Prices at hundreds of KFC restaurants across the country will likely rise again as the owner points out the need to keep up with inflation.
Collins Foods announced revenue growth of 11.1 percent in the year to May 1 on Tuesday — pushing its stock price up 11.5% to $9.97 and making it one of the day’s top performers.
The company owns 263 KFC stores across Australia, 23 Taco Bells, 62 KFCs in Germany and the Netherlands, and 66 Sizzlers in Thailand and Japan.
It says it now leads McDonald’s in quality and value and is increasing its market share by expanding the delivery market.
“The KFC brand has never been stronger in Australia, and the standards of quality, value, and purchase intent are at record levels – especially important in times like these,” said CEO Drew O’Malley.
Camera Icon Prices at hundreds of KFC restaurants across the country will likely rise again as the owner points out the need to keep up with inflation. Credit: News Corp Australia
But while Mr. O’Malley said his company’s brands were in “excellent shape” to weather economic headwinds, there would be a short-term effect in “turbulent times”.
He told investors that KFC was well positioned to moderate its cost inflation next fiscal year through “customer-focused” price increases, which were expected to exceed normal historical increases.
“While we’re planning a higher price point for menus than in the past… I have to make every effort to point out that this is exactly the environment we want to gain in value,” said Mr. O’Malley on a conference call.
“We must be careful not to get too far in front of our consumers to erode the work done over the past decade.”
He said there had already been two price increases of between one and 2 percent since January, and customers “will likely see more rounds in the coming year.”
“While menu pricing plays a part in our efforts to offset pressure on margins, we will continue to put the value at the heart of customer appeal. While some margin compression is inevitable in the near term, we expect margins to recover in the medium term,” he said.
Local KFC store sales increased 6.1 percent to $955.5 million, and Taco Bell sales increased 27.5 percent to $35.8 million.
Mr. O’Malley marked between nine and 12 new KFCs, and Taco Bells was set to open in fiscal 2023 — which would continue for the latter to reach scale within three years.
The company is also driving further growth in the first KFC delivery via drones. It is currently piloted in five Brisbane suburbs. It says delivery is twice as fast as traditional methods, and battery and drone technology improvements will lead to wider delivery areas.
