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Tana’s fast food profit lift

NICK Tana’s Australian Fast Foods, which runs the Chicken Treat and Red Rooster food chains, has reported a strong 48 per cent increase in net profit to $5.6 million for the year to June 2005. It was the second successive year of rapid profit growth for the Balcatta-based company, following its $70 million purchase of the Red Rooster business from Coles Myer in 2002. The loss-making Red Rooster brand dragged down AFF to a $3.1 million loss in 2003 before the company bounced back with a $3.8 million net profit in 2004. AFF, majority owned by its chairman Nick Tana and managing director Frank Romano, continued a major restructuring of the business in 2005. The number of company-owned stores dropped from 326 to 312 over the year to June 30. Despite this reduction, the company increased sales revenue 3.8 per cent to $323.6 million.Conversely the number of franchise stores increased from 73 to 97, and as a result franchise revenue increased by 28.3 per cent to $6.6 million. Chief financial officer Mark Lindsay said most of the growth was in the Red Rooster brand in NSW and Victoria, where the company had a much lower market share than in Western Australia. To support its growth, the company increased its marketing and advertising spending by 30 per cent. Mr Lindsay said the company’s performance was adversely affected by the decision to transfer Red Rooster’s head office functions, such as property management, finance, technology and personnel, from Melbourne to Perth. He said the company incurred redundancy costs and had to hire new staff and this had slowed its planned expansion, which would involve between 6 per cent and 7 per cent growth annually in store numbers. The company added to its status as a substantial employer, albeit with a large number of part-time and casual staff. The number of national employees increased by six per cent to 7,769.

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