Collins Foods (ASX: CKF) is an Australian-based fast-food operator that manages KFC and formerly Taco Bell franchises across Australia and parts of Europe. Known for its long-standing relationship with Yum! Brands, the company is now realigning its focus toward profitable KFC expansion.
Strategic Shift Announced
Collins Foods Limited, has announced a significant strategic shift aimed at focusing on core strengths and long-term growth. The company will exit its Taco Bell operations in Australia while expanding its KFC footprint in Germany. These moves form part of a broader operational review led by CEO Xavier Simonet, designed to streamline global operations and improve capital allocation.
Taco Bell Exit in Australia
Collins Foods currently operates 27 Taco Bell outlets in Australia. However, the brand has underperformed expectations in a competitive fast-casual market dominated by players like Guzman y Gomez. As a result, the company plans to wind down or transfer the business within 12 months. It is now in discussions with Taco Bell’s parent company, Yum! Brands, to reassign the license to a new operator. Should that fail, the company will consider full divestment or closure. Simonet emphasised that the decision aligns with a disciplined capital deployment strategy, allowing the company to refocus on proven growth avenues.
KFC Expansion in Germany
While exiting Taco Bell, Collins is doubling down on KFC, particularly in Germany. The company currently operates 16 outlets in the country and aims to open between 40 and 70 more over the next five years. Germany’s fried chicken market is considered significantly underpenetrated, and Collins Foods has secured exclusivity rights in key regions including North Rhine-Westphalia and Baden-Württemberg. This expansion represents a cornerstone of the group’s international growth ambitions and complements its existing success in KFC Australia.
Operational Review in the Netherlands
In the Netherlands, where the company operates 58 KFC stores, Collins is also undertaking an operational review. The region has experienced economic headwinds, such as inflation and declining consumer spending. As a result, Collins expects to close some underperforming stores and has flagged potential impairment costs of up to $32.7 million. The company stated that it is revising development plans in the Netherlands to better align with market conditions and long-term profitability.
Leadership Restructure
The global strategic review has also led to leadership changes. Helen Moore, Chief Operating Officer of KFC Australia, has stepped down and been replaced by Krystal Zugno, a long-serving executive with over two decades at the company. In Europe, Hans Miete has departed from his role as CEO, with Chris Johnson stepping in as Acting General Manager. These changes are intended to align leadership structures with the company’s new international direction and reinforce operational focus.
Market Reaction
Financially, the market reacted negatively to the strategic update, with Collins Foods’ share price dropping nearly 8% to close at $8.00 on the day of the announcement. There is uncertainty around the transition and short-term restructuring costs as key concerns. However, some investors welcomed the decision to cut losses on Taco Bell and redirect resources toward the more profitable KFC brand, particularly in Europe where there is still room for expansion.
Outlook
Looking ahead, Collins Foods appears committed to streamlining its operations and reinforcing its core strengths, particularly through KFC’s international expansion. The company’s focus on underpenetrated markets like Germany could provide meaningful growth, especially given its exclusivity arrangements with Yum! Brands. Although short-term headwinds remain—such as restructuring costs and economic pressures in the Netherlands—Collins’ strategic pivot suggests a long-term plan centred on operational efficiency and margin improvement. Success will depend on disciplined execution, stabilising European operations, and capturing market share in key international regions.
