The Retail Food Group Limited (ASX: RFG) share price advanced 1% to $4.36 today after the fast-food franchisor revealed it is to expand into Sweden with its Donut King franchise.
According to news wires, Retail Food Group will use its master franchise partner business model to partner with BC Food & Beverage AB in an attempt to crack the Swedish donut market.
The master franchise partner is a business model Retail Food Group is also actively pursuing in expanding its Gloria Jean's coffee brand across Chicago and the mid-west United States. It is also actively looking to further expand into the high-growth markets of Asia and the Middle East, as its Australian franchising activities appear to be plateauing.
The company is a also a major player in the wholesale coffee roasting and distribution business, alongside ready-made food distribution operations.
Outlook
The company recently downgraded its full year profit guidance to growth of around 15% over the prior year and flagged that the downgrade was related to "timing in connection with the conversion of significant new Master Franchise Opportunity which will now be concluded in FY18."
The company also recently conceded it would be forced to write down $22 million in marketing expenses it now does not expect to recover from certain Australian franchisees due to their weaker-than-expected operating performance.
As a result of the bad news flow the stock is down 24% over the course of the past year, although it could be cheap if management is able to execute on its considerable international growth ambitions.
If you don'ut care for Retail Food Group, other stocks in the fast-food space worth a look are pizza franchisor Domino's Pizza Enterprises Ltd (ASX: DMP) and KFC merchant Collins Foods Ltd (ASX: CKF). In my opinion all three may be good long-term growth picks given their current valuations.
