KFC closes in-restaurant dining

KFC closes in-restaurant dining

KFC restaurant operator Collins Foods (ASX: CKF) has announced in-restaurant dining areas will be closed in a bid to slow down the spread of the coronavirus Covid-19.

The company says it will immediately shift its focus to take-away, drive-thru and delivery - three areas that already account for around 80 per cent of sales.

CKF explains customers can still use multiple contactless options for purchase such as its own app and delivery providers including Menulog and Deliveroo.

In addition, the business is moving to contactless service in its restaurants and has already worked with delivery partners to ensure contactless delivery is an option for customers.

Customers are now being encouraged to prepay through the KFC app and to use contactless payment rather than cash.

Sales to date have been in line with expectations, and the group expects these latest moves will limit the damage of any impact on sales while reinforcing KFC's position as a trusted brand.

"We believe the announcement of today's bold move to close in-restaurant dining areas and focus on take-away, drive-thru and delivery in the near term, to be strongly in the interest the public's well-being and of the KFC brand," says managing director and CEO Graham Maxwell.

"The health and wellbeing of Collins Foods' employees and customers is the company's number one priority, and never more so in these challenging and uncertain times."

The actions are hot on the heels of an announcement from Domino's Pizza Enterprises (ASX: DMP) to prepare for "100 per cent zero contact ordering" if necessary. Like KFC, most of Domino's sales are for out-of-store consumption.

In Europe, the Dutch Government had previously announced measures that all restaurants would have to close as of 6 April.

However, CKF has confirmed today the Netherlands will now allow restaurants to operate take-away, drive-thru and delivery channels.

This will be a lifeline for Collins Foods, which offers take-away at all of its Dutch stores, drive-thru in two-thirds of them, and delivery at half its outlets.

In terms of delivery, plans are underway to add a third aggregator to the system within the next week in the Netherlands.

Overnight, the German Government has announced a limitation on the hours that in-restaurant dining can trade during the day. However, take-away, drive-thru and delivery channels will continue to be allowed to trade without restriction.

Whilst there will be an impact to the in-restaurant dining business in both markets, Collins Foods expects a portion of this to be mitigated by an increase to sales through these alternative channels.

In addition, the Governments of both the Netherlands and Germany have also announced measures to support lost wages due to the current coronavirus situation, which will assist employees and reduce potential cost burdens to businesses.

CKF shares have bucked the market trend so far today and are up 3.46 per cent at $4.48.

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