Australian fast-food operator Collins Foods announced plans to exit its partnership with Taco Bell and focus on expanding its KFC business in Germany. The company intends to end its underperforming Taco Bell operations within the next year, while increasing its KFC presence in the European market.
Collins Foods is currently in discussions with Yum Brands, the parent company of Taco Bell, Pizza Hut, and KFC, to transfer the license for its 27 Taco Bell outlets in Australia to new owners. If these talks do not lead to a successful transfer, the company will explore other options.
At the same time, Collins Foods is committed to expanding its KFC operations in Germany. The company plans to open between 40 and 70 new KFC outlets over the next five years, adding to the 16 locations already in operation. Collins Foods believes the German market remains under-served for fried chicken, presenting a significant growth opportunity.
The company also operates 58 KFC outlets in the Netherlands and 285 KFC locations across Australia as of October 2024.
In the first half of fiscal 2025, Collins Foods reported a 0.3% decline in same-store sales at its Taco Bell outlets in Australia, in sharp contrast to the 9.4% growth posted by its competitor, Guzman Y Gomez. This performance contributed to an 8% drop in Collins Foods’ stock price, marking its worst decline in nearly eight months.
However, analysts, such as Nicholas Sundich from Pitt Street Research, questioned the specifics of Collins Foods’ expansion plans in Germany. Sundich noted that while the company emphasized the under-penetration of chicken in the German quick-service restaurant market, the expansion strategy seemed largely focused on opening new outlets without offering new initiatives to drive further growth.
In addition to its focus on Taco Bell and KFC, Collins Foods disclosed an impairment of between A$25.5 million and A$32.7 million (approximately $16.11 million to $20.66 million) related to its operations in the Netherlands. The company also announced several changes to its executive team, including the departure of its Europe CEO, Hans Miete.
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