Why Brumby’s Bakery is struggling – as its former boss launches a scathing attack on parent company Retail Food Group

Two decades ago, Brumby’s Bakery was hailed as an Australian business success story – but its future is now hanging by a thread.

What began as a single bakery in Melbourne half a century ago expanded to more than 320 stores across Australia and New Zealand and was as popular as its major rival, Bakers Delight.

The brand claims on its website to be one of the first Australian companies to successfully embark on a franchising program in the very early days of franchising.

In 2007, the business was acquired by parent company Retail Food Group, which owns a string of Aussie food and beverage chains, including Gloria Jean’s, Donut King, Beefy’s Pies and Crust Gourmet Pizza.

Today though, fewer than 100 stores remain – and Brumby’s Bakery’s very existence is now in doubt.

On Wednesday, RFG announced plans to sell the chain, with ‘no guarantees it will result in an acceptable offer’.

Now the Brumby’s former chief executive Michael Sherlock has weighed in with a brutal message for the corporation which bought it over.

‘How do you start a small business?’ Mr Sherlock posted on LinkedIn on Thursday. ‘Sell a big business to RFG and watch them destroy it slowly.’

Brumby’s Bakery faces an uncertain future with ‘no guarantees’ a planned sale will result in an acceptable offer

Brumby’s Bakery can bounce back by diversifying its range and reinventing the business model, according to retail expert Gary Mortimer

While the company insists Brumby’s is a profitable part of to its convenience, cafe and bakery division, it has seen a sharp decline in outlets over recent years.

Experts believe the franchising model was a major contributing factor, where operators face additional challenges on top of economic pressures.

‘They face much higher expenses than your locally run bakery,’ Queensland University of Technology marketing and consumer behaviour expert Professor Gary Mortimer told Daily Mail.

‘On top of wages and leasing costs, those owners are also paying for franchising, operation, marketing and store fit-out fees.’

Increased competition from supermarket giants also played a role.

‘For some time, bakeries such as Brumby’s have produced good, high-quality products,’ Professor Mortimer explained.

‘But now, people can wander into their local Coles and Woolworths and find a similar range of baked goods, such as sourdough.’

Professor Mortimer believes the potential new owners could breathe new life into Brumby’s by diversifying its product range and reviewing the business model.

Brumby’s Bakery once consisted of more than 320 stores. Fewer than 100 remain today

He cited how a popular pie chain bounced back from voluntary administration in 2014 through a creditor-approved financial rescue plan.

‘Pie Face went out of business and then reinvented itself with a new business model by going into service stations,’ Professor Mortimer said.

He noted that RFG had ‘struggled with some of its brands’ in recent years and hopes Brumby’s won’t meet the same fate as Michel’s Patisserie.

The café chain was also part of the RFG fold until cafés were shut down or converted into Gloria Jean’s or Donut King stores in February after a few tough years of trade.

The former long-time chief executive of Brumby’s has now launched a scathing attack on RFG following news of its plans to offload the bakery chain.

Originally called ‘Old Style Bread Centre’, the first bakery opened in Melbourne’s east in 1975.

The business was rebranded as Brumby’s in the 1980s and later expanded to hundreds of franchises across Australia and New Zealand.

Michael Sherlock spent 26 years at the helm of Brumby’s as chief executive, where he instilled a winning culture and saw the firm’s capitalised value soar from $6million to $46million.

Michael Sherlock spent 26 years as Brumby’s Bakery chief executive until the business was acquired by Retail Food Group in 2007

It included an eight-year stint as managing director until the business was acquired by RFG and he also lays the blame for the firm’s decline with RFG’s franchise model.

‘The fairness dial needs to be in the middle,’ he said.

‘A franchisee needs more than a wage – if they work hard, they should get a good return on the investment.

‘Not pay extra for purchases, receive little support and see their marketing fund disappear in headquarters expenses.’

Mr Sherlock is now Sentinel Property Group chief experience officer, and says he has no intention of buying Brumby’s back.

‘For the record, I am not interested – not yesterday, not today, not tomorrow,’ he added.

Former franchisee Michael Kopittke added: ‘While other bakeries / chains are thriving, as an ex Brumby’s master franchise who opened 60 stores with some great successful franchisees in North Queensland and New Zealand, let’s hope a new owner can regain potential.’

Two months ago, Mr Sherlock shared another scathing post following the demise of the long-standing Brumby’s Mount Isa store in outback North Queensland

While Retail Food Group regards Brumby’s as a profitable contributor to its convenience, cafe, bakery segment, it has seen outlet declines over an extended period

It was forced to close its doors after the owners were unable to find new operators, leaving the town with just one independent bakery.

‘Our franchise agreement was coming to an end and we didn’t want to renew it,’ Michelle Russell told the North West Weekly at the time.

‘We looked into de-branding, doing our own store, but at the end of the day, we weren’t able to go forward.’

The bakery has been running for almost 30 years but faced tough competition after Coles and Woolworths began trading seven days a week.

Mr Sherlock added in another post in LinkedIn: ‘In 2007 when Brumby’s bakery was bought by RFG in a hostile takeover, there were 321 stores with 50 to open.

‘In 2025, there are 60 to 70 left (depending on if you count ghost stores). In Townsville alone, we had 16, now around 1 to 2.’

‘Another store bites the dust.’

RFG announced on Wednesday that the company recorded a $14.9million loss in 2024-25, down from a profit of $5.8million in the previous financial year.

Popular chain Pie Face was forced to reinvent its business model after it went into voluntary administration

The long-term decline and restructure of the ageing Brumby’s brand cost the company $12.2million in the last 12 months.

‘Based on a review of our strategic growth pillars, we have announced that we are exploring options for the sale of the Brumby’s Bakery and are shifting the focus of our company store operations towards Beefy’s Pies and Firehouse Subs to support their rapid expansion,’ chairman Peter George wrote in a letter to shareholders.

‘The group is investigating opportunities to divest of Brumby’s and has recognised non-cash impairment charges relating to the brand assets and goodwill in FY25.’

The company stressed that Brumby’s Bakery stores continue to operate and remain profitable.

The news has sparked a mixed reaction from Aussies online.

‘This is terrible news,’ one loyal customer commented.

Another wrote: ‘Tough to see an Aussie icon like Brumby’s get sliced off, but makes sense if it’s not the cash cow anymore.

‘Markets will be watching to see if this lets RFG focus better on their other brands.’