Sorry’s the hardest word for Nell and RFG [IMG] Retail Food...

Sorry’s the hardest word for Nell and RFG

Retail Food Group’s Andre Nell. ​

• 12:00AM December 23, 2017​

Andre Nell isn’t doing “sorry’’ right now. Having spent the past 10 years of his career at the embattled Retail Food Group, he leads a food franchise business under siege — from his franchise operators, investors and the media.
A collapsing share price, angry franchisees happy to broadcast the company’s woes to the media, mounting debt that needs to be refinanced with bankers and those awful headlines about the company’s alleged improper and unethical treatment of its food franchisees are piling up.
But Mr Nell isn’t saying “sorry”, not yet anyway.
Although its share price has slumped nearly 70 per cent in the past 12 months, there is no mea culpa and certainly no admission from the company that Retail Food Group’s management and board might just be masters of its own demise, or that it has any kind of agency as to what has gone so disastrously wrong for it this year.
Pushed to acknowledge any mistakes Retail Food Group made in the past that have led to its precarious financial state, Mr Nell holds firm to the positive halo around the board.
“Well, I guess, I would point to the Deloitte review which was commissioned six months ago and saying that we are already on a journey and that journey has been going on for some time in terms of how we refine aspects of the business model,’’ Mr Nell says.


Pushed again on whether the Retail Food Group board bears any responsibility for the mess — such as the indigestion caused by nine acquisitions in four years, a string of impairments and profit warnings — Mr Nell won’t concede the company’s senior ranks need to apologise or admit they got it wrong.
“Again I can only point you to those positive things that we have done, and that’s not an acknowledgment of anything that has been done wrong in the past, that’s an acknowledgment of what must be done from the point of view of driving enhancement moving forward.’’
Mr Nell, whose work overseas included a stint at drug maker GlaxoSmithKline, makes an ever-so-slight admission that under former CEO Tony Alford the company grew too fast.
But then it’s time to move on to a different subject, and Mr Nell sidesteps questions around whether he ever heard complaints from franchisees about excessive fees and charges, underpayment of wages or a franchise business model that allegedly hands the profits to the company and leaves nothing for the franchisee.
Mr Nell was the head of franchise for Retail Food Group from 2015 before being appointed CEO of the company in July 2016.
“Over the years, every year, there is always a small component of franchisees that need further support and the business has remained dedicated to them. But I think one also needs to acknowledge more recently the retail environment and changes within the retail environment.’’
Retail Food Group is not using the downturn in retail trading conditions as an excuse for its sagging profits and drop in customers at its food stores, Mr Nell says.
“Well, I mean, to say that one is using retail market being challenging as an excuse, I guess we would dispute that and in fact that it is not only impacting us.’’
Mr Nell rejects allegations that Retail Food Group squeezes its franchise operators so tightly for fees that it makes it difficult for store owners to make a living. He rejects any accusation the fees for Retail Food Group franchisees were so onerous that they were forced to underpay workers just to survive.
“Absolutely dispute that.
“First and foremost our fees are standard within the industry and have been the same fees for many years. What’s important are all the initiatives that we drive where we are investing significantly in that franchise division across areas like product innovation, providing them with significant advantage in that space in terms of first-to-market products, digital initiatives that, for example in the case of Donut King, drive significant engagement across social media and the like to drive a significant increase in customer count to our Donut King network.
“So there’s numerous initiatives and investments that we have in that franchise division and there is no doubt that is driving successful outcomes for our franchisees.’’
Mr Nell believes the Retail Food Group is “absolutely sustainable’’ and that it can do more to support franchisees.
Asked if Retail Food Group would lower its fees structure, Mr Nell declines to answer the question directly and turns the conversation to initiatives the company is undertaking to help drive customer traffic to its stores.
Mr Nell also discounts the number of franchisees that are genuinely unhappy with the fees structure and corporate leadership. “We have many, many hundreds of franchisees that are very successful and we are particularly disappointed with some of the coverage around what was tabled as systematic wage fraud … because that is simply not the case.
“There is no evidence of such and we absolutely refute that, based on all of the work we have done, and that’s an area we have focused on in depth for a very long period over the past two years. It’s about being very proactive in terms of how we have engaged with our franchisee partners, we have set up a customised program with the National Retail Association specifically for them.
“In addition we have got a very strong audit regime in terms of managing that compliance piece so all of that gives us the confidence to provide the comments I am making. A lot of the (media) coverage hasn’t been balanced in context of picking on a few isolated instances of unhappy franchisees where there are significant numbers of very positive stories which are not being told.”
Mr Nell will conduct a roadshow in the new year armed with the results of the Deloitte review — and the market will have many questions for him on his business model. Maybe it’s not too late to say sorry.