Multi-brand fast food franchise operator Restaurant Brands has announced a mammoth jump in underlying profit.
According to an ASX announcement posted on Wednesday, Restaurant Brands first-half underling profit rose by 14.4 per cent to $NZD25m ($AUD20.3m), thanks primarily to a major lift from its Australian KFC stores.
Restaurant Brands’ 61 Australian KFC outlets delivered a 4.2 per cent rise in sales to $AUD99.5m, coinciding with a 5.7 per cent rise in earnings. The company revealed that the lift was partly due to store upgrades and digital channels.
Restaurant Brands new developments
While same store growth and profit performance remained steady for Restaurant Brands’ KFC operations, the fast food operator is set to swell. Despite not opening a new outlet for the period, the chain was able to roll out delivery to 30 stores in the Aussie network.
Additionally, two new KFC stores are in development, predicted to open in the second half of FY20, alongside a powerhouse new arrangement that will likely deliver a massive network boost.
Over the past few months, the chain has been establishing the necessary infrastructure to launch a number of new sites for global Mexican inspired chain Taco Bell.
According to the most recent announcement, that infrastructure is now complete, with staff trained and sites identified. The two new Taco Bell stores are set to open in Jesmond and Blacktown before years’ end.
Speaking with Inside Franchise Business, Taco Bell Asia Pacific managing director Ankush Tuli revealed that the new partnership with Restaurant Brands would drive the chain’s progress across Australia.
“I truly believe that Australia is a key market for us, and in conjunction with our highly capable partners in Restaurant Brands and Collins Foods, fans to continue to enjoy the experience that they have come to expect form Taco Bell,” he said.
“Our success really has come off the back of the great partners that we have, so the timing couldn’t be better to kick off the next stage.”
Challenges
The first half of FY20 wasn’t without its challenges however, with Restaurant Brands suffering a similar fate to other operators in the fast-food space.
The firm was hit by a downturn at its NZ Pizza Hut restaurants due to competition from other stores and food delivery services.
It’s an ongoing issue in the fast-food sector, particularly for big-name pizza chains. Just last week, franchise giant Domino’s unveiled plans to ‘fortress’ stores in order to curb the growing competition from third party aggregators.
However, Restaurant Brands revealed that an evolving operational and administrative structure had helped the company to stabilise amid the challenging conditions.
According to the brand, once one-off items and the effect of changed accounting standards were stripped out, it had performed strongly and expected that to continue through the remainder of FY20.