Key Highlights

  • Domestic network sales fell 3.1% to AUD 489.5 million in FY2026.
  • Underlying EBITDA declined 31.4% to AUD 20.3 million.
  • Retail Food Group targets AUD 5 million to AUD 7 million in FY2027 savings.
  • The company aims to expand Firehouse Subs to 15 locations by FY2027-end.

Retail Food Group (ASX: RFG), the franchisor behind well-known Australian brands including Donut King, Gloria Jean's, Brumby's Bakery and Michel's Patisserie, is once again testing whether a turnaround can gain traction against a soft consumer backdrop. The company has spent years restructuring after a troubled period, and its FY26 result showed both the strain of weak discretionary spending and the early shape of a fresh growth push built around a new international brand.

Reported on 26 August, the FY26 numbers were subdued. Domestic network sales fell 3.1% to $489.5 million, same-store sales slipped 0.7%, and underlying EBITDA dropped 31.4% to $20.3 million. Executive Chairman Peter George acknowledged that retail trading conditions remained challenging through the year, with the second half seeing further pressure. For a Franchise Business whose royalties flow from Franchisee turnover, softer network sales feed directly into earnings, so the result underlines how exposed RFG remains to household budgets.

A cost reset underpins the base

Much of management's near-term work has centred on taking cost out of the business and improving franchise-partner profitability. RFG closed 35 loss-making or underperforming locations during the year while opening six, a net reduction of 29 outlets, as it prunes the network toward healthier stores. For FY27 the company is targeting a further $5 million to $7 million in savings, alongside a stated focus on lifting franchisee margins, cash generation and unit economics. A leaner, more profitable network is the foundation the growth plan is meant to build on.

Firehouse Subs is the growth bet

The more forward-looking part of the story is RFG's rollout of Firehouse Subs, the US sandwich chain it is introducing to the Australian market. The first local outlet opened at Mt Gravatt in Queensland during FY26, and the company said it set an opening-day sales record for an international Firehouse Subs location. RFG is targeting four stores by December 2026 and 15 locations by the end of FY27, positioning the Brand as a new format to complement its established bakery, coffee and confectionery franchises.

Whether Firehouse can scale profitably in Australia is the key unknown. New quick-service brands can take time to build recognition, and site selection, franchisee recruitment and Supply chain all have to line up. But a fresh, differentiated offer gives RFG a potential growth avenue that its mature legacy brands, several of them in structurally challenged categories, largely lack.

What to watch and the risks

Investors weighing the turnaround should watch several signposts into FY27: the pace and profitability of the Firehouse Subs rollout against the 15-store target; whether same-store sales across the legacy brands stabilise as cost-of-living pressure eases; delivery of the flagged $5 million to $7 million in savings; and progress on franchisee profitability, which ultimately drives network health.

The risks are significant. Consumer spending on discretionary food and coffee remains under pressure, several core brands sit in declining or highly competitive categories, and executing a new international brand rollout carries its own operational and financial demands. Franchise models can also be slow to turn, since improvements depend on hundreds of individual operators.

Retail Food Group enters FY27 as a genuine turnaround watch: Earnings are still going backwards, but the combination of a cost reset and a new growth brand gives the story a clearer direction than it has had in some time. The question the headline poses, whether RFG can reignite growth, will be answered less by the legacy network and more by whether Firehouse Subs and the efficiency drive can together offset the drag from a cautious consumer.