The sad reasons Michel's Patisserie went bust
A retail expert has revealed the major factors that forced franchise chain Michel's Patisserie from more than 300 locations at the height of its popularity... to bust.
A retail expert has revealed the major factors that forced once-popular franchise chain Michel's Patisserie to go bust.
This week, the bakery and cafe chain announced it would shut down after struggling through a tough few years of trade.Ā
Its parent company Retail Food Group (RFG) said it would close the 19 Michel's Patisserie franchises which are in operation across NSW, Queensland and Victoria.Ā
Professor of Marketing and Consumer Behaviour for the business school at the QueenslandĀ University of Technology, Gary Mortimer, said franchises faced additional challenges than independently owned cafes or coffee shops.Ā
While high wages, operational costs, leasing, insurance, electricity and registration affect all cafes, Professor Mortimer said franchises had additional expenses.Ā
'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 the hospitality industry has also seen the price of coffee beans skyrocket in the past 12 months thanks to drought in major growing regions.Ā
Since the beginning of 2025, the cost of coffee beans have increased 26.47 per cent and more than doubled in the past year from $US1.90 a pound to $US4.30.Ā
Retail Food Group (RFG) announced it would be closing its 19 Michel's Patisserie franchises across NSW, Queensland and Victoria
The price of coffee beans proves particularly challenging for franchises as individual stores don't do 'dynamic pricing' - the flexibility to change the price of a product.Ā
'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.Ā
'If the franchise source says you must sell medium coffees for $6 you can't sell them higher or lower, you have to stay 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.'
Professor Mortimer explained the hospitality industry was an 'incredibly competitive market' and both independent and franchises stores were struggling to make a profit.
Soaring inflation has not only impacted operational costs but also affected the way Australians spend their money, with many ditching barista-made coffee to save money.Ā
Professor Mortimer said cafes had the difficult decision to raise the price of their coffee and risk it becoming 'cost inhibitive' for customers.Ā
Professor Mortimer told Daily Mail Australia cafes and coffee shops operated in an 'incredibly competitive market', with franchised stores hit with additional costsĀ
Professor Mortimer said another challenge for franchises is that individual stores do not haveĀ 'dynamic pricing' - the flexibility to change the price of a product
'The impact of inflation, the impact of increased interest rates, the impact of cost of living, it's all simply eating away at our discretionary spending,' Professor Mortimer said.
'The morning coffee becomes more around discretionary spending. 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 its just becoming outside a customer's comfort zone.'Ā
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.Ā
RFG is also in discussions with Michel Patisserie's current franchisees on the brand's future and other network opportunities.Ā
'These conversations form part of our organisation's evolution to be closer to our customers, focusing on elevating customer experience to drive growth, and increase franchise partner profitability,' RFG said.
Professor Mortimer also added the barista-made morning coffee has now become a luxury as the cost of living crisis 'eats away' at discretionary spendingĀ
'In light of this assessment, we are engaging with all Michel's Patisserie franchise partners to explore the opportunity for them to convert their business to the Gloria Jean's brand, or where that outcome is not feasible, the Donut King brand.'
Michel's Patisseries was founded in Sydney in 1980 by French chef Michel Catteon.Ā
It boasted more than 300 locations across the country at the height of its success.Ā
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