Australia’s Collins Foods will ditch Taco Bell to focus on making KFC big in Germany

Collins Foods has called time on Taco Bell after failing to land a punch on its Mexican rival in Australia, Guzman y Gomez, with the future of all Taco Bell stores nationally up in the air.

Collins Foods will sell or close down its Taco Bell stores in Australia. Picture: Mark Stewart

Collins Foods will ditch its struggling Taco Bell stores after years of poor trading to focus exclusively on its KFC franchise, which it plans to expand in Germany under new leadership that promises to return the fast-food business to profit growth.

Taco Bell has failed to land a punch against its larger and more successful Mexican fast food chain rival Guzman y Gomez and stalwart Taco Bill.

Collins Foods operates 27 Taco Bell stores in Australia that have consistently struggled to make a profit, despite numerous brand reinventions, posting an underlying loss of $1.1m for the first half of 2025.

New chief executive Xavier Simonet, the former boss of outdoor adventurewear retailer Kathmandu, concluded that Guzman y Gomez was a big competitor, and that Taco Bell was “not where we want to put our capital in terms of future investment”.

Collins Foods CEO Xavier Simonet.

Mr Simonet has also triggered a sweep out of Collins Foods executives in Australia and Europe as he unveils his strategy to arrest declining earnings, rid itself of its problematic taco chain and develop Germany into a major earnings powerhouse for the company.

As part of this, Collins Foods will take a knife to its KFC operations in the Netherlands, warning of an accounting impairment of as much as $32.7m, but the company still has optimistic plans for the continent with Germany currently under-represented for KFC stores compared to other fast food chains like McDonald’s.

Mr Simonet told The Australian on Tuesday that after he met with the company’s largest shareholders before Christmas, it was clear that investors were looking for a better return on their capital and that investing in KFC was the more rewarding option.

“What’s your view on Taco Bell, is there a pathway to profitable growth? Do you want to allocate more capital or do something else with our capital?” he recalls being asked.

“The outcome of the review is that I see more opportunities in growing the KFC business in Australia and in Europe, opportunities to drive profitable growth. I don’t see at this stage an opportunity to give a good return on investment to our investors through Taco Bell, so it’s a strategic decision the board has made,” Mr Simonet said.

Collins Foods boss Xavier Simonet sees huge potential for KFC in Australia as well as Germany.

Mr Simonet said Collins Foods had a great KFC business in Australia, where it will drive growth, open more stores and consider acquisitions of other KFC networks.

The Collins Foods boss is turning his attention to Germany because there are around 207 KFC stores (of which Collins Foods operates 16) and huge potential. Collins Foods is the largest KFC franchisee in the Australian market.

“I know Europe pretty well because I come from Europe, I have operated businesses based in Europe and based in Australia, so I’ve got a good understanding of doing business in Europe and the complexity and the opportunity as well. Germany is a big market, 80 million people, it is a big quick service restaurant market, and KFC is under-represented with about 200 stores. McDonald’s has got 1400 stores.

“There is a huge gap and this is an opportunity. Germany is a good opportunity, and we think there is a lot of potential.”

KFC operator Collins Foods sees huge potential for more KFC stores in Germany.

Collins Foods has stores in Dusseldorf and Stuttgart which it will now use as a base to accelerate its rollout, through an agreement with KFC parent Yum. Collins Foods is targeting between 40 and 70 new KFC restaurant openings across Germany over the