Collins Foods half- year profit hits a massive snag

RESTAURANT operator Collins Foods is closing its fledgling Snag Stand business as it launches Taco Bell and focuses on its KFC restaurants.

Collins Foods has posted a 17.5 per cent fall in half- year profit to $ 12.7 million due to $ 4.7 million in one- off costs, including the closure of Snag Stand and the acquisition of more KFC stores from Yum! Brands.

Underlying net profit – before those one- off costs – was up 3.7 per cent and group revenue had risen 14 per cent to $ 322.1 million in the half year to Octo- ber 15, compared with the same time a year ago.

Revenue from its core business, KFC Australia restaurants, increased 8.5 per cent to $ 270.8 million, with like- for- like sales up 1.2 per cent. The group’s Sizzler restaurants suffered a 23 per cent fall in revenue to $ 24 million, as it had seven fewer stores in Australia than at the same time a year ago.

Chief executive Graham Maxwell said the company would close its Snag Stand business by the end of the year – with the decision to end the business coming after a strategic review started in June.

Mr Maxwell said the group remained focused on growing the core KFC Australian business and had been pleased by the positive response to its newly opened Taco Bell store in Brisbane.

“We are excited by the early response to our first Taco Bell store that was recently opened and will look to roll out out another two stores in a considered fashion to ensure consumer acceptance before undertaking a major rollout of this chain.”