RFG - Retail Food Group

[greggles]

rfg is going to get smashed again monday:
http://www.theage.com.au/business/r...ustralias-franchise-king-20171207-h00lbl.html

You can't ask for worse publicity than that. Some very sad stories of financial devastation there. I've always been skeptical of the franchise model and this is just more evidence that while in some instances it can work, it can be botched very badly too with terrible consequences.

RFG is going to get punished in the short term.

 

[basilio]

The Franchise model is like many elements of a poorly regulated capitalist economy.

In concept a Franchiser with a good product, well sorted out management systems, good overall marketing and cost effective supply of products to franchisees can establish an excellent win-win situation. The franchiser expands his overall business and gets a cut from each franchise while the new players get a well sorted cookie cutter business that gives them a fair return for their investment and work.

Unfortunately... the system has just become a rort aimed at screwing would be small businesspeople to the wall. That report on RFG highlights how ruthless and greedy the aggregated franchise model can be.

But that's business when the greedy ferals are let loose.

(IMV the Retirement Villages, Holiday clubs etc are similar creatures. Conceptually good ideas for win/win outcomes but wide open to greed.)

 

[sptrawler]

The Franchise model is like many elements of a poorly regulated capitalist economy.

In concept a Franchiser with a good product, well sorted out management systems, good overall marketing and cost effective supply of products to franchisees can establish an excellent win-win situation. The franchiser expands his overall business and gets a cut from each franchise while the new players get a well sorted cookie cutter business that gives them a fair return for their investment and work.

Unfortunately... the system has just become a rort aimed at screwing would be small businesspeople to the wall. That report on RFG highlights how ruthless and greedy the aggregated franchise model can be.

But that's business when the greedy ferals are let loose.

(IMV the Retirement Villages, Holiday clubs etc are similar creatures. Conceptually good ideas for win/win outcomes but wide open to greed.)

Somewhat like "Green incentives", not much difference, just depends which camp your in.

 

[ukulele]

lol, down over 20%.

I agree, the franchise model "in theory" is a good concept. But what I have seen with Nando's is that head office control everything. They make money on sales but they make the cost of goods so expensive; which is the opposite of the theory of big buying power.

You get punished on mystery shopper wait times but if you go to a head office store it is no different. Head office were pressuring us to basically walk away, so then they can take over a store for free then on sell it for pure profit.

 

[greggles]

RFG has dived down below what appears to be support at $4, which it has managed to stay above for more than four years. Next support level appears to be $3 which served as resistance from September 2009 to September 2012.

With all the negative sentiment surrounding it, RFG could have further to fall in the short term. I can't see it gaining much traction given recent media reports.

 

[greggles]

Interesting article from Motley Fool recommending RFG as a buy at about $5.50 in February this year.

https://www.fool.com.au/2017/02/28/...d-group-limited-is-a-buy-at-this-share-price/

Interesting also that UBS had a price target on it of $5.70 at the time.

Fortunes can change so quickly.

 

[Garpal Gumnut]

I've never been a fundamentalist. But for what it's worth the suite of businesses that RFG runs, it can be picked off with low rental costs by similar stores in North Queensland and deliver a better lower priced product. One example is Brumby's. I can buy a better pie ( with peas which Brumby's don't do ) at 3 adjacent small strips to the local Brumby's in large shopping centres near me.

 

[kid hustlr]

Stock is still getting carted. Any fundamentalists with interests down here or just all in the too hard basket?

 

[Knobby22]

Just looks terrible.
Too many risks. - owing employees, zombie stores, etc.
I am sure though that if you can pick the bottom you may do well but that may be six months away.

 

[greggles]

The RFG slide continues. Down another 8.3% so far this morning and looking weak. While the company has tried to publicly tackle the negativity surrounding it, it seems to be an almost impossible task. A trading update released this morning has further disappointed the market. 1H18 Statutory NPAT is currently expected to be c.$22.0m, compared to 1H17 NPAT of $33.5m.

 

[greggles]

The intraday carnage continues. Down 20.75% to $2.10 today. RFG is now at levels not seen since August 2009.

 

[notting]

Seem to be taking a bit of the wind out of retailers in general today, like DMP maybe worth taking advantage of that.
The franchise model really is kind of hard to understand you have basically two parties competing against each other trying to profit from the same shop.

 

[Country Lad]

The franchise model really is kind of hard to understand you have basically two parties competing against each other trying to profit from the same shop.

3 actually, don't forget the landlord

 

[finnsk]

3 actually, don't forget the landlord

Yes but only the franchisee doing the work

 

[greggles]

Down another 10% so far today. Ouch. Things are looking grim for RFG.

 

[greggles]

Utter disaster for RFG. From $4.41 to $1.625 in eight trading days. Volume really started to pick up yesterday after the release of the company's Trading Update. The big question now is, how close are we to the bottom? Given the trading in recent times, I certainly wouldn't want to jump onto this train wreck anytime soon.

 

[notting]

Looks more like a raid than a short squeeze going aggressively up by 35%.
Although we are in amateur hour with a lot of pros already at picnics and booze ups into Partymas.

 

[So_Cynical]

Given the trading in recent times, I certainly wouldn't want to jump onto this train wreck anytime soon.

Massive bounce today up to $2.20 intraday, $1.63 was total overkill, i tried to buy some today @ $1.58.
~

 

[kid hustlr]

Incredible price action. I have a small interest in this as someone I respect considers this a bit of an opportunity on a longer scale - as such I'm following with interest as morale support give his position.

It's interesting to see how it plays out. The media coverage has been ripe for several weeks on this and reading the articles I get really skeptical at the possible agendas behind the scenes.

Articles about management needing to 'protect the shareholders' and protect the mum and dad store owners, yet they are interviewing fund managers who have huge short positions. Will they interview these managers in the week to come when they have covered their position?

Another example for me about needing to always 'play my own game' and know my style but boy it's been a violent week and for the longer termers who are able sit through these types of moves I applaud.

 

[notting]

I seen Farifax media, especially via fin review, do this kind of ramp down media speculation at this time of year before!
This one was an absolute cracker.
I suspect they got wind of the revenue downgrade before it was announced and got their buddies in too!
When they used to attack Renie Rivkin who died of stress due to insider trading, he used to say, 'there is enough room for both of us!' as an olive branch tying to shut them up!!