News

McDonald’s Australia is to inject more than $130 million into opening 19 new restaurants and renovating existing stores.

The fast food giant has already opened eight new stores in NSW, Queensland, and Tasmania this year and will open 11 additional stores across the country before the end of this year.

Aside from opening new outlets, the company said it would also renovate over 80 of its existing stores, including improvements in the design, efficiency and functionality of the drive-thru, deliveries, and dining rooms to provide a better customer experience.

David Howse, chief support officer of McDonald’s Australia, said that the company is focused on opening new stores in residential growth areas close to transport and infrastructure in both metro and regional locations.

“Most new restaurants will feature a McCafe, digital ordering kiosks, dual lane drive-thrus and McDelivery partner rooms, allowing customers to continue enjoying Macca’s how and when they like,” said Howse. 

He added that the company is also working to reduce its environmental impact on new restaurants by using LED lighting, solar panels, heat recovery water systems, and recycled material for wheel stops and dining room tiles.

“The restaurants we have opened to date have received an extremely positive response from the local community, which makes us excited for our plans to continue to invest across the country,” Howse concluded.

Liquor company Lark Distilling has named Satya Sharma its new CEO, effective on May 1.

Sharma is presently the regional MD Southeast Asia and Australasia for William Grant & Sons, and a member of the company’s Branded Business Unit, which is in charge of the company’s global brands.

“The board has been working on CEO succession, and we are delighted to secure a CEO of Satya’s calibre and experience to lead the company through its next phase of growth and expansion,” said Lark chairman David Dearie. 

Sharma used to hold many roles during his 10-year journey with William Grant & Sons in Singapore, China, and the UK, including head of business strategy & development, interim finance director Apac, and head of commercial.

Prior to that, Sharma worked for Campbell Arnott’s and Pitcher Partners as a senior manager in corporate finance when he was in Australia. 

Laura McBain, the company’s current temporary MD, will remain CEO position until May 1, after which she will continue to serve as a non-executive director.

“According to IWSR data, William Grant & Sons have more than doubled its’ Asia Pacific sales over the last five years,” Dearie added. 

DTC pet wellness start-up, Lyka Pet Food, has raised $30 million in Series B funding. 

Led by Itai Tsidon – a lead investor in other startups such as Gcash, Frame.io, and Forter – the funds will be used for research and development, consumer education, and building manufacturing and distribution capabilities.

Investors include Craig Blair, (founding chairman of Pet Circle) and Paul Wilson (founder and former CEO of Petbarn).

“Lyka’s purpose-driven and innovative ethos are more than just an interesting idea, thousands of real-life examples of positive impact from their customers is a testament to that!”

Established in 2018 by CEO Anna Podilsky (pictured above) and integrative veterinarian Dr Matthew Muir, Lyka aims to deliver freshly prepared, researched-backed, wholefood pet nutrition direct to consumers nationwide.

The startup said its unique algorithm offers customers the opportunity to tailor meal plans specific to their dog’s age, breed, weight, activity level and sensitivities, with the pre-portioned, ready-to-serve meals delivered directly to customers. 

Podolsky said she was thrilled with the substantial backing, noting the capital injection will shine a bright light on the pet-care sector.

“Here at Lyka, dogs are much more than family and deserve to eat like it. There’s a reason why we feel better on a fresh food diet and the same goes for dogs”, she added.

The maker of Dove toiletries and Streets ice creams will allow 500 Australian employees to work shorter weeks after a pilot found staff could be just as productive in four days as five by removing low-value tasks such as meetings and emails.

Unilever Australia will test a four-day workweek for at least 12 months from November 14, and will base its trial on the 100:80:100 model, whereby employees retain 100 per cent of their pay but reduce their hours to 80 per cent, provided they maintain 100 per cent productivity.

All staff except for factory employees covered by existing enterprise bargaining agreements will take part in the trial, which comes after Unilever achieved good results with a four-day workweek experiment in New Zealand.

