Collins Foods thinks it could be third time lucky for Taco Bell in Australia
The country's largest KFC franchisee plans to have at least three Taco Bell stores operating in Australia by the end of next year.
Collins Foods hope it will be a case of third-time lucky for the Tex-Mex chain, after it opened its first Taco Bell in Annerley, Queensland, at the start of November.
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Collins Foods' first Taco Bell restaurant, in Annerley, Brisbane. Collins Foods will wants to have three stores open by the end of next year. Photo: Dylan Evans
Collins Foods chief executive officer Graham Maxwell on Wednesday said that trading at its first store had been "above expectations".
"We are pleased with the customer acceptance of the Taco Bell brand and look forward to the rollout of additional stores in 2018," Mr Maxwell said.
He said a second Taco Bell would open in the first half of 2018, with another to follow shortly after. The company would assess the performance of the first three stores ahead of a potential further rollout.
Mexican food - or at least a fast-food interpretation of it - has emerged as one of the hottest cuisines in the "quick service restaurant" market. Local chain Guzman y Gomez will open its 100th outlet on Thursday in Burleigh Heads, Queensland, and Australian-grown franchise Mad Mex has opened about 60 outlets since 2007.
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Taco Bell first tried its hand in Australia in 1981 but a Sydney restaurant called Taco Bell's Casa
dragged it to court over the name. Another attempt to establish the brand here between 1997 and 2005 also failed.
Taco Bell is a subsidiary of Yum! Brands, which also owns the KFC brand globally.
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Europe weakness disappoints
Collins Foods on Wednesday revealed its comparable sales, which removes the impact of opening or closing outlets, at its network Australian KFC stores grew 1.2 per cent in the half-year to October 15.
The company has acquired 28 KFC stores from Yum! Brands, which will bring its network to 225 stores, and has incorporated five of those stores to date.
In Germany, where Collins Foods has 15 stores, comparable sales grew at 0.4 per cent and its 16 Dutch stores grew at 2.5 per cent, which UBS analyst Tim Plumbe said was a "disappointing" result.
The European business returned earnings before interest, tax, depreciation and amortisation of $400,000 - short of USB's estimate of $2.5 million, which was "the key miss within the result", Mr Plumbe said.
Collins Foods said it would close its Snag Stand business after a "strategic review", at a cost of $1.2 million.
Collins Foods shares had risen 5.5 per cent from $5.93 on Friday to $6.26 at market close on Tuesday. But the stock lost most of those gains on Wednesday, falling 4.5 per cent to $5.95 after it released its first-half results.
The market may have been anticipating the company to announce a more aggressive roll out of Taco Bell stores, according to one analysts, who declined to be named.
Bottom-line net profit in the first half fell 17.5 per cent to $12.7 million, due to a $4.7 million hit from one-off acquisition costs, refinancing costs, and the cost of closing Snag Stand.
Without these costs, its underlying profit was $17.4 million, up from $16.8 million in the same half last year. Collins declared a fully franked interim dividend of 8¢ - in line with the same half last year.
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