RFG: apologises for Brumby’s carbon price advice

Southport / AU. (rfg) Leading Australian retail food brand manager and franchisor Retail Food Group Limited (RFG) advises that various media outlets this week published articles reporting upon comments made by the Brumby´s Bakery Brand System Managing Director concerning then impending changes to recommended retail prices (RRP) for the Brumby´s network.

RFG maintains that all outlets operating under its umbrella retail goods and services which are priced fairly to reflect the costs of doing business whilst ensuring acceptable margins for franchise owners.

Consistent with accepted and prudent business practices, RRP amongst each of RFG´s franchise systems is subject to regular review. In the case of the Brumby´s network, RRP will be adjusted on 16 July – the first such adjustment in twelve months notwithstanding significant increases in costs of doing business over this period.

RFG CEO Tony Alford: «The reported comments, made in an internal newsletter recently disseminated amongst Brumby´s franchisees prior to RRP adjustment, were not sanctioned and are of significant concern to the Board».

«Following thorough investigation of the matter, we are satisfied that the comments were not made in an effort to encourage our franchisee community to link RRP adjustment to the carbon tax, but rather, were innocent albeit foolish and ill-considered remarks when placed in the context of the internal franchisee communication. To be sure, the principal purpose of the communication was to promote franchisee evaluation of in-store pricing practices due to cost and margin pressures».

«We are also satisfied that the comments are isolated to the subject newsletter and certainly not representative of RFG policies or practices», Alford said. «As a consequence of the introduction of the carbon tax, there will be further margin and cost pressures on our franchisee community, however, it was inappropriate to link this matter with the imminent RRP increase».

«RFG takes very seriously its obligations under Australian consumer law. Further to that we are now communicating with our franchisee community regarding the limited relevance of the carbon tax to recently adjusted RRPs and otherwise to provide appropriate counsel as to how RRP changes should be addressed with consumers. We are also liaising with the ACCC in connection with the matter».

Alford: «Our Brumby´s franchisees pride themselves on delivering an exceptional customer experience which includes a fair and appropriate retail price point for their products. We therefore express our genuine regret over this isolated incident and unreservedly apologise for this unacceptable error of judgement».

Background

The Australian Competition and Consumer Commission (ACCC) investigated Brumby´s Bakeries after the company´s general manager Deane Priest told franchisees of the approximately 300 stores to blame the carbon tax for general price rises. When his letter was leaked to the media last week, Priest has resigned. Nevertheless Brumby´s Bakeries could face a fine of up to one million AUD after issuing the memo that encouraged franchise owners to blame price rises on the carbon tax …