Retail food brand manager and franchisor Retail Food Group has announced a first half yearly net profit after tax result of $12.5 million, an increase of $1.9 million from the corresponding 2009 figures, equating to an 18.3 percent increase.

The group includes bb’s cafe, Brumby’s, Donut King and Michel’s Patisserie franchise systems.

RFG CEO Tony Alford said revenues had dropped because of the strategic disposal of the company’s central manufacturing facility in January 2009 and more than 160 franchised outlets in the Michel’s Patisserie system transferring from a wholesale margin royalty fee to a traditional royalty based model.

However these have been completely offset by increased licence and franchise service fee revenues, allied with a 16 percent reduction in operation expenses, Alford said.

RFG franchisee reported network sales was wholly maintained and supported by growth in weighted average weekly sales and transaction values of 3.5 percent and 3.8 percent over FY09, said Alford. This was despite the programmed reduction in franchise outlet population (as a consequence of legacy outlet closures in the Michel’s Patisserie and Brumby’s Bakeries systems) and a challenging retail environment (including subdued shopping centre foot traffic flows and flagging economic stimulus.

Alford said the group expected to make further cost cuts and continue product development. Donut King has witnessed an 8.9 percent growth in coffee sales following introduction of the Royal Bean coffee blend, he explained.

Non-traditional sites and acquisitions such as the DCM Donuts, Coffee & Muffins system will be the focus for growth, said Alford.