Australia's Collins Foods plans to exit Taco Bell partnership, open more KFC outlets in Germany

By Aaditya GovindRao and Adwitiya Srivastava

(Reuters) -Australian fast-food chain operator Collins Foods said on Tuesday it planned on exiting the underperforming Taco Bell restaurant business in a year and instead open more KFC outlets in Germany, maintaining its partnership with Yum Brands.

Collins Foods said it is in talks with Yum -- which also owns Pizza Hut besides Taco Bell and KFC -- to transfer its license to operate 27 Taco Bell outlets in Australia to new ownership, failing which it would explore other options.

On the other hand, the Brisbane-based company said it would open 40 to 70 new KFC outlets in Germany in five years to add to the 16 it already operates, saying the fried chicken brand is "under-penetrated" in the country.

The quick-service restaurant (QSR) operator also ran 58 KFC outlets in the Netherlands and 285 in Australia as of October.

Collins Foods posted a 0.3% drop in Taco Bell Australia's same-store sales for the first half of fiscal 2025, a stark contrast to the 9.4% growth at key Mexican food rival Guzman Y Gomez.

Still, Collins Foods' shares tumbled nearly 8% by 0340 GMT, set for their worst day in nearly eight months.

The KFC expansion plan lacked details, said Nicholas Sundich, an equity analyst at Pitt Street Research.

"The investor presentation talked about how 'chicken is under penetrated in the German QSR market'. We're yet to hear of any new initiatives to drive growth other than just opening 40-70 new restaurants and hiring new middle managers."

Collins Foods also flagged a A$25.5 million to A$32.7 million ($16.11 million to $20.66 million) impairment from its Netherlands operations, and announced several executive changes, including the exit of Europe CEO Hans Miete. ($1 = 1.5830 Australian dollars)

(Reporting by Aaditya Govind Rao and Adwitiya Srivastava in Bengaluru; Editing by Alan Barona, Christopher Cushing and Savio D'Souza)