More than 100 jobs have been cut at Liverpool-based cake decoration specialist Real Good Food (RGF) as part of a radical reform set to turn the business around.
The reform, described by RGF as a ‘well-defined plan’, was announced in October 2022 and was designed to return the business to profitability. It included significant price resets with customers across all sectors, overhead cost savings, and further manufacturing efficiency gains.
As part of the plan, employee numbers decreased by 45% from 318 to 201, and have since reduced to 186 (106 of the remaining roles are production related and 80 are in business support functions).
To date, around £8m of price resets, efficiency gains, and cost savings have been secured for the 2024 financial year.
The figures were revealed in the firm’s final results for the year ended 31 March 2023 in which it reported a 19.8% decrease in revenue to £32.4m and an EBIDTA loss of £4.8m. Loss before tax was at £9m – although this was an improvement on the £19m loss seen in 2022.
Trading conditions throughout the year were described as challenging due to the ‘perfect storm’ of rising costs and lower revenues. Volumes were around 26% lower year-on-year, although the firm said the reductions were market driven rather than customer losses.
The impact of reduced volumes and the lag effect of passing cost increases through to customers (the average input cost was 30% higher) meant gross margins reduced from 39.9% to 33.3%. However, margins in the current year are improving and are currently at 35.9%, RGF added.
“Market conditions remain challenging; we are however starting to see volumes in some segments beginning to slowly rebuild and we are gradually trading our way into a better place as the busier autumn season kicks in,” said executive chair Mike Holt.
“The radical reform programme we have implemented over the last year has been transformational and, with new management now in place, the Group is well positioned to make further gains, particularly in manufacturing efficiencies, sales, and customer focus.”
In July 2023, John Tague was appointed as MD of JF Renshaw and Rainbow Dust Colours replacing Steve Moon. Tague has ‘significant expertise’ and a track record of managing successful business transformations, the business said.
Real Good Food also secured £2.5m in funding last year to support its turnaround, and Holt noted that it has recently agreed a loan extension with Hilco which provides a “more secure platform to continue our journey to sustainable and satisfactory profitability”.
Five months into the 2024 financial year and Real Good Food said demand is higher than last year and, despite sales being broadly the same due to cash constraints, EBITDA is better.
Strategy for Renshaw
Following research conducted in 2021, Renshaw’s own brand products were rebranded in September 2022 with a new improved recipe to make it easier to knead, roll and correct slight imperfections. RGF said the “just roll with it” rebrand has been well received and product range rationalisation has made choosing the right product easier for all users.
Notably, the brand is set to celebrate its 125th anniversary this year and RGF said its aim is to consolidate its market leading position in the UK, build sales in the US, accelerate growth in caramels and sauces, and diversify into products that use the same equipment or process know-how. Growth in these areas should counterbalance the gradual decline in fondant icing and marzipan, it added.
During the FY23, the business launched 69 new products into the market across retail, Renshaw brand, international and B2B channels. The on-trend drip icings range, launched in 2021, also continued to be a focus for retail and international customers this year.
RGF also expanded all-year-round lines of frostings with trending flavours and colours to tap into key occasions to drive consumer interest. It also gained shelf presence within the dessert sector with dessert sauces driving new consumers to purchase products.
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