Highlights

• Retail Food Group expects first-half FY26 underlying EBITDA of A$9 million to A$10 million, compared with A$16.8 million in the prior corresponding period.

• Domestic network sales declined to A$254.6 million during the half, while core brand sales fell 4.8% during the first 20 weeks of the second half.

• FY26 underlying EBITDA guidance was narrowed to A$20 million to A$21 million from the previous range of A$20 million to A$24 million.

• The first Australian Firehouse Subs store opened in June 2026 under a 20-year master franchise agreement with Restaurant Brands International.

• Retail Food Group shares traded at A$0.86 on 28 July 2026, rising A$0.030 or 3.61% during the session.

Retail Food Group Limited (ASX:RFG) is navigating another challenging stage in its turnaround journey, with earnings pressure emerging despite ongoing cost reduction initiatives and new growth opportunities.

The Australian franchisor, which operates brands across coffee, bakery, pizza and quick-service restaurant categories, has focused on rebuilding its network following previous operational and reputational challenges.

However, recent trading trends show that the recovery remains dependent on stabilising customer demand, improving franchise performance and successfully expanding newer growth platforms such as Firehouse Subs.

Earnings Decline Highlights Operating Challenges

Retail Food Group indicated that first-half FY26 underlying EBITDA would fall to between A$9 million and A$10 million, compared with A$16.8 million in the previous corresponding period.

The company also reported softer network performance:

  • Domestic network sales reached A$254.6 million, down approximately 1% year-on-year.
  • Core brand same-store sales declined 4.8% during the first 20 weeks of the second half.
  • Same-store sales during the first half increased slightly by 0.2%.

Management attributed the earnings pressure to weaker trading conditions, slower performance from newer Beefy’s locations and delays associated with a supply hub in Turkiye.

The company expects cost reduction initiatives and operational improvements to support earnings recovery.

FY26 Guidance Narrowed as Cost Program Expands

In June 2026, Retail Food Group revised its FY26 underlying EBITDA guidance.

The company now expects:

  • Underlying EBITDA of A$20 million to A$21 million.
  • FY27 cost savings of A$5 million to A$7 million.
  • FY26 cost savings of A$2.3 million to A$2.5 million.

The revised guidance compares with the previous FY26 EBITDA range of A$20 million to A$24 million.

The company has also completed consolidation of its South East Queensland office operations as part of its broader cost reduction strategy.

While these initiatives are expected to improve efficiency, the recovery remains reliant on stabilising franchise network performance.

Firehouse Subs Provides Long-Term Growth Opportunity

Retail Food Group is attempting to diversify growth through the introduction of Firehouse Subs in Australia.

The company holds the Australian master franchise rights under a 20-year agreement with Restaurant Brands International.

The first Australian Firehouse Subs location opened at Westfield Mount Gravatt in Queensland in June 2026.

Retail Food Group has identified a long-term opportunity to expand the brand significantly, with management indicating potential for up to 165 locations over time.

However, Firehouse Subs remains an early-stage growth initiative and is unlikely to materially affect near-term earnings.

The company must continue improving performance across its established brands while building the new platform.

Understanding Retail Food Group’s Business Model

Retail Food Group operates as a franchisor rather than a traditional restaurant operator.

The company generates revenue through:

  • Franchise royalties.
  • Marketing fees.
  • Product supply margins.
  • Brand licensing arrangements.

Its portfolio includes:

Cafe, Coffee and Bakery brands:

  • Gloria Jean’s Coffees.
  • Donut King.
  • Brumby’s Bakery.
  • Michel’s Patisserie.
  • Cibo Espresso.

Quick Service Restaurant brands:

  • Crust Gourmet Pizza.
  • Pizza Capers.
  • Beefy’s.
  • Rack ’em Bones.

The company reported approximately 1,250 outlets across around 30 countries at FY25.

This asset-light model allows scale, but revenue depends heavily on franchisee profitability and outlet stability.

Financial Position and Balance Sheet Considerations

Retail Food Group reported underlying revenue growth during FY25, with underlying revenue increasing 13.6% to A$102.7 million and underlying EBITDA reaching A$29.6 million.

However, statutory results were affected by impairment charges, including a A$12.2 million non-cash impairment related to Brumby’s.

For FY25, the company reported a statutory net loss of A$14.9 million compared with a profit in FY24.

During the December 2025 half, reported revenue was approximately A$67.9 million, while net profit was around A$2 million.

The company’s balance sheet includes significant lease liabilities and intangible assets linked to franchise brands.

At December 2025:

  • Cash was approximately A$16.8 million.
  • Interest-bearing borrowings were approximately A$32.7 million.
  • Total debt including leases was substantially higher.

The company’s reported equity includes significant goodwill and brand assets, making asset quality an important consideration for investors.

Why the Development Matters

The key challenge for Retail Food Group is whether cost savings can offset weaker franchise network performance.

The company’s recovery strategy currently depends on three areas:

  • Improving mature brand performance.
  • Reducing corporate costs.
  • Growing newer brands such as Firehouse Subs and Beefy’s.

Cost reductions can improve profitability in the short term, but sustainable growth requires stronger sales momentum across the franchise network.

The company’s ability to maintain franchisee profitability will remain central to long-term recovery.

Potential Growth Catalysts

• FY26 full-year results confirming whether EBITDA guidance of A$20 million to A$21 million was achieved.

• Delivery of targeted FY27 cost savings of A$5 million to A$7 million.

• Additional Firehouse Subs store openings and early performance data.

• Improved trading performance across established brands.

• Contribution from the Turkiye supply hub and operational initiatives.

Risks and Challenges

Franchisee performance remains the largest risk for Retail Food Group.

The company relies on franchise operators generating sufficient returns to continue investing in their businesses. Weak customer demand or rising costs could affect outlet profitability and future network growth.

Leadership concentration is another consideration, with Executive Chairman Peter George continuing to play a central role following the departure of the previous chief executive.

The company also carries significant intangible assets, including goodwill and brand values. Further impairment charges could reduce reported equity.

Consumer spending pressures remain another risk, particularly as food and beverage purchases are discretionary.

What Investors Should Watch Next

The FY26 full-year results will provide the next major assessment of the turnaround strategy.

Key areas include:

• Whether underlying EBITDA reaches the A$20 million to A$21 million target range.

• Network outlet numbers and closures.

• Same-store sales performance across major brands.

• Debt levels and financing arrangements.

• Firehouse Subs expansion progress.

Conclusion

Retail Food Group is entering another important stage of its turnaround, with cost reduction programs and new brand expansion supporting efforts to rebuild earnings.

The company has made progress in stabilising operations, but recent trading trends highlight ongoing pressure across its franchise network.

Firehouse Subs provides a long-term growth opportunity, while cost savings may support near-term profitability.

The next phase will depend on whether Retail Food Group can restore sales momentum while maintaining franchisee confidence and improving earnings consistency.