Collins Foods delivered record FY26 revenue and underlying profit, declaring a 15c fully franked final dividend while exiting Taco Bell to sharpen focus on KFC expansion in Australia and Europe.
- Record $1.59 billion revenue, 8.6% growth
- Underlying NPAT up 13% to $61.4 million
- Exit from Taco Bell completed, refocus on KFC
- German acquisition expands growth pipeline
- First mandatory climate reporting with 30% emissions cut target
Record Revenue and Profit Amid Strategic Refocus
Collins Foods Limited (ASX:CKF) reported a landmark financial year ending 3 May 2026, with group revenue climbing 8.6% to a record $1.593 billion and underlying net profit after tax (NPAT) rising 13% to $61.4 million. Statutory NPAT surged 280.5% to $47.1 million, boosted by a mix of non-trading items including impairment reversals and a class action settlement.
The company declared a fully franked final dividend of 15 cents per share, payable 11 August 2026, lifting total dividends for FY26 to 28 cents per share; a 2-cent increase on FY25.
Taco Bell Exit Sharpens KFC Focus
In a decisive strategic move, Collins Foods completed the exit from Taco Bell during FY26, transferring 20 restaurants to a joint venture between Yum! Brands’ subsidiary and Restaurant Brands Australia, and closing the remaining seven outlets. This divestment allows Collins Foods to concentrate capital and management bandwidth on its core KFC brand across Australia and Europe.
The Taco Bell business had revenues of $47.7 million in FY26 but continued to report losses, with an underlying EBITDA loss narrowing to $0.3 million. The transition is expected to generate a one-off non-cash gain on lease liability transfers in FY27.
Australia and Europe Drive Growth
KFC Australia remains the powerhouse, delivering $1.241 billion in revenue, up 7.6%, with same-store sales growing 2.7%. Underlying EBITDA rose 6.5% to $237.1 million, despite margin pressure from delivery fee resets and value investments. Digital sales channels accounted for 43.2% of total sales, up from 34.2%, supported by app adoption and kiosk rollouts.
In Europe, revenue grew 12.5% to $351.3 million, aided by a $16 million currency translation tailwind. The European network expanded to 80 restaurants, including 63 in the Netherlands and 17 in Germany, with Germany posting a 3.7% same-store sales increase. Underlying EBITDA rose 14% to $44.9 million, though margins were squeezed by avian flu-related poultry cost inflation.
Munich Acquisition Accelerates German Expansion
Post-year-end, Collins Foods acquired eight KFC restaurants in Munich for €31.1 million ($50.6 million), significantly boosting its German presence. This acquisition increases the German footprint by nearly 50% and supports an ambitious target to develop 45 to 90 additional restaurants by FY30. Germany remains underpenetrated with only 217 KFC outlets serving over 80 million people, compared to market leaders with over 1,400 locations.
This expansion underpins Germany as Collins Foods’ second strategic growth pillar, alongside Australia.
Operational Excellence and Innovation Support Growth
Collins Foods continued to invest in restaurant network upgrades, opening eight new KFC restaurants in Australia, closing one, and completing 33 remodels, including three large-scale “supercharged” remodels designed to improve operational efficiency and customer experience.
Product innovation remains a key growth driver, with successful launches such as Zinger Banh Mi, Upside Down Double, and Hot & Crispy Wrap. The company is rolling out KFC’s global beverage platform, Kwench by KFC, nationally by mid-2027 and trialling late-night and breakfast trading hours to capture growing day-part opportunities.
Sustainability Milestones and Climate Commitments
FY26 marked Collins Foods’ first year of mandatory climate reporting under the Australian Sustainability Reporting Standard AASB S2. The company set a target to reduce Scope 1 and 2 greenhouse gas emissions by 30% by 2030 from a 2025 baseline and achieved a marginal 0.3% absolute reduction in FY26 despite network growth.
Food waste was reduced to 1.9% of sales, below the 2% target, with plans to reassess the 2030 goal. Renewable energy generation via solar PV reached 3.4 million kWh, covering about 2.7% of electricity consumption. The company also reported progress on waste diversion, ethical sourcing, and gender diversity, with 46.2% female senior leaders and a near-neutral gender pay gap.
Governance and Leadership Updates
Mark Hawthorne took over as Independent Non-executive Chair in February 2026, succeeding Robert Kaye SC. Meredith Scott joined the Board in June 2026, bringing expertise in digital payments and consumer engagement to support Collins Foods’ growth agenda.
The Board and management emphasized disciplined capital allocation, operational excellence, and risk management as cornerstones of sustainable growth.
Financial Position and Outlook
Strong cash flow generation enabled Collins Foods to reduce net debt by $18.3 million to $119.6 million, lowering the net leverage ratio to 0.77. The company plans capital expenditure of $80-$100 million in FY27 to fund new restaurants, remodels, the Kwench rollout, asset upgrades, and technology investments.
Early trading in FY27 shows continued momentum in Australia with 6.7% total sales growth and 4.0% same-store sales growth, while Europe faces headwinds from geopolitical tensions, fuel prices, and a heatwave impacting consumer confidence and limited-time offer performance.
Collins Foods remains confident in its strategic growth pillars and financial flexibility to pursue profitable expansion in Australia and Germany, supported by a strong partnership with Yum! Brands.
Bottom Line?
Collins Foods enters FY27 with a clean slate post-Taco Bell exit, a strengthened balance sheet, and ambitious growth plans in Australia and Germany, but European market headwinds and execution risks warrant close attention.
Questions in the middle?
- How will Collins Foods navigate European consumer softness and geopolitical uncertainties in FY27?
- What impact will the Munich acquisition have on German profitability and integration costs?
- Can the company sustain its emissions reduction trajectory while scaling the restaurant network?