Food stores forced to close

Retail Food Group says some of its outlets closed by floods may not reopen, and others may close subsequently as franchisees count the costs of the Queensland floods.

The group, whose chains include Brumby's bakeries, Donut King and Michel's Patisseries, said yesterday that 108 outlets had been closed.

Eight Brumby's outlets remain closed, due either to direct flood damage or to the closure of shopping centres where they are located.

"The immediate future of each of these outlets is presently the subject of further assessment," Retail Food Group (RFG) said.

"In certain instances, it may well be determined that rectification works in order to facilitate recommencement of trade will be uneconomical."

As well, RFG said it "does not discount the potential for permanent outlet closures ... in circumstances where the franchisees concerned are incapable of meeting financial obligations otherwise owed by them".

It said the floods presented an opportunity for damaged Big Dad's Pies outlets "to progress opportunities for stronger realignment of their outlets to the Brumby's brand".

RFG said it was too early to provide guidance on the financial impact of the floods overall, but it was "evident that there will be a consequential adverse impact on RFG revenues in the short to medium term".

That would lead to lower full year net profit in 2010/11, than would otherwise have been expected.

RFG said 108 outlets had been closed because of the floods, including 56 Brumbys (including Brumbys Go! and 13 Big Dads Pies outlets), 31 Donut King outlets, 14 Michels Patisserie outlets; and seven bbs cafe outlets.

Eight Brumbys outlets (including five Big Dads Pies) remained closed, including six with significant flood damage and two which are inoperable due to shopping centre/site closure.

RFG chief executive officer, Tony Alford, expected the floods would continue to disrupt normal trading.

"Many franchisees will experience a long period of revenue reduction, and in some cases, this may result in a permanent reduction in retail sales within those communities worst affected by flood," Alford said.

"This may have long-term adverse effects for those franchisees concerned."

But Alford said there were positives from the situation, with some stores achieving higher sales "due to demand for consumer staples such as bread and stock shortages amongst supermarket vendors".

No Victorian outlets had been affected so far.

- AAP