KFC and Taco Bell owner Collins Foods flags price rises in high inflation environment

Prices at hundreds of KFC restaurants nationwide will likely rise again as its owner flags the need to keep pace with inflation.

Collins Foods on Tuesday announced revenue growth of 11.1 percent in the year to May 1 — pushing its share price up 11.5 percent to $9.97 and making it one of the day’s top performers.

The company owns 263 KFC outlets across Australia, 23 Taco Bells, 62 KFCs in Germany and the Netherlands, and 66 Sizzlers in Thailand and Japan.

It says it now leads McDonald’s on measures of quality and value and is growing its market share through increases in the delivery market.

“The KFC brand has never been stronger in Australia, and metrics around quality, value, and purchase intent are at record levels — particularly important in times like these,” chief executive Drew O’Malley said.

Camera IconPrices at hundreds of KFC restaurants nationwide will likely rise again as its owner flags the need to keep pace with inflation. Credit: News Corp Australia


But while Mr. O’Malley said his company’s brands were in “excellent shape” to navigate economic headwinds, there would be a short-term impact in “turbulent times”.

He told investors KFC was well-positioned to moderate its cost inflation next financial year through “customer-centric” price increases, which were expected to be above its historic normal hikes.

“While we are planning a higher level of menu pricing than historically … I need to take pains to point out this is exactly the environment we want to be winning in value,” Mr. O’Malley said in a conference call.

“We’ve got to be careful of not getting too far out in front of our consumer to erode the work that’s been done over the past decade.”

He said there had already been two price hikes since January of between one and 2 percent, and customers were “likely to see more rounds in the year ahead”.

“While menu pricing is factoring into our efforts to offset margin pressures, we will keep value at the center of our customer appeal. While some margin compression in the short-term is unavoidable, in the mid-term, we expect margins to recover,” he said.

Revenue from local KFC outlets was up 6.1 percent to $955.5 million, and Taco Bell revenue was up 27.5 percent to $35.8m.

Mr. O’Malley flagged that between nine and 12 new KFCs, and Taco Bells would open during the 2023 financial year — which for the latter would continue its progression towards reaching scale within three years.

The company also pushes for further growth in the first KFC drone delivery. A pilot in five suburbs of Brisbane says delivery is twice as fast as traditional methods, and battery and drone technology improvements will mean wider delivery areas.

Bella E. McMahon
I am a freelance writer who started blogging in college. I am fascinated by human nature, politics, culture, technology, and pop culture. In addition to my writing, I enjoy exploring new places, trying out new things, and engaging in conversations with new people. Some of my favorite hobbies are reading, playing music, making crafts, writing, traveling, and spending time with my family.