University of Technology Business School monitored the trial across the ditch. Based on three company-wide online surveys and 57 in-depth interviews between December 1, 2020 and June 30, 2022, it found that staff were less stressed, more productive and more committed to the organisation after the introduction of reduced working hours.

Staff took 34 per cent fewer sick days in 2021 than in 2020. And across the full 18-month trial period, stress fell by 33 per cent, work-life conflicts dropped by 67 per cent, and feelings of strength and vigour at work increased by 15 per cent.

The experiment, which covered about 80 employees in New Zealand and has since been extended, also allowed for strong results against the company’s business objectives. Targets for overheads, market-winning share and sales and revenue growth were either met or exceeded.

The vast majority of employees embraced the change, with 72.8 per cent saying they were frequently sticking to reduced hours, and 88.5 per cent describing the trial as a positive experience.

Fewer emails, fewer meetings

Anish Singh, the head of HR for Unilever Australia and New Zealand, told The Australian Financial Review that moving to a four-day workweek was about giving staff greater autonomy as well as the opportunity to try different ways of working.

He said he hoped a shorter workweek in Australia would lead to happier and healthier employees at the same level of productivity – or even higher.

Key to the trial’s success in New Zealand, he said, was prioritising some tasks while eliminating those that added little or no value.

As a result, the company reduced the average time employees spent in meetings by 3½ hours per week, slashed the number of emails sent and adopted technology such as Microsoft Teams for video calls.

Bronwen Dalton, head of the department of management at UTS Business School, said one of the two big takeaways from the New Zealand trial was that companies had to change the way they worked for a four-day week to be successful.

“[You need] fewer emails, fewer meetings, less time on the phone and other distractions, and [you need to adopt] a practice of deeper work,” she said.

The second major takeaway was that companies should not make a four-day workweek compulsory for all staff, as this takes away the extra autonomy typically given to employees when moving to a work practice focused on outcomes rather than the number of hours worked.

Asked whether the study’s findings were reliable given they were based on surveys, Professor Dalton said the research would be subject to a peer review and used well-established academic techniques, known as “verifiable academic instruments”, to compensate for biases.

She added that employees were likely honest about their experiences, as the surveys were conducted by UTS rather than Unilever, and the university made the data it collected anonymous before sharing it with the company.

A six-month pilot program run by 4 Day Week Global that covered 73 organisations in Britain has also shown positive results for the four-day workweek.

At the UK program’s halfway point, companies were sent questionnaires to capture their experience. Of the 41 companies that responded, 88 per cent said the shorter week was working “well”; 46 per cent said productivity had stayed the same; 34 per cent said it had “improved slightly”; and 15 per cent said it had “improved significantly”.

The a2 Milk Company has been granted temporary access to sell its a2 Platinum infant formula in the United States as the country continues to face a significant shortage of baby formula after a contamination scare.

The US government has been dealing with a major crisis since February after Abbott Nutrition’s plant was closed following a contamination scare.

While multiple companies including smaller rival Bubs Australia was given special market access to help with the shortage, a2 Milk had missed out. In August, it received a letter from the US Food and Drug Administration (FDA) saying the regulator was deferring further review of its request to ship tins.

A2 Milk said on Thursday it now expects gross margins to be lower than average, and distribution costs to be higher due to potential air freight and rework costs in the near term, and incremental marketing and trade investment to enter the category.

Overnight, the FDA said a2 Milk will be able to import its a2 Platinum 0-6 months and 6 to 12-months ranges. Danone (Ireland) will also be able to import ​its Aptamil Stages 1 and 2 formulas.

“Both products will be sold at major US retail outlets,” the FDA said on its website.

The FDA added that the grant of special access follows a review of information provided “pertaining to the nutritional adequacy and safety, including microbial testing, labelling and additional information about facility production and inspection.”

The positive news sent the Kiwi company’s share price soaring on Thursday, gaining 29¢, or 5.5 per cent, to $5.56 each in afternoon trade on the ASX. It has been clawing back some ground since dipping just below $4 each in May.

