The head of fast food giant Collins Foods says he’s sad but doesn’t regret that popular buffet brand Sizzler was cut earlier this year after failing to weather the COVID-19 pandemic.
The last nine Sizzler stores in Australia opened on Nov.. It finally closed its doors on November 11th after Collins announced in October that the brand will no longer exist. Collins’ half-year results, released Tuesday, showed that Sizzler’s sales had more than halved since early May.
Sales at the rest of Collins’ operations, which include nearly 300 KFC restaurants and 13 Taco Bell stores, have been booming since May when banned Australians opted for fast food and take-away.
Collins Foods chief executive officer says Sizzler has no regrets about closing. Photo credit: Edwina Pickles
Collins’ managing director Drew O’Malley said the retailer has made every effort in recent years to keep Sizzler afloat, but the troubles caused by the virus are the last nail in the coffin.
« There is a lot of sadness, we love Sizzler and we are incredibly proud of our team. But regret? I would say no. We have made every effort to see if we can continue to operate Sizzler via COVID, « he said. « But it was a decision that the time had come. «
Collins’ total sales increased 11. 3 percent over the previous corresponding period to $ 499. 6 million, mainly driven by the company’s 242 Australian KFC stores, which increased their sales by 15. 6 percent to $ 415 million.
Sales at the company’s 41 European restaurants have been more heavily impacted by COVID-19 restrictions, with the region currently experiencing a second wave. Sales decreased by 4. 2 percent on a comparable basis.
The legal result decreased by 19. 1 percent to $ 16. 5 million but excluding a number of one-off costs and the effects of a new accounting standard, profit increased 15. 1 percent to $ 27. 5 million.
Growth on both fronts was supported by a doubling of the company’s digital sales through delivery platforms such as Deliveroo and Menulog, as well as click-and-collect options. Mr O’Malley said he expected the boom in grocery delivery popularity to continue even if Australians return to eating out.
« Behaviors during COVID that made people’s lives easier, such as online delivery, are the behaviors that will persist, » he said. « Behaviors that made life difficult for people, like social distancing and wearing masks, will not become those behaviors. «
Mr O’Malley said the « marriage » between Collins and the food delivery platforms was working well for the company and expressed confidence that delivery drivers can be safe given the recent deaths of five delivery drivers in Australia. The chief executive didn’t say whether Collins raised additional concerns about his delivery partners in response to the recent deaths.
James Barker, analyst at Morgans, said the result exceeded consensus estimates due to a stronger than expected result at KFC Australia, with recent incentives and results playing an important role.
« Obviously, in the current environment, customers may be more willing to move to delivery / e-commerce orders. However, Collins introduced delivery via aggregators before COVID and saw benefits so likely that COVID has just accelerated adoption. « Mr. Barker said.
« It is unlikely that these growth rates will last forever. However, as long as incentives are in place and domestic discretionary spending persists, it is unlikely to slow significantly in the short term. « . «
Collins’ focus for the new financial year is on further expanding his core brand KFC. The talks with the master franchisor Yum! Another 66 KFC restaurants are to be introduced by the end of 2028.
Collins shares rose 10. 9 percent to $ 10. 37 on Tuesday. The company pays a fully prepaid interim dividend of 10. 5 cents on 18th. December.
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Collins Foods, ASX, KFC, Taco Bell, ASX: CKF, Sizzler
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