Growth strategy pays off for Collins Foods

Growth strategy pays off for Collins Foods

For Collins Foods (ASX: CKF), Australia's largest KFC franchisee, FY18 was a year of growth and expansion.

This strategy, involving adding a number of new KFC stores to its network, resulted in Collins Foods' profit growing by 16.1 per cent to $32.5 million from $28 million in FY17. Revenue was up by 21.7 per cent to $770.9 million from $633.6 million in FY17.

During the financial year Collins Foods added 25 new KFC restaurants by acquisition to its Australian portfolio, and finished the year with 33 KFC restaurants operating in Europe.

It's this strategy of acquisition and growth that has served Collins Foods so well, according to managing director and CEO Graham Maxwell.

"Over the past financial year, we have continued to grow our KFC Australia business through organic underlying growth, and acquisitions which have expanded our Australian footprint and consolidated our position as the largest KFC operator in Australia," says Maxwell.

"At the same time, we established a European footprint providing attractive long-term growth opportunities for increased KFC penetration in the Netherlands and Germany."

The company, which came in at number 23 in Business News Australia's Top Listed Brisbane Companies list, recently launched its first Taco Bell restaurant in Australia, and plans to open more during FY19.

Collins Foods is slowly ramping down the operations of beloved buffet chain Sizzler in Australia, which is now down to just 13 restaurants nationally.

Sizzler Australia revenue was down 22 per cent to $50.8 million, with two fewer restaurants compared to FY17, and warnings were flat at $4.6 million.

The chain is performing well overseas, with 73 Sizzler restaurants open in the Asian region, and revenue up 9.7 per cent during FY18.

The company plans to continue growing its various brands in FY19, according to Maxwell.

"During FY19, in Australia we plan to drive transaction led sales growth, build eight further KFC restaurants, and maintain a focus on operational improvements and margins," says Maxwell.

"Simultaneously we will look to roll out home delivery from more KFC restaurants through both aggregators and our own channel."

Shares in Collins Foods are down 4.04 per cent to $5.23 per share at 11.13am AEST.

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