The crisis continues in the US – while shipments of formula have landed, US media reports stores remain unevenly stocked, and officials in charge of the response blame hoarding, supply chain bottlenecks and manufacturers making fewer varieties.

A2 Milk chief executive David Bortolussi said on Thursday that the company has approval through to January 6, 2023 to import tins to the US.

The company can also supply Stage 3 toddler product in addition to Stages 1 and 2, which does not require enforcement discretion.

Mr Bortolussi added that the product to be supplied to the US has the same formulation as a2 Platinum but has different scoops, mixing instructions and labelling requirements to meet the FDA requirements.

This product is not currently available and will need to be manufactured as soon as possible, he said.

While the US represents a significant opportunity to develop the a2 Milk brand in the formula category over the long term, Mr Bortolussi said it is early days.

“In the near-term, and prior to confirming distribution plans, sales during FY23 are expected to be up to 1 million cans all within 2H23, assuming enforcement discretion remains in place throughout the period,” he said.

“Actual sales will ultimately depend on customer demand, consumer offtake, supply shortages and market conditions at the time.”

A2 Milk will provide an update on US distribution gains and sales outlook when it presents its first half results early next year.

Woolworths boss Brad Banducci says shoppers have returned to doing their weekly grocery shop on weekends, but must now face up to paying more as inflation makes itself felt in every aisle.

The supermarket giant revealed on Thursday that food prices across its Australian supermarkets rose 7.3 per cent in the September quarter, with fresh produce spiking even more as inclement weather and supply chain pressures hit fruit and vegetable producers.

“In the last month or so we’ve started to see Sundays become our major shopping day - which means customers have got far more routine and habit [than during COVID],” Banducci said.

But some of these shoppers have started to make tough choices about what goes in their trolleys, with signs people are trading fresh produce for frozen food, or moving to canned goods and cheaper home brand items.

The days of the $6 iceberg lettuce might be over, but the supermarket chain is still seeing price rises from producers and supply challenges across its fresh food range, Banducci added.

Challenges with corn and potato crops were also leading to issues with the supply of frozen products, and there have been delays to in-season fruits coming into stores at good prices, meaning consumers have to wait longer than usual for mangoes and cherries.

Banducci made his comments after Woolworths reported a 1.8 per cent rise in group sales to $16.3 billion for the 14 weeks to October 2 - the first quarter of its financial year. But Australian food sales weakened by 0.5 per cent compared with this period last year, when more shoppers were stuck at home due to the pandemic lockdowns.

Inflation continued to accelerate across the quarter, with the average price of food up 7.3 per cent in Australia, and 5.3 per cent higher in New Zealand.

The company did not specify the exact jump in fruit and vegetable prices during the quarter, but said there had been “double-digit” increases in this category.

Last week, Woolworths’s rival Coles confirmed it had seen inflation of 7.1 per cent across its supermarkets, with prices for fresh food up 8.8 per cent.

Woolworths’-owned discount department store Big W continued to benefit from the end of retail lockdowns, with total sales hitting $1.2 billion for the quarter, up 30.1 per cent on the same period last year. Online sales at Big W more than halved though in a sign that people have gone back to the shops rather than shopping on the internet.

UBS analysts said Woolworths’ numbers had come in below estimates, noting that Australian food sales had dropped 0.5 per cent despite inflation jumping during the quarter.

Despite the inflationary challenges, Banducci said that with 51 days to Christmas the company was focused on delivering customers an affordable festive offer.

“We are seeing strong early sell-through of seasonal lines, and we remain cautiously optimistic for the period ahead,” he said.

Woolworths shares opened lower amid a broader sell-off on the Australian sharemarket, and closed 3.5 per cent weaker at $32.05.

The United Nations food agency’s world price index fell for a sixth month in a row in September, receding from all-time highs posted earlier this year after Russia invaded Ukraine.

The Food and Agriculture Organization (FAO) said on Friday that its price index, which tracks the most globally traded food commodities, averaged 136.3 points last month versus a revised 137.9 for August.

The August figure was previously put at 138.0.

The index has fallen from a record of 159.7 in March. The September reading was, however, 5.5 per cent higher than a year earlier.

The latest drop was driven by a 6.6 per cent month-on-month fall in vegetable oil prices, with increased supplies and lower crude oil prices contributing to the decline.

Sugar, dairy and meat prices all slipped by less than one percentage point, relieving inflationary pressures.

By contrast, FAO’s cereal price index rose 1.5 per cent month-on-month in September, with wheat prices climbing 2.2 per cent because of concerns over dry crop conditions in Argentina and the United States, strong EU exports and heightened uncertainty over access to Ukrainian Black Sea ports beyond November.

Rice prices rose 2.2 per cent, partly because of worries over the impact of recent severe flooding in Pakistan.

In separate cereal supply and demand estimates, FAO lowered its forecast for global cereal production in 2022 to 2.768 billion tonnes from a previous 2.774 billion tonnes.

That is 1.7 per cent below the estimated output for 2021.

“A lower global coarse grain production forecast makes up the bulk of this month’s overall cutback, as adverse weather continued to curb yield prospects in major producing countries,” FAO said.

World cereal use in 2022/23 is expected to surpass production at 2.784 million tonnes, leading to a projected 1.6 per cent fall in global stocks compared with 2021/22 to 848 million tonnes.

That would represent a stocks-to-use ratio of 29.7 per cent, down from 31.0 per cent in 2021/22 but still relatively high historically, FAO said.

Cereal and snack company Carman’s has made its first-ever acquisition – of Adelaide-based snack brand Fruit Wise. Details of the purchase have not been disclosed.

Carman’s founder Carolyn Creswell said the purchase marked an exciting venture for the company as it brings together two like-minded businesses with a passion for delicious food.

“My kids have loved Fruit Wise fruit straps for over 15 years, so much so they were the number one school lunchbox request,” said Creswell.

“Given how much we all loved the product, I decided to pick up the phone to see if there was any opportunity to work together.” 

After a year of discussions, Creswell said the parallel similarities and outlook on healthy snacking helped finalise the deal. 

“It’s truly a moment that I’m so proud of, and I just can’t wait to watch Carman’s continue to grow,” she added.

Creswell explained she holds the Australian-owned brand close to her heart, which is why Fruit Wise will remain in its location at Adelaide Hills.

“With so much uncertainty in the world over the last two years, locally made products are becoming increasingly important to Aussie families,” she added. 

 “That’s why I place so much pride in the fact we’re 100 per cent Australian-owned and manufactured.” 

Bridget Beal, MD at Fruit Wise, said being family-owned for 15 years, the brand wanted to ensure it was in good hands before “passing over the reins”.

“After speaking with Carolyn, we knew straight away that this was the right move for Fruit Wise,” proclaimed Beal. “We can’t wait to watch Fruit Wise grow under the care of Carman’s!” 

Liquor retailer Endeavour Group says Australians are rushing to book in a pub lunch for Christmas as the company’s buoyant hotels business offsets the predicted slowdown in retail sales.

Boss Steve Donohue said Endeavour’s hotels segment had benefitted from bigger groups of diners making bookings in the first weeks of the new financial year, while Christmas reservations were well up on last year.

“We are seeing larger groups coming together - a 10 per cent increase over the size of the booking,” he said.

“We expect to serve around 44,000 Christmas covers - so Christmas lunches, Christmas dinners - and at the moment our forward bookings are double what they were at the same time a year ago. We have demand for about a third of the seating capacity that we’ll have for Christmas already.” Those figures put the business in a strong position into the end of the calendar year, he said.

Endeavour, which operates the Dan Murphy’s and BWS chains, generated just over $3 billion in sales for the first quarter of the 2023 financial year, with sales from its hotels up 90.8 per cent to $538 million compared to the COVID-hit first quarter of 2022 as customers spend up on food and accommodation.

Asked about cost of living pressures, Donohue acknowledged that families were looking for better value, and the affordability of the pub experience could be a factor in increased interest in hotels.

“A trade down out of fine dining, well, that is potentially a factor at play out there.”

As expected, sales across the company’s retail drinks business have slowed, however, with sales down 6.2 per cent compared with the same time last year as the incredible demand seen throughout COVID lockdowns continues to wane.

The retail business generated $2.5 billion in sales during the third quarter, which still represents a three-year compound annual growth rate of 4.4 per cent.

Donohue was still upbeat about retail sales, however, noting that the festive season rush had always been a core part of the company’s annual sales.

Last year’s Christmas trading period was marked by supply chain disruptions across the business, but the business has worked hard to ensure it has enough stock over the next couple of months.

“It worked out ok [last year], but we don’t want those sorts of challenges this year. We are pulling forward some of our inventories in store a bit earlier.”

Endeavour shares jumped over 2 per cent on the update and closed the session at $6.97.

UBS analysts noted that while the slowdown in retail sales had been predicted there were some bright spots for Endeavour, including the growth of its specialist wine, beer and spirits business, Pinnacle.

“Reopening leverage is evident in the strong Hotels result as the consumer socialises,” Shaun Cousins said in a note to clients.

Australia’s largest fresh food producer has downgraded the earnings guidance for its citrus business after excessive rainfall and lower temperatures damaged its orange and mandarin crops.

ASX-listed Costa Group’s citrus is grown in three regions: roughly 40 per cent in the Riverland area (South Australia), 40 per cent in Sunraysia (straddling the NSW-Victoria border) and 20 per cent in central Queensland.

The company said on Monday that adverse weather conditions had taken a heavy toll on its citrus crop across the country.

“The weather impact has been pretty consistent run across the whole country, which is very unusual – normally you have a north-south divide – but this year, La Nina and other influences have had an effect right across the country,” said Costa interim CEO Harry Debney.

The ASX company had flagged earlier this year that excessive rain would result in poorer quality citrus. Those conditions have continued, leading to higher labour, pest and disease control costs.

Costa Group’s Queensland citrus crop has been harvested and packed, while its southern crops in the Riverland and Sunraysia regions are about 80 per cent through the harvest, with late navels and some mandarins still to be packed.

The lower quality crop had resulted in “considerably lower” volumes, down “at least 20 per cent” on expectations, Debney said. This is expected to affect the bottom line of Costa’s citrus business.

“The net outcome to date plus the forecast for the balance of the citrus season is expected to translate into full year EBITDA-S for the Citrus category that is considerably lower than previously forecast.”

The revised earnings guidance was poorly received by the market, with investors sending Costa Group’s shares down 13.4 per cent to $2. The company’s stock has slid 35.4 per cent this year.Costa’s other businesses, including berries, tomatoes and mushrooms, are not expected to be as badly affected by the rain as these crops are grown undercover in glass houses, unlike citruses which is grown in fields.

However, reduced sunlight will have some impact, Debney said. “They are affected a little bit by low light, but nowhere near the same extent as the citrus crop.”

Costa’s avocado business has suffered for a number of years thanks to a national oversupply that has pushed down retail prices.

Overall, the company’s full-year earnings for the 2023 financial year are expected to be “marginally ahead” of the previous financial year. Costa is predicting more normal weather conditions, though Debney acknowledged the business could be taken by surprise again.

“Who knows? The Bureau of Meteorology is calling for more moderating influences from November, and let’s hope they’re right.”

Despite the lower packing volumes, citrus prices are not expected to increase significantly, although there will be some rise.

Debney stepped back into the CEO role in late September after former chief Sean Hallahan suddenly resigned from the position, sparking investor concerns.

Before Hallahan, Debney was Costa’s long-time chief, having spent more than a decade in the role.