Taco Bell defies gloom

Progress on Mexican food chain’s city plan

TACO Bell is pressing ahead with plans to open its first restaurant in Cairns despite COVID-19 taking a bite out of its franchisee’s finances.

The Mexican fast food chain is set to take up residence as a stand-alone drivethrough and dine-in restaurant at the DFO Cairns shopping centre in Westcourt.

Shopping centre owner Sentinel Group first lodged plans for the development late last year – although it took some detective work to unmask Taco Bell as the tenant.

It has now lodged a second development application to Cairns Regional Council for operational works such as road construction and water services to be carried out before the building’s construction.

The latest progression is a good sign the restaurant is committed to the development despite its Australian owner’s balance sheets copping a hit during the coronavirus crisis.

Collins Foods is a franchisee of KFC in Australia and Europe, Taco Bell in Australia and owns Sizzler restaurants in Australia.

KFC makes up the bulk of its business – and rules around social distancing have taken an economic toll.

An announcement to shareholders stated KFC sales in Australia had declined since the introduction of restrictions on in-restaurant dining.

In the last week of March, sales were down 8 per cent on the previous year – a figure that would have been much higher if not for the prevalence of drive-through restaurants in Australia.

“In Europe, where drivethrough is not as prominent in the overall mix, sales in the Netherlands have dropped 30 per cent to 40 per cent versus prior year while in Germany, sales have dropped approximately 50 per cent versus prior year,” the ASX announcement stated.

Collins Foods managing director and CEO Graham Maxwell said the company had significant headroom in its current debt facilities and covenants.

“Our business is showing strong resilience despite very challenging macro conditions and is well positioned for when the overall environment improves,” he said.

Taco Bell has 14 restaurants in Australia, 10 of which are in Queensland – including its Townsville store, which opened in November.

Collins Foods and Sentinel Group have been asked to comment on when construction would start.