Firehouse Subs addition positions RFG for long-term growth, analysts say
The group’s QSR brands remained challenging but saw early signs of stabilisation.
Retail Food Group’s (RFG) core coffee business continues to deliver strong results, but analysts suggest that the company’s long-term growth could hinge on the successful rollout of Firehouse Subs.
According to a report by CGS International and Petra Capital, whilst the quick-service restaurant (QSR) division remains under pressure, early signs of stabilisation and renewed interest from franchisees hint at a potential turnaround.
Crust has seen a customer count decline in line with the category as families continue to pull back (total food service spend -10.7%, traffic -2.6%), but has minimised the impact on Franchise Partner profitability. Meanwhile, a reduction in Pizza Capers outlets (non-core) in FY2024 is contributing to the net network sales decline.
Meanwhile, the group’s cafe, coffee, and bakery segment (CCB) CCB saw a 2.5% decline in customer count but strong ATV growth, lifting sales by 3.5%, with a high percentage converting to U/L EBITDA.
“For some time, we have wanted to see RFG add a new brand to support growth so we view the Firehouse Subs announcement favourably. We expect initial progress to be slow, but we like the sandwich category, seeing it as a core fast food option and complimentary to RFG’s existing portfolio,” the report said.
