Collins Foods Delivers Record 1H FY26 Revenue with Strong KFC Momentum

About Collins Foods Ltd

Collins Foods Limited (ASX: CKF) is one of Australia’s leading quick-service restaurant operators, managing more than 350 restaurants across Australia, Europe and Asia under the KFC and Taco Bell brands. Founded in 1969 and headquartered in Brisbane, the company has steadily expanded its footprint through new store development, acquisitions and strong same-store sales performance. As the largest KFC franchisee in Australia and a rapidly growing operator in Europe, Collins Foods plays a significant role in the global Yum! Brands ecosystem.

In its first-half FY26 results, the company delivered a resilient performance despite rising labour and input costs, demonstrating the strength of its brands, operational disciplines and customer engagement strategies. With both KFC Australia and KFC Europe performing ahead of expectations, Collins Foods enters the second half of FY26 with positive momentum, supported by strong cash generation and a healthy development pipeline.

KFC Australia: Exceptional Same-Store Sales and Margin Gains

KFC Australia remained the cornerstone of Collins Foods’ performance, delivering 8.7% same-store sales growth,  a strong result given the competitive environment and cost-of-living pressures affecting consumers. Revenue for the division increased 7.9% to $576.3 million, supported by new menu innovation, strong brand marketing and sustained customer demand for value-led offerings.

Margin expansion was a notable highlight. Underlying EBITDA margins improved to 18.8%, up 100 basis points from the prior period, driven by improved labour productivity, increased digital ordering penetration and supply-chain efficiencies. Management noted that digital channels, including delivery and app-based orders, continued to outperform expectations, helping lift per-customer transaction value and operational throughput.

The division opened three new restaurants during the half and continues to target a steady pipeline of new stores in high-growth suburban and regional areas. Collins Foods also progressed its major refurbishment program, with several restaurants upgraded to the latest KFC design standards, supporting higher guest satisfaction and throughput.

KFC Europe: Strong Growth Across the Netherlands and Germany

KFC Europe produced another strong half, with revenue rising 16.3% to $148.1 million, driven by increased customer traffic and improved brand awareness across its European markets. Same-store sales remained solid, supported by targeted promotional campaigns and continued investment in digital platforms.

Underlying EBITDA in Europe climbed to $16.4 million, with margins improving as the division gained scale and benefited from increased operational efficiencies. The Netherlands remains the company’s largest European market, performing ahead of expectations, while Germany continues to build momentum as stores mature and consumer awareness grows. Collins Foods opened four new restaurants in Europe during the period and reaffirmed its commitment to long-term market expansion. Management highlighted strong demographic and economic fundamentals in both territories, which continue to support the company’s multi-decade growth strategy.

Taco Bell: Simplification Strategy Continues to Narrow Losses

Taco Bell Australia remains in turnaround mode but delivered a more stable performance in the first half. While revenue declined 7.3% following targeted store closures, underlying EBITDA loss narrowed meaningfully to $3.2 million, reflecting improved menu execution, operational simplification and tighter cost control.

Management emphasised that the business is now focusing on a smaller, more profitable network with a clearer brand proposition. Menu innovation and simplified ordering are expected to support improved sales density, while the company continues to assess long-term positioning for the brand in Australia.

Balance Sheet, Cash Flow and Capital Management

Collins Foods strengthened its financial position during the half, reducing net debt to $138.9 million, supported by improved operating cash flow and disciplined capital management. The company’s leverage ratio remains well within banking covenant limits, providing flexibility to fund future store openings, refurbishments and strategic opportunities.

Capital expenditure was directed primarily towards new restaurant development, digital platform enhancements and ongoing refurbishment of high-performing stores. Management reiterated its commitment to maintaining a balanced approach to reinvestment and shareholder returns. The Board declared an interim dividend of 12.5 cents per share, consistent with the company’s dividend-paying history and confidence in long-term earnings visibility.

Strategic Outlook

Collins Foods enters the second half of FY26 with a strong operational foundation across its core brands. Management expects continued growth in KFC Australia and Europe, supported by robust pipelines of new store openings, brand investment and digital channel expansion. Rising input costs remain a watchpoint, but the company’s demonstrated ability to manage cost pressures provides confidence in margin resilience.

The company will continue prioritising development opportunities in both Australia and Europe, leveraging the strength of the KFC brand and its proven operating capabilities. Meanwhile, Taco Bell’s focus on network optimisation is expected to gradually improve financial performance over the coming periods. Longer term, management views population growth, increased digital adoption and demand for convenience dining as key tailwinds supporting the quick-service restaurant sector.

Conclusion

Collins Foods’ first-half FY26 result demonstrates the company’s resilience and operational strength amid a dynamic retail environment. With strong performances across KFC Australia and KFC Europe, improved cost management and a clear strategy for disciplined expansion, the company remains well positioned to deliver sustainable growth. As digital engagement deepens and new store development progresses, Collins Foods continues to reinforce its leadership in the quick-service restaurant category and deliver long-term value for shareholders.