ASX-listed franchise consolidators report upbeat results

Listed franchise consolidators Retail Food Group and Allied Brands have both reported strong results for the six months to 31 December 2007 thanks to their aggressive acquisition strategies.

Retail Food Group, owner of Donut King and BB’s Cafes, is forecasting it will meet full-year earnings guidance after more than doubling net profit to $8.1 million thanks to the acquisition of Michel’s Patisserie and Brumby’s Bakeries.

The franchised chains sales rose from $79.2 million to $306.3 million and the franchisors franchise, marketing and wholesale revenue increased more than four times to $50.3 million.

Chief executive Tony Alford downplayed the likely impact of a downturn in discretionary spending on the businesses. He told The Australian Financial Review that the low value of each transaction means that consumers will buy anyway.

Allied Brands, which owns the Baskin-Robbins and Cookie Man franchises, and recently bought the Kenny’s Cardiology and Awesome Water franchises, posted net profit before tax of $2.738 million for the half year, up 390% on the same period last year.

It has upgraded its full year forecast for net profit before tax for 2008 to $7.25 million from the $4.6 million it was expecting before the acquisition of Awesome Water.

Both chains say they are looking for more acquisitions.