Collins Foods delivers record revenue as KFC Australia fires on all cylinders

About Collins Foods Ltd

Collins Foods Limited (ASX: CKF) is one of Australia’s largest quick service restaurant operators, with a history spanning more than five decades. Headquartered in Brisbane, the company operates 295 KFC restaurants across Australia and a further 80 across the Netherlands and Germany, making it one of the most significant KFC franchisees outside the United States. Collins Foods listed on the Australian Securities Exchange in 2011 and has grown steadily through organic network expansion and selective bolt-on acquisitions, most recently completing the purchase of eight KFC restaurants in Munich in June 2026. The company employs more than 22,000 people from 104 nationalities across its operations, and its Australian KFC network stretches across every mainland state and territory.

The KFC Australia result

KFC Australia was the undisputed engine room of the FY26 result. Revenue from the Australian business rose 7.6 per cent to $1,241.3 million, supported by same-store sales growth of 2.7 per cent, a sharp improvement on the 0.3 per cent recorded in FY25. Restaurant-level EBITDA grew 6.2 per cent to $260.5 million, with productivity improvements and lower commodity costs partially offset by mid-year value investments for consumers and the structural cost impact of a growing delivery channel. Segment EBIT rose 6.6 per cent to $155.8 million at a margin of 12.6 per cent. Eight new restaurants opened during the year and one was closed, with 33 remodels completed including three large-scale Supercharge formats featuring dual lane drive-throughs and t-line kitchen designs. A successful trial of the Kwench by KFC specialty beverage concept in Cairns since December 2025 has prompted a national rollout, with 80 per cent of the network to be fitted by April 2027 and full completion targeted by mid-2027. Capital expenditure for the rollout is expected to reach $35 million in FY27 and a further $10 million in FY28. The company also confirmed it is trialling a breakfast offering and extending trade to midnight at selected restaurants, targeting the two fastest-growing dayparts in the Australian quick service restaurant category.

The KFC Europe result

The European KFC segment delivered its strongest result in several years despite challenging economic conditions across both markets. Revenue climbed 12.5 per cent to $351.3 million, or 7.0 per cent on a constant currency basis, with a favourable foreign exchange translation impact of $16.0 million. Germany posted same-store sales growth of 3.7 per cent, recovering strongly from a decline of 3.3 per cent in FY25, as improved brand execution and a VAT reduction on dine-in transactions drove customer traffic. The Netherlands returned flat same-store sales of 0.0 per cent after two consecutive years of declines, with QSR market share edging up 0.2 percentage points on the prior year. European EBIT nearly doubled, rising 94.7 per cent to $14.9 million, as higher EBITDA combined with general and administrative cost leverage and lower depreciation following prior year impairments. The Corporate Franchise Agreement covering the Netherlands was also extended by three years to 31 December 2029 and restructured, with Yum! Brands resuming marketing responsibilities from 1 January 2027, allowing Collins Foods to focus on its core role as restaurant operator.

Taco Bell exit

Collins Foods announced the exit of its Taco Bell franchise in March 2026 following sustained losses, with 20 restaurants transferring to a joint venture between a Yum! Brands subsidiary and Restaurant Brands Australia, and the remaining seven restaurants closed during the year. Trading and capital expenditure exposure on the transferring restaurants ceased from 1 April 2026, with the full transfer expected to complete by July-August 2026. One-off closing costs of $1.7 million were recognised in FY26, and the company expects a one-off gain relating to lease liability transition and reversal in FY27, subject to negotiated outcomes. The exit allows Collins Foods to redeploy capital and management attention fully towards KFC, where it has demonstrated a demonstrably superior return on investment across both its Australian and European networks.

Strategic significance and outlook

The FY26 result is significant beyond the headline numbers. Collins Foods is in the early stages of a meaningful growth phase in Germany, where it now operates 25 restaurants following the Munich acquisition and holds ambitions to grow the network to between 70 and 115 restaurants by FY30, supported by approximately $20 million in German capital expenditure in FY27 alone. Germany represents a structurally underpenetrated market, with only around 217 KFC restaurants serving more than 80 million consumers. Following the Munich acquisition, Collins Foods is the largest KFC franchisee in Germany by system sales. The company enters FY27 with group capital expenditure guidance of between $80 million and $100 million, reflecting investment across the Kwench by KFC rollout, new restaurant development, asset modernisation and technology. Management noted that European sales in the first eight weeks of FY27 have been softer than expected, attributing the weakness to Middle East conflict impacts on consumer confidence and a prolonged heatwave affecting restaurant traffic, and confirmed that work is underway with Yum! Brands on initiatives to strengthen near-term performance. KFC Australia, however, has continued its strong momentum, recording total sales growth of 6.7 per cent and same-store sales growth of 4.0 per cent in the first eight weeks of FY27.