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Collins Foods reports strong sales growth at home and abroad

30 Nov 2022 - ASX-listed fast-food operator Collins Foods has reported a revenue increase of 15 per cent ($614.3 million) in the latest half across all its business units, including the Australian, European and Asian markets.

Drew O’Malley, MD and CEO, said the resilience of QSRs (quick service restaurants) and the half-year growth has helped protect margins from the headwinds of inflation. 

“Whilst we expect inflationary pressures to remain in the near term, we continue to pursue our long-term growth agenda and will continue to invest in new restaurant builds, as well as equipment, technology, and operational innovations to provide unmatched experiences for our customers and our people,” said O’Malley.

KFC Australia

Despite transactions being broadly flat during the prior period, the company’s KFC franchises in Australia achieved revenue growth of 10.6 per cent to $479.6 million. Collins Foods accredited the rebound in earnings to its recent Uber rollout in July, strong delivery sales, and increased consumer adoption of digital ordering via the KFC app (click and collect).

Taco Bell

Taco Bell’s revenue increased 42.6 per cent to $21.1 million, which reflects the recent opening of four new restaurants during the half and seven new restaurants during the corresponding period in the prior year. Delivery represented 15.6 per cent of sales before the anticipated launch of Uber Eats early in the second half.

The company opened four new drive-thru Taco Bell restaurants during the half – two in Melbourne and two in Perth – taking total restaurant numbers to 13 in Queensland, eight in Victoria and three in WA. 

KFC Europe

As the company continues to  scale in Europe, its revenue registered an increase of 32 per cent ($118 million) supported by same-store sales growth of an estimated 10.4 per cent – reflecting higher ticket and transaction volumes – which it described as a substantial improvement on pre-Covid sales. 

Collins Foods’ KFC stores in Germany presented same-store sales growth of 14.6 per cent and in the Netherlands 9.2 per cent. 

Inflationary pressures were partially offset by revenue growth and increased operational control in the Netherlands. In addition, the company recently launched a vegetarian offer, which targets increased consumer demand for plant-based products. 

Sizzler Asia

The company’s Sizzler Asia franchises have reported a 100-per-cent increase in royalty revenue to $1.8 million and credited the strong results to the improved operating conditions for dine-in restaurants compared to the prior period reflecting the impact of Covid-19 restrictions in the first half of last year. Collins Foods has 69 restaurants and seven kiosks across Japan and Thailand. 

Collins Foods’ outlook

Commenting on the company’s outlook, O’Malley said that the company plans to open up to 12 restaurants for KFC Australia this financial year and three in the Netherlands next month to meet its target of 130 new restaurants by 2031.

“We continue to monitor the Australian and European landscapes for merger and acquisition opportunities to increase scale for Collins Foods,” he added. “Operating in the resilient QSR sector, we are well positioned to navigate the challenging environment.”