How Collins Foods Navigated FY25 Challenges to Post Record Revenue
Collins Foods reported a record $1.52 billion revenue for FY25 with flat EBITDA despite tough market conditions, while signaling optimism for low to mid-teens NPAT growth in FY26.
- Record FY25 revenue of $1.52 billion, up 2.1%
- Underlying EBITDA flat at $228.5 million; NPAT down 14.8%
- KFC Australia revenue up 3%, modest same-store sales growth
- KFC Europe impacted by geopolitical and regulatory challenges, impairments recorded
- Taco Bell transition discussions ongoing; strong cash flow and reduced net debt
Solid Revenue Growth Despite Market Headwinds
Collins Foods Limited (ASX – CKF) has delivered a resilient full-year performance for FY25, posting record revenue of $1.52 billion, a 2.1% increase over the prior year. This growth was largely driven by the Australian operations, which offset softness in European markets. The company navigated a challenging consumer environment marked by cost inflation and subdued demand, particularly in the first half of the year.
Underlying EBITDA remained steady at $228.5 million, reflecting disciplined cost management and operational efficiencies, although underlying EBIT and NPAT declined by 5.7% and 14.8% respectively. Statutory NPAT was significantly impacted by non-cash impairments and provisions, including a $40.8 million write-down on European restaurants and a $3.2 million provision for potential wage underpayments.
KFC Australia – Growth and Digital Momentum
KFC Australia was a standout contributor, with revenue rising 3.0% to $1.15 billion. Same-store sales growth was modest at 0.3%, but improved in the second half, supported by product innovation, marketing campaigns, and a growing digital footprint. Digital sales channels now account for over a third of total sales, driven by app adoption and kiosk rollouts. The network expanded with 10 new restaurants and 40 remodels, positioning the brand well for future growth.
European Operations Face Headwinds but Show Signs of Stabilisation
KFC Europe experienced a slight revenue decline of 0.4% to $312.3 million amid geopolitical tensions, regulatory hurdles, and cost pressures, particularly in the Netherlands. The company recorded impairments on 16 restaurants, reflecting the challenging environment. Despite this, second-half sales improved, and brand health metrics such as awareness and consideration increased. Germany, a key growth market, is poised for expansion following a new agreement with Yum! Brands, with plans to develop under-penetrated regions.
Taco Bell Transition and Financial Strength
Taco Bell revenue declined slightly to $53 million, with ongoing discussions to transition the business to new ownership within the next 12 months. Collins Foods remains committed to operational excellence and maintaining strong cash flows, generating $181.4 million in operating cash flow and reducing net debt to $137.9 million. The company declared a fully franked final dividend of 15 cents per share, bringing the total FY25 dividend to 26 cents per share.
Looking Ahead – Confident on Growth and Margin Expansion
Collins Foods is optimistic about FY26, targeting low to mid-teens percentage growth in underlying NPAT. The company expects easing cost pressures, particularly deflation in key Australian input costs, and ongoing efficiency gains to support margin improvement. Network expansion remains a priority, with plans to open 7-10 new KFC restaurants in Australia and accelerate growth in Germany. Operational excellence and brand innovation will be central to driving sales and profitability across all markets.
Bottom Line?
Collins Foods’ FY25 resilience sets the stage for growth, but European challenges and Taco Bell’s future remain pivotal.
Questions in the middle?
- How will the Taco Bell ownership transition impact Collins Foods’ financials and strategy?
- Can Collins Foods sustain margin improvements amid ongoing inflation and geopolitical risks in Europe?
- What specific initiatives will drive same-store sales growth and brand health in FY26?
