The costs of withdrawal pushed the company into a pounds 741,000 pre- tax loss, compared with pounds 210,000 profit last time.
The loss, coupled with the decision to pass the final dividend - 0.5p was paid last time - disappointed the City and the shares closed 3.5p lower at 11.5p.
Peter Matthews, chief executive, said he believed shareholders would prefer the structure of the company to be sorted out before it paid dividends.
Reds Chicken and Ribs was set up three years ago. Initial results were encouraging, but price-cutting and increased competition from other fast food operators have prevented it producing a profit.
In the year to 27 February, the trading loss, before provisions and fixed asset losses, was pounds 276,000, up from pounds 177,000 last time.
Cullens has also provided pounds 416,000 for fixed asset write-offs and other closure costs. The shops have been transferred to licensees, but the group will have no further financial risk.
The neighbourhood food stores increased operating profits from pounds 491,000 to pounds 663,000, helped by the opening of a store in Baker Street, central London.
Sales at the 28 shops rose 6.3 per cent to pounds 24.4m but 23 of these are franchised so Cullens' share of sales and franchise fees was pounds 5.3m, up 18 per cent.
Patisserie, the group's second experimental format, made pounds 7,000 operating profits compared with pounds 1,000 previously. A second outlet has been opened in west London.
The loss per share was 2.8p, compared with a 0.8p profit last time.Reuse content