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Australian fast-food operator Collins Foods Ltd (ASX:CKF) has announced plans to exit its Taco Bell operations within the next 12 months and redirect its focus toward expanding KFC outlets in Germany. The decision is part of a broader strategic pivot, driven by weaker consumer spending in Australia and challenges in parts of its European portfolio.
Despite softer domestic demand, Collins reaffirmed its commitment to the Australian market, calling it a "highly profitable growth market." The company will continue to develop KFC locations in Australia under its existing agreement with Yum! Brands Inc (NYSE:YUM), the parent company of KFC.
As part of its international expansion, Collins has signed a new agreement with Yum! to open additional KFC restaurants in Germany. Although it currently operates only a small share of the country’s 207 KFC stores, Collins sees strong growth potential in the German market. The firm aims to establish Germany as its second key growth pillar and is open to exploring mergers and acquisitions to accelerate its footprint.
However, Collins is facing headwinds elsewhere in Europe. The company flagged a potential impairment charge of AUD 25.5 million to AUD 32.7 million from its Netherlands operations. This comes amid a business review prompted by rising inflation and limited expansion opportunities in the region.
Following the announcement, Collins Foods’ shares dipped 1.4%, underperforming the broader ASX 200 index, which rose 0.2%.
With the planned exit from Taco Bell and renewed focus on scaling KFC internationally, Collins Foods is realigning its global growth strategy to adapt to shifting market dynamics and strengthen its core operations.
