Australia’s biggest KFC operator Collins Foods reveals 90pc profit slump

Shares in Collins Foods, the nation’s biggest KFC operator, have soared despite the company reporting a near-90 per cent slump in full-year profit as restaurant impairments drag results lower.

Collins Foods operates 288 KFCs in Australia, as well as 27 Taco Bells, including all four in WA.

The company on Tuesday revealed net profit slumped 88.5 per cent to $8.8 million in the year ended April 27, inclusive of $40.8m in restaurant impairments and a $3.2m provision for potential wage underpayments.

Last year’s $76.7m result included a $20.2m gain from the sale of its Sizzler Asia arm.

Group revenue lifted 2.1 per cent to a record $1.52 billion, with growth in Australia partially offset by softness in Europe.

Earnings before interest, tax, depreciation and amortisation hit $228.5m, which was 3.9 per cent ahead of market consensus.

Shares in Collins Foods were 16.6 per cent higher at $8.465 just before 10am as investors focused on the strong start to the 2026 financial year.

Collins Foods managing director Xavier Simonet said tax cuts and lower interest rates were starting to help improve consumer sentiment, with sales at KFC Australia up 4.9 per cent in the first eight weeks of the new financial year.

KFC Australia was the best performer for the group in the 2025 financial year, delivering a 3 per cent lift in revenue to $1.15b over the period as it benefited from 10 new restaurants, strong digital growth and product innovation.

In Europe, where it operates 78 KFCs, revenue of $312.3m was down slightly on the prior year. It booked a $35m impairment in the region.

Collins Foods said the result reflected challenging market conditions driven by cost-of-living pressures, the war in Ukraine impacting costs, and the Middle East conflict impacting sentiment towards American brands, primarily in the Netherlands.

The company added discussions regarding a potential sale of the Taco Bell chain in Australia — first flagged in April — were ongoing. It intends to complete the process within the next 12 months.

“While trading conditions were subdued, particularly in the first half, the strength of the KFC brand held firm,” Mr Simonet said.

“Market share increased in both Australia and the Netherlands, underpinned by improvements in brand health, compelling marketing campaigns, product innovation, everyday value initiatives and a heightened focus on operational excellence.

“Encouragingly, tax cuts and lower interest rates are beginning to support improvements in consumer sentiment, with same store sales improving in the second half in Australia and the Netherlands.”

For the new financial year, it is targeting year-on-year group underlying net profit growth in the “low to mid-teens” (percentage basis).

Collins Foods trimmed its final dividend to 15¢ a share, compared with 15.5¢ last year.