Retail Food Group share price lower after admitting to extending use-by dates

The Retail Food Group Limited (ASX:RFG) share price has tumbled lower again on Monday. Here’s what sent its shares sinking lower this time…

| More on:
pizza shares

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In morning trade the Retail Food Group Limited (ASX: RFG) share price has dropped lower after the SMH reported that Michel’s Patisserie was deliberately selling batches of chocolate cakes, birthday cakes, and edible decorations to customers months after their use-by date.

At the time of writing the Retail Food Group share price is almost 2.5% to 22 cents.

What was reported?

The media outlet revealed that Retail Food Group “instructed Michel’s franchisees to ignore expiry dates on packaging and adopt a new shelf-life extension date, ranging between two and six months.”

This includes extending the use-by date on chocolate cakes by three months and spinach and feta scrolls by two months.

Retail Food Group response.

This morning the company responded to the media reports and defended its actions.

According to the response, the company “follows strict standards with regard to food quality and any product extension was granted following written approval from the supplier and with consumer safety top of mind.”

However, it has decided to withdraw any products which have received use-by extensions from its suppliers.

It added that over the last 18 months, the company’s brands have “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 c.0.25% of RFG’s annual spend with its supplier network.”

It also stressed that it has not been contacted by regulators in regard to concerns over its food safety standards.

What now?

Whilst the company may ultimately have not done anything wrong here, I feel this negative media coverage has damaged its brand even further now.

As well as putting off consumers from visiting its struggling stores, I suspect that would-be franchise buyers will also be put off by these reports. As franchise sales are the life-blood of the company, things look increasingly bleak in my opinion.

In light of this, I would urge investors to stay clear of Retail Food Group and focus on other options in the food space such as Costa Group Holdings Ltd (ASX: CGC) or Domino’s Pizza Enterprises Ltd (ASX: DMP).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

ASX shares COVID the words crash with a declining arrow on top
Share Fallers

These were the worst performing ASX 200 shares in June

It was a bad month for the ASX 200 but an even worse month for these shares...

Read more »

Man with his head on his head with a red declining arrow and A worried man holds his head and look at his computer as the Megaport share price crashes today
Industrials Shares

Why is the Electro Optic Systems share price hitting a new 52-week low?

Selling pressure has rolled over into today's session after Wednesday's collapse

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Share Fallers

Why BWX, Sayona Mining, Tyro, and Woodside shares are sinking

These ASX shares are sinking on Thursday...

Read more »

Red arrow going down, symbolising a falling share price.
Share Fallers

Why Carsales, EOS, Imugene, and Tyro shares are sinking today

These ASX shares are sinking on Wednesday...

Read more »

Sad woman on a sofa.
Share Market News

Temple and Webster shares tumble 8% amid bleak US consumer confidence

ASX retail shares are being punished today.

Read more »

A man sits uncomfortably at his laptop computer in an outdoor location at a table with trees in the background as he clutches the back of his neck with a wincing look on his face.
Share Fallers

Why is the Xero share price slipping 6% today?

It’s a painful day for the cloud accounting giant.

Read more »

a man wearing an old-fashioned aviation leather head covering and goggles and with a cardboard plane shape around his waist runs along the ground against a barren, desert background.
Share Fallers

Flight Centre share price struggles amid dwindling household cashflows forecast

The travel company was among many ASX shares that tracked lower today.

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

These 2 ASX tech All Ords shares are hitting new 52-week lows today

Despite another good day for the All Ords, two ASX tech shares are going in reverse.

Read more »