Collins Foods to Transfer 20 Taco Bell Restaurants, Closing 7 Others by Mid-2026
Collins Foods has agreed to transfer 20 of its 27 Australian Taco Bell restaurants to a new partnership involving Taco Bell’s parent company, marking a decisive step in its strategic exit from the brand.
- Transition of 20 Taco Bell stores to Taco Bell-affiliated partnership
- Closure of remaining 7 Taco Bell restaurants imminent
- Lease liabilities of approximately $24 million to be transferred or extinguished
- Reimbursement for operating losses and capex from April 2026
- Focus to shift towards core KFC business in Australia and Europe
Strategic Shift Away from Taco Bell
Collins Foods Limited (ASX:CKF) has taken a significant step in its long-anticipated exit from the Taco Bell brand in Australia. The company announced a conditional agreement to transition 20 of its 27 Taco Bell restaurants to a partnership involving Taco Bell’s affiliated company, part of global giant YUM! Brands, and Restaurant Brands Australia Holdings. This move aligns with Collins Foods’ strategy to streamline its portfolio and concentrate on its core KFC operations across Australia and Europe, particularly in Germany.
Details of the Transition Arrangement
The proposed transaction involves transferring the 20 Taco Bell restaurants, including employees who accept new employment offers, to the new partnership. The purchase price is largely nominal, supplemented by the value of stock and cash floats, with the new owners assuming lease liabilities from completion. Collins Foods will also be reimbursed for any net operating losses and necessary capital expenditures incurred from 1 April 2026 until the transaction closes, expected between June and August 2026, subject to regulatory and landlord approvals.
Closure of Remaining Stores and Financial Implications
The seven Taco Bell restaurants not included in the transition will be closed in the coming weeks, with Collins Foods actively seeking new tenants for those leases. The company anticipates one-off closure and transaction costs in the range of $1-2 million. Importantly, from 1 April 2026, Collins Foods will no longer be liable for royalty or advertising fees related to Taco Bell, and lease liabilities estimated at $24 million as of 31 March 2026 are expected to be reversed once leases are assigned or transferred.
Focus on Core Brands and Markets
CEO Xavier Simonet emphasised the strategic rationale behind the move, highlighting the opportunity to sharpen focus on KFC’s growth in Australia and Europe. He also reassured stakeholders about employment continuity for team members at the transitioning Taco Bell stores, underscoring Collins Foods’ commitment to a smooth transition. The company will continue to operate some Taco Bell restaurants into the next financial year until the transition completes.
Looking Ahead
This transition marks a pivotal moment for Collins Foods as it exits a brand that has been part of its portfolio but has struggled to meet strategic expectations. The shift allows the company to reallocate resources and management attention to its more profitable and established KFC operations, particularly in the competitive European market. Investors will be watching closely for updates on regulatory approvals and the financial impact of the closures and lease assignments.
Bottom Line?
Collins Foods’ Taco Bell exit clears the way for renewed focus on KFC growth, but execution risks remain.
Questions in the middle?
- Will regulatory approvals and landlord consents proceed smoothly to meet the mid-2026 timeline?
- How will the closure of seven Taco Bell stores impact Collins Foods’ short-term financials and brand reputation?
- What are the long-term growth prospects for Collins Foods’ KFC operations in Europe following this strategic refocus?
