THE state’s two dominant bakery franchises – Brumby’s and Bakers Delight – could be preparing for heated competition this year after Retail Food Group reacquired the master franchise Brumby’s Bakeries, operating in Western Australia and the Northern Territory.
The acquisition of 50 outlets in WA and eight in the NT, to be funded through a mixture of RFG scrip and cash, comes after the company bought the north Queensland and New Zealand master franchise territories late last year.
It’s the latest in a string of acquisitions for the company, which recently bought Sydney-based DCM Coffee & Donuts and 37 Big Dad’s Pies franchises in Queensland.
Brumby’s, which has 320 stores in Australia and New Zealand, has struggled to achieve the same growth in the bread market in WA as Bakers Delight, which has more than 700 bakeries across Australia, New Zealand, Canada and the US.
According to WA Business News’ latest ‘Book of Lists’, Bakers Delight remains the largest bread chain in the state with 68, also making it the fifth largest franchise overall.
The list shows that, with 50 franchises, Brumby’s has not grown its number of outlets in WA since 2006 when it had 47, although Bakers Delight has only grown marginally, adding just five outlets in four years.
Roy Morgan research shows that Bakers Delight holds a 13.7 per cent slice of the Australian bread market, while Brumby’s has 3.2 per cent market share, and supermarkets have the lion’s share, 62.1 per cent.
RFG chief executive Tony Alford said the combined Brumby’s WA and NT master franchise territories achieve the highest weekly sales in Australia and that the transaction would deliver in equivalent terms of earnings before interest and taxes contribution of an additional 32 new Brumby’s outlets.
“Except for the relatively small Brumby’s South Australian master franchise territory, the completion of these two acquisitions will result in RFG having reacquired all Australian or New Zealand master franchise and licence rights for each of the company’s four proprietary franchise systems,” he said.
The baking industry, albeit a mature market, has not maintained consolidated statistics over the years and is a mixture of highly fragmented small to medium-sized enterprises in the three main product sectors – bread products, cakes and pastries, and biscuits.
Bread manufacturing makes up almost a third of the multi-billion-dollar Australian baking industry market, although Brumby’s and Bakers Delight retain a duopoly in WA in terms of bakery franchises.
The level of competition within and between sectors is intense, with each sector relying on product differentiation, innovation and value adding to maintain or grow market share.
