Investor Presentaiton
Key risks (continued)
RETAIL
FOOD
GROUP
Risk
Data Security and
IT System
Availability
People and
Culture
Wage compliance
Changing
consumer
behaviour
Failure to Achieve
Objectives
Workplace Health
& Safety
Interruptions to
Roasting
Operations
Page 25
Description
The Group relies on IT infrastructure, systems and processes to support ongoing business operations and growth. These systems may be vulnerable to certain threats, including hacking, data
breaches, human error and electrical, hardware or software failure. Were such infrastructure and processes to be unavailable, or if they were impacted by cyber-crime or events beyond RFG control,
there could be a material impact on ability for the Company to operate, as well as financial and reputational damage. In addition, the impacts of cyber-crime could lead to loss of confidential or private
data, which may impact on the Group's customers, suppliers and employees. The occurrence of a loss of confidential or private data may also have a material impact on the Company's reputation, and
a subsequent financial impact.
The Group's ability to develop and grow is reliant on having the right mix of motivated and skilled talent in place. Past organisational challenges and change have impacted on the Group's ability to
attract such talent.
Under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (the FWA Amendment), franchisors are potentially liable for a franchisees' contraventions of certain provisions under the
Fair Work Act (e.g. a failure to pay correct wages) where the franchisor knew or could reasonably be expected to have known that the contravention would occur, or that a contravention by the
franchisee of the same or a similar character was likely to occur, and the franchisor has not taken reasonable steps to prevent a contravention by the franchisee. RFG implements a number of
measures designed to prevent a contravention by its franchisees, including wage compliance auditing of franchisees. Whilst the legislation provides some guidance as to factors a Court might have
regard to when assessing whether reasonable steps have been undertaken, if a claim were to be made, would depend on the circumstances of the relevant claim as to whether the steps taken by
RFG would be considered sufficient by a court. To date, as far as RFG is aware, no Court has considered this issue in order to provide further guidance on the appropriate steps that should be taken.
There is also a risk of inadvertent non-compliance by the Company of employment laws in respect of its own personnel. A failure to demonstrate the reasonable steps defence (in the event a claim is
lodged), or to comply with employment laws in relation to its own personnel, may have material adverse implications for the Company's reputation, operational and financial performance and financial
position. There is also a risk that the Company's performance and reputation, or the reputation of its brands, may be adversely impacted by wage non-compliance or underpayment within its franchise
network.
The Australian coffee and retail food sectors are subject to changing consumer trends, demands and preferences. Examples of recent consumer changes include an increase in work-from-home
practices, a reduction in consumer foot-traffic in metropolitan CBDs and transport hubs, and the growth of third party aggregator channels such as Uber Eats. Responding to new market trends can
require significant investment. A failure to anticipate, identify and appropriately react to these changes could lead to reduced demand for products in RFG's network. This could have a material adverse
effect on the financial and operating performance and financial position of the Company, its franchisees or master franchisees.
RFG's future financial performance is dependent upon its ability to meet its strategic and operational objectives and to develop and execute appropriate strategies and initiatives pursuant to those
objectives. Those strategies and initiatives may include the successful identification and establishment of new outlets (corporate or franchised); the implementation of new outlet formats and ways of
doing business; and the potential execution of inorganic growth opportunities such as acquisitions and or brand licensing opportunities. If the Company's those strategies and initiatives are ineffective,
poorly implemented or implemented later than expected (including due to competition for or availability of sites, franchisee adoption (or lack thereof) of new outlet formats and ways of doing business,
acquisition integration risk or negative consumer reaction to new brands), RFG may not meet its objectives, which could in turn have a material adverse impact on the financial and operating
performance and financial position of RFG.
RFG's employees and the employees of its franchisees are at risk of workplace accidents and incidents. In the event that an employee is injured in the course of their employment, RFG or its
franchisees may be liable for penalties or fines imposed by regulatory authorities or damages arising from claims for compensation from injured parties that are not fully covered by insurance policies.
Further, in such circumstances, RFG or its franchisees may be required to undertake remedial action in compliance with notices from regulatory authorities if there have been any contraventions of
work health and safety laws or workers' compensation legislation. Accordingly, such workplace accidents and incidents could materially adversely affect RFG's and its franchisees' operating and
financial performance or financial position. Additionally, they have the potential to harm the reputation of the Company and its brands.
RFG's coffee roasting operations may be exposed to short, medium or long-term interruptions arising from machinery or equipment failure, electricity and gas interruptions, human error and natural
disasters, weather or force majeure events. RFG's insurance arrangements may not adequately mitigate any liabilities or losses which might arise as a result of an interruption to RFG's roasting
operations. Such interruptions could adversely affect RFG's ability to supply goods to its franchisees and wholesale customers, which may in turn have a material adverse impact on the financial and
operating performance and financial position of RFG.View entire presentation