EBITDA margin hit 18.4% — nearly 5 points above BFG's historical mean

Revenue grew 7.4% to NZ$25.6m, below the historical mean rate of 10.0% but directionally sound after FY25's 8.4% decline. EBITDA rose 41.6% to NZ$4.7m on that 7.4% revenue increase, driving PBT up 80.0% to NZ$2.7m. NPAT doubled (up 100.0% to NZ$2.0m), though that headline partly reflects the effective tax rate falling to 25.9% from 33.2% in FY25 — PBT growth is the cleaner 80.0% read. Management attributed the uplift to three factors: higher sales, the absence of significant legal costs incurred in FY24–FY25, and a one-off NZ$0.3m gain from the sale of the company-owned Ponsonby store. Total system sales across all brands rose 2.9% to NZ$111.4m.

The EBITDA margin of 18.4% is a genuine step up from prior years, but two of the three disclosed drivers — lapsing legal costs and the store-sale gain — are non-recurring. The underlying margin improvement from sales growth and operating leverage is present, but a 5-percentage-point gap above the historical mean is unlikely to be fully sustained without further system-sales growth or permanent cost reduction.

Tax rate distortion inflates NPAT growth. The 25.9% effective tax rate is 4.5 percentage points below the historical mean of 30.4% and outside the prior three-year range of 28.5%–33.2%. That gap amplified NPAT growth to 100.0% relative to PBT growth of 80.0%. Without knowing whether the lower rate reflects timing items or a permanent change, NPAT is a less reliable run-rate measure than PBT this period.

Cash generation is the strongest outcome. Operating cash flow more than doubled to NZ$3.5m, with pre-lease FCF of NZ$2.9m exceeding the historical range of NZ$0.3m–NZ$2.4m. Cash conversion (OCF/EBITDA) of 74.5% is within the company's normal range and a marked improvement on the prior year's 50.0%, which means the improved earnings quality is backed by real cash. Working-capital absorption of NZ$0.1m was a modest drag versus prior-year releases averaging approximately NZ$2.6m, but the absolute amount is small and did not impair cash generation.

The FY26 outcome represents a clear recovery from FY25's decline: system sales had fallen 7.6% at the half-year and the full year recovered to +2.9%, suggesting H2 system sales improved meaningfully. The second half contributed approximately 53% of operating cash flow, consistent with a business that recovered momentum through the year.

The key uncertainty for FY27 is whether recurring cost savings and volume growth can fill the margin gap left by lapsing legal costs and the Ponsonby gain. System sales growth of 2.9% — while an improvement — is still below the NZ$100m-plus BurgerFuel NZ peak reached in FY24, and international revenue remains marginal at NZ$0.1m.

Pre-lease FCF of NZ$2.9m, FCF/NPAT of 149.2%, and cash on hand rising to NZ$6.1m all point to a business generating meaningfully more cash than it reports as earnings, which is a positive quality indicator. ROE strengthened to 16.6% against a historical mean of 8.9%, driven by the earnings uplift and reduced liabilities.

The less durable elements are the margin levels themselves. Legal cost normalisation is a genuine permanent saving if prior-year disputes are resolved, but that requires confirmation. The NZ$0.3m store-sale gain is by definition non-recurring. And the below-historical effective tax rate — 25.9% versus a 28.5%–33.2% prior range — has not been explained, meaning FY27 earnings could face a tax headwind if the rate reverts. Capex doubled year-on-year to NZ$0.6m, though at 2.2% of revenue it remains modest and does not signal a material capital-allocation shift.

This briefing cannot assess the sustainability of the legal-cost saving, the tax rate outlook, or the underlying same-store sales trajectory without further management disclosure.