RFG bought Gloria Jeans for $163 million in 2014. These days...

RFG bought Gloria Jeans for $163 million in 2014.

These days there are 173 Gloria Jeans Cafes in Australia, making it the largest ambience coffee chain in this country, ahead of Starbucks (56) and Dome Cafe (65).

GJ also has stores in 50 other countries. There's the USA, where it has 43 stores. The UK opened its first GJ in 2019 and so far there are 23 stores. And then there's Asia where there's a bunch of stores, including some in obscure places like East Timor, Pakistan (50) and so on. You'll even find GJ in Saudi Arabia (where American style places are in decline).

Markets like China, where a planned rollout of 600 stores a decade ago never took place, seem to have been disappointing, mainly due to the inaction of RFG's joint venture partner. But everyone knows doing business in China is notoriously tough, even if one has a reliable local partner.

All of the above is pretty impressive for RFG, which has a miniscule market capitalization (roughly AUD$150m) when compared to other famous overseas coffee names with market capitalizations in the billions. Clearly, the brand recognition is definitely great.

This thread seeks dissenting views. Why? Because rather than being mindlessly bullish I'd like some critical thinking from others as to why Gloria Jeans/RFG can or cannot succeed in the tough overseas ambience coffee market. Remember, coffee is a cutthroat industry, with stores opening one year and closing the next. Starbucks had that dilemma a decade or so ago and all but exited Australia for a few years. But then Starbucks returned - this time the US parent sold the naming rights to the 7-11 group (formerly American owned, but now listed in Japan).

Naturally, we cannot compare RFG with Starbucks, with its 30,000+ international stores and a multibillion market capitalization. Rather, I'm thinking of other comparable examples like Canada's Tim Horton (it merged with Burger King) and Green Mountain (taken over for USD $15 billion) or the UK's Costa Coffee (taken over for US$5.1 billion).

To those who are knowledgeable about the coffee and franchise industries, please chip in an contribute:

What are your opinions - can RFG's Gloria Jeans maintain and increase its overseas operations and how meaningful will this be to RFG's bottom line? Does the future lie in company owned stores or franchises? What benefit to RFG in selling franchises rather than operating company owned stores?

For the record, I disclose ownership of slightly less than 10m RFG shares. I don't especially like ambience coffee shops with their sugary offerings (although my spouse does). However, given its miniscule market capitalization I am highly bullish abut RFG and I want informed dissenting views before I mortgage the house and buy any more shares (said in jest - my spouse would never allow it).

Thanks in advance for meaningful, informed commentary.