PHOTO: Murat IŞIK: https://www.pexels.com/photo/woman-wearing-sunglasses-drinking-espresso-in-cafe-17200353/
The Downfall of Michel’s Patisserie: Key Factors Behind the Collapse of the Once-Popular Franchise Chain
A retail expert has revealed the major factors that led to the collapse of the once-popular franchise chain Michel’s Patisserie. This week, the bakery and cafe chain announced it would shut down after struggling through several tough years of trade.
Retail Food Group (RFG), the parent company, announced the closure of the 19 remaining Michel’s Patisserie franchises operating across NSW, Queensland, and Victoria.
Gary Mortimer, Professor of Marketing and Consumer Behaviour at the Queensland University of Technology, explained that franchises face additional challenges compared to independently owned cafes or coffee shops. While high wages, operational costs, leasing, insurance, electricity, and registration affect all cafes, franchises bear additional expenses.
“With a franchise model, those owners not only have to pay wage and input costs but also franchising fees, marketing fees, and store fitout costs,” Professor Mortimer said.
He added that the hospitality industry has also seen the price of coffee beans skyrocket in the past 12 months due to drought in major growing regions. Since the beginning of 2025, the cost of coffee beans has increased by 26.47 percent and more than doubled in the past year from $1.90 per pound to $4.30.
The price of coffee beans proves particularly challenging for franchises as individual stores don’t employ ‘dynamic pricing’—the flexibility to change the price of a product. “If you were running a cafe and regularly selling a medium cup for $5, you now have to push that up to $7 or $8 to cover your costs,” Professor Mortimer said. “If the franchise source says you must sell medium coffees for $6, you can’t sell them higher or lower; you have to stick to that national structure. Unless the franchise deems it important to increase the retail price, a chain like Michel’s Patisserie would have to stick to their price even if supplier costs increased.”
Retail Food Group (RFG) announced it would be closing its 19 Michel’s Patisserie franchises across NSW, Queensland and Victoria
Professor Mortimer highlighted that the hospitality industry is an ‘incredibly competitive market,’ with both independent and franchise stores struggling to make a profit. Soaring inflation has not only impacted operational costs but also affected the way Australians spend their money, with many opting to save money by foregoing barista-made coffee.
“Cafes have the difficult decision to raise the price of their coffee and risk it becoming ‘cost prohibitive’ for customers,” he said. “The impact of inflation, increased interest rates, and the cost of living is simply eating away at our discretionary spending. The morning coffee becomes more of a discretionary spend. You know, if I’m paying $7 a cup every morning, that’s almost $50 a week. The morning coffee is becoming a luxury and it’s just outside a customer’s comfort zone.”
The remaining Michel’s Patisserie stores are set to be converted into one of the company’s other brands, including Donut King, Gloria Jeans, Brumby’s Bakery, and Crust Gourmet Pizza. RFG is also in discussions with Michel’s Patisserie’s current franchisees about the brand’s future and other network opportunities.
Professor Mortimer told Daily Mail Australia cafes and coffee shops operated in an ‘incredibly competitive market’, with franchised stores hit with additional costs
Professor Mortimer said another challenge for franchises is that individual stores do not have ‘dynamic pricing’ – the flexibility to change the price of a product
“These conversations form part of our organization’s evolution to be closer to our customers, focusing on elevating customer experience to drive growth and increase franchise partner profitability,” RFG said.
Michel’s Patisserie was founded in Sydney in 1980 by French chef Michel Catteon. At the height of its success, it boasted more than 300 locations across the country.
SOURCE: THE DAILY MAIL