COLLINS Foods Limited (ASX:CKF) has posted a $10.4 million loss, after its brand revitalisation of Sizzler restaurants fizzled.
The food retailer has labelled the chain as "non-core to strategic growth" after booking a $37.5 million impairment charge.
The writedown has pushed Collins Foods in the red for the year ending March 3, compared to an underlying profit of $17.9 million in the previous period.
A small number of Sizzler locations will be closed, while performance of the remaining restaurants will be closely monitored.
Collins Foods CEO Graham Maxwell says the move will allow the company to pursue more attractive growth opportunities.
"After careful consideration and due to the year on year under performance of the Sizzler Australia business we no longer consider Sizzler to be a strategic growth prospect in Australia and therefore we will not be investing further capital into Sizzler Australia," Maxwell says.
Revenue was up 34.4 per cent at $571.6 million, driven by strong performance from the company's network of KFC stores.
KFC same store sales was up 4.8 per cent in FY15, with six new locations and 16 major remodels across the country.
Maxwell says KFC has delivered solid growth over the past 12 months, particularly in Western Australia and the Northern Territory.
"Strong sales across our KFC stores were boosted by attractive product offerings, a continued focus on innovation, and a successful summer marketing campaign," he says.
"In addition, our focus on cost control and extraction of further efficiency gains has resulted in continued margin improvement across the store network.
"We continue to expand our KFC network in regions with low market penetration compared with our existing stores, while enhancing our existing network with progressive major remodels."
Collins Foods also unveiled two new Snag Stand stores in Sydney and the Sunshine Coast, taking the total to six company-owned locations and one franchised.
Maxwell says the company will continue to refine the Snag Stand model as a "viable avenue" for growth, with another location planned for the Gold Coast this year.
The company has eight new KFC stores in the pipeline, as well another 18 major refurbishments.
The board has declared a fully franked dividend of 6.5 cents per share to be paid on July 23.
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