Judging by the full year results for Collins Food, the fast food sector seems to be a small spot of light – food delivery that is.
Collins yesterday revealed a solid rise in earnings for the year to April and a higher final dividend for shareholders to share.
But it had decided to cut its chain Sizzler chain adrift by cutting all support and assessing the future of the remaining handful of outlets on a case by case basis.
There are only a dozen outlets left and it sounds very much like Collins will effectively starve the businesses into closure.
Collins reported a near 17% jump in revenue for the year to June to $901.2 million, with same-store sales growth up a reasonable 3.7% in the 12 months.
That was more than double 2017-18’s 1.8% rise in same-store sales growth across Collins 231 franchised Australian KFC stores.
That saw net profit jump more than 20% to $39.1 million.
That was despite weaker trading at its KFC Europe division and continuing weak revenue from Sizzler Australia, following the closure of two stores (it has been something of a black hole for Collins now for years).
Collins will pay a fully franked final dividend of 10.5 cents, up from 9.0 cents a year ago, making a total for the year of 19.5 cents a share, up from 17 cents a share in 2017-18.
CEO Graham Maxwell said the strong KFC Australia result had been helped by an increase in app-based sales, with 64 restaurants now supporting KFC delivery through the likes of Deliveroo and Menulog.
“Over the past 12 months we have consolidated our position as the largest KFC operator in Australia, with initiatives around digital and delivery expected to drive further growth,” Mr. Maxwell said in the results release on Tuesday.
Revenue of $722.5 million from KFC Australia accounted for 80% of Collins’ total global revenue during the year.
Up to 10 new KFC restaurants will be opened in Australia in FY20.
The company said a below-expectation performance at its 37 KFC restaurants in the Netherlands and Germany had been underpinned by weaker sales and higher than anticipated costs.
Collins said the four Taco Bell stores it opened in Australia during the year were performing in line with expectations, with plans to open 10 more by the end of 2019.
“Our rollout of the Taco Bell brand in Australia will gain pace during FY20, with further restaurants to be opened in Queensland and the entry into Victoria in early 2020,” Mr. Maxwell said.
The company’s global Sizzler revenue was down 8.0% to $46.7 million as its Australia restaurant numbers were cut from 14 to 12.
The company said no further capital would be allocated to Sizzler Australia restaurants and the remaining outlets will continue to be assessed on an ongoing basis in relation to their individual performance and expiry of leases.
Collins Food shares edged up 5 cents to $7.72 yesterday, a modest reaction to the result and higher dividend.