Retail Food Group profits from new ideas

Drive-through cafes and standalone stores are just some of the ideas Retail Food Group will be serving up as it gets creative in dealing with a difficult retail environment.

The company behind brands such as Brumby's Bakeries, Donut King, Esquires Coffee and Michel's is set to move its franchise brands out of major shopping centres and into standalone shopfronts.

It has so far moved four Donut King stores, and is currently piloting standalone stores for Michel's and Brumby's.

Esquires Coffee Houses will also be transformed into drive-throughs, with four slated for this year.

CEO Tony Alford said these were among the strategies the group was considering to fortify sales in a tough retail environment.

"I don't think there is an endearing outlook for the retail sector in the next 12 months," he told AAP.

"The present state may well prevail for the next two years and it's incumbent upon retailers to adjust to the environment and enhance the business and business model without an expectation that there's going to be a significant turnaround."

Mr Alford said the group commenced a strategic project last year to look at non-traditional sites.

"The motivation is to develop our brands such that they can be commercially sustainable for our franchisees outside of the traditional shopping centre environment," Mr Alford told AAP.

"Drive throughs, hole-in-the-walls in strip sites and thoroughfares, are just a natural migration for the business."

He said it was part of a move to reduce competition from major retailers like Woolworths and Coles.

"We are changing the dynamics or each of our franchise systems such that they can rely upon less customer traffic," Mr Alford said.

"How we achieve that is to increase the average transaction value of each customer that visits our outlets," he said.

So far, the group says it's working: customers at Donut King are spending an average of $2.50 more in standalone stores than inside shopping centres.

While it's too early for the group to predict the effect of the strategies on its finances, it does expect $7.5 million in earnings before interest and tax to come from the consolidation of two gourmet pizza brands - Pizza Capers, which was bought in April, and Crust Gourmet, which was announced Thursday.

The group posted a 4.9 per cent rise in full year profit to $28.5 million, from the $27.2 million in the 2011 financial year.

Mr Alford said it was too early to provide guidance for this financial year.

Shares in the group closed at a five-month high, 10 cents higher to $2.80.


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