Nine-owned The Age and The Sydney Morning Herald reported over the weekend that emails from RFG to Michel’s Patisserie franchisees instructed them to “ignore expiry dates on packaging and adopt a new shelf-life extension date, ranging between two and six months”.
In one example, it was suggested that edible plaques with a use-by date of 15 January 2019 had been extended to 15 July.
The publications also said that franchisees have reported falling sales in recent years after RFG — which, under its franchise agreement, forces franchisees to buy products directly from the group — moved from fresh products to frozen ones.
It has since been reported that RFG has begun withdrawing certain products from sale, and that Queensland’s food safety authority has been notified, given that RFG is headquartered in the state.
RFG denies wrongdoing
In a statement to the ASX on Monday, RFG subsequently admitted that it had in some instances extended expiry dates, but defended the practice.
“RFG follows strict standards with regard to food quality and any product date extensions was granted following written approval from the supplier and with consumer safety top of mind,” it said.
“Regardless, RFG has taken voluntary action and is in the process of withdrawing any products which had received approved date extensions from our suppliers.”
In the statement, RFG said that it “works closely with its preferred supplier network to ensure high-quality products are delivered ready for sale to franchise stores”, amounting to 15,000 products from over 1,000 Australian suppliers.
It also said the practice of extending shelf-life dates was limited to a small proportion of products.
“In the past 18 months, RFG brands engaged with less than 1 per cent of its supplier network to request possible shelf-life extension where appropriate and safe to do so. These extensions related to circa 0.25 per cent of RFG’s annual spend with is supplier network,” the company said.
RFG added that, so far, it “has not been contacted by regulators regarding any concerns with our food safety standards”.
“If it were, then it would fully co-operate in the best interests of consumers.”
The company has so far not disclosed whether the practice was restricted to Michel’s Patisserie or used by other brands it owns, including Gloria Jean’s Coffees, Donut King, Crust Gourmet Pizza Bar and Brumby’s Bakery.
Latest scandal to hit the company
It is the latest in a series of bad publicity for ASX-listed RFG, which received a scathing rebuke from the Fairness in Franchising inquiry over its conduct. The parliamentary inquiry recommended formal investigations into its operations be launched by ASIC, the ATO and the ACCC.
In March, Retail Food Group was also forced to deny reports that its board was considering appointing administrators.
Meanwhile, last year, RFG announced a swathe of store closures in a bid to cut costs following an $87.8 million half-year loss, despite revenue surging year-on-year to the tune of 20.8 per cent.
That loss, according to its latest earnings report released on 28 February this year, has increased to $111.1 million, which included a $123.7 million hit due to “non-cash impairments and write-downs and provisioning”.
And in February 2018, it was revealed that some franchisees were mulling a class action against the group, alleging disclosure failures and abuse of power.