Highlights

  • Collins Foods reported record FY26 Revenue and Underlying Profit growth.
  • KFC Australia delivered higher revenue with continued digital and restaurant investment.
  • The company expanded its European KFC presence through Germany restaurant acquisitions.
  • Collins Foods exited Taco Bell to focus on KFC operations across Australia and Europe.

Collins Foods Limited (ASX:CKF) is a quick service restaurant operator focused primarily on the KFC Brand across Australia and Europe. The company manages a network of restaurants supported by more than 22,000 team members and operates through a strategy centred on restaurant growth, operational improvement and technology investment.

Recent Development

Collins Foods released its 2026 Annual General Meeting addresses and trading update on 1 September 2026. The company highlighted FY26 as a record year, delivering record revenue and underlying profit despite challenging conditions in the quick service restaurant sector.

For FY26, Collins Foods reported record revenue from continuing operations of $1,592.6 million, up 8.6%. Underlying EBITDA increased 6.3% to $244.5 million, while underlying NPAT rose 13.0% to a record $61.4 million. Statutory NPAT was $47.1 million after including costs related to a class action settlement, restaurant impairments, wage provisions and Acquisition expenses.

The company generated net Operating Cash Flow of $150.1 million, achieved cash conversion of approximately 94%, and reduced net Debt to $119.6 million with a net Leverage Ratio of 0.77. Collins Foods also declared a final fully Franked Dividend of 15.0 cents per share, taking total FY26 dividends to 28.0 cents per share compared with 26.0 cents per share in FY25.

During FY26, Collins Foods restructured its Netherlands Corporate Franchise Agreement, signed new development agreements in Germany, acquired eight KFC restaurants in Munich and completed its exit from Taco Bell. The company stated that these decisions would allow greater focus on KFC operations in Australia and Europe.

Sector Context

Collins Foods operates within the quick service restaurant sector, where growth is influenced by consumer spending trends, brand strength, restaurant productivity and digital adoption.

KFC Australia remained the company’s largest and most profitable market during FY26. Revenue reached $1,241.3 million, up 7.6%, with same-store sales growth of 2.7%. Collins Foods opened eight new restaurants and completed 33 restaurant remodels during the year. Digital sales increased to 43.2% of sales from 34.2%, supported by increased kiosk penetration and changes to delivery fee structures.

The company is also developing its European KFC operations. Europe delivered record revenue of $351.3 million, up 12.5%, while underlying EBITDA increased 14.0% to $44.9 million. Germany recorded same-store sales growth of 3.7%, and Collins Foods expanded its German portfolio through the acquisition of eight restaurants in Munich, taking its network to 25 restaurants.

Risk and Uncertainty

Collins Foods operates in a competitive consumer environment where changing customer preferences, inflationary pressures, labour costs and discretionary spending patterns can affect restaurant performance.

The company also faces execution considerations as it expands in Europe. Collins Foods noted that Europe started FY27 softer than expected due to consumer confidence conditions, weather impacts and challenging prior-year comparisons.

Operational compliance and workforce-related matters remain areas to monitor. During FY26, Collins Foods continued its wage compliance review, with an estimated wage underpayment provision of $8.3 million at year-end. The company also entered into a settlement agreement regarding class action proceedings concerning 10-minute rest pauses, subject to court approval.

Catalysts Investors Can Watch

Future developments for Collins Foods may include continued KFC Australia sales growth, European restaurant expansion, digital initiatives and operational improvements across its network.

In Australia, the company is progressing initiatives including the rollout of Kwench by KFC, extended late-night trading hours and breakfast trials at selected Gold Coast restaurants.

Germany remains a strategic growth market, with Collins Foods targeting further restaurant development while maintaining a disciplined approach to Capital allocation. The company has increased its FY30 development target to between 45 and 90 additional restaurants.

Key Takeaways

Collins Foods delivered record FY26 financial results supported by KFC Australia performance, European expansion and operational initiatives. The company is focusing on KFC growth opportunities while simplifying its portfolio following the Taco Bell exit. Future performance will depend on consumer demand, restaurant execution, European expansion and effective capital allocation.