
APPENDICES RETAIL FOOD GROUP.
Slide 48: Income Statement Reconciliation
INCOME STATEMENT RECONCILIATION AASB15 & Non-core, GROUP PERFORMANCE FY23 Marketing 16 & non- FY23 FY22 % Change • Definition of Underlying EBITDA Statutory Fund Underlying Underlying interco recurring consistent with prior periods and H1 Revenue $120.8m ($14.8m) ($5.1m) ($2.9m) $98.0m $90.8m 8.0% F
Slide 49: Cash Flow Reconciliation
CASH FLOW RECONCILIATION CASH FLOW STATEMENT FY23 ($m) FY22 ($m) Net cash (used in) / provided by operating activities (1.7) 15.4 • Reconciliation between Statutory and Add back interest & tax cash movements 1.6 1.6 underlying operating cashflows Add back ACCC matter, legal fees & Business restructu
Slide 50: Definitions
Definitions 3PA Third party aggregator ATV Average Transaction Value AWS Average Weekly Sales BCD Bakery/Café Division: Donut King; Michel’s Patisserie; Brumby’s Bakery CC Customer Count CCB Café Coffee Bakery COGS Cost of Goods Sold CRD Coffee Retail Division: Gloria Jean’s; Cafe2U; The Coffee Guy