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Collins Foods boosted by European recovery

Collins Foods shares surged by 13% on Tuesday after it announced its results for the first half of FY22. The owner of KFC and Taco Bell in Australia said it delivered another strong financial performance underpinned by a return to growth in its European operations.

Revenue increased by 8.5% to $534.2 million and statutory EBITDA from continuing operations was up 10.0% to $92.5 million.

Record revenues were achieved in KFC Australia, despite cycling a high base of same-store sales growth in the HY21. The company noted that growth in digital and delivery channels, ongoing investment in innovation, and a focus on customer experience and has enhanced convenience and is driving brand loyalty.

KFC Europe was the standout performer, experiencing a strong recovery with revenue and earnings back above pre-pandemic levels. As a result, dine-in customers returned, while drive-thru and delivery revenues continued to record high growth levels.

Collins said it had made significant progress towards unlocking the long-term potential of its Netherlands business unit, entering into a Corporate Franchise Agreement (CFA) and announcing the acquisition of an additional nine restaurants. It is expected the KFC Netherlands CFA will enable the company to significantly scale its footprint over the next 10 years to drive further brand awareness and growth.

Taco Bell revenue increased 33.0% to $14.8 million as CKF build a restaurant footprint in targeted regions. As a pure-play “quick-service restaurant” Mexican offering, they are investing in the brand, as Mexican is the fastest-growing segment of the Australian QSR sector, outpacing broader QSR growth by 32% annually over the last decade.

The group increased its restaurant footprint by nine to 322 in HY22 and they are expecting to open a record number of new restaurants this financial year.

Commenting on the HY22 results, Managing Director & CEO, Drew O’Malley, said: “Collins Foods has successfully leveraged brand strength, scale and operational efficiency to deliver another strong first half result. The KFC brand is stronger than ever and continues to take market share in a growing but competitive chicken category. We have a significant organic growth pipeline and attractive opportunities to reach scale in KFC Netherlands and Taco Bell Australia, while adding to our core KFC Australia footprint.”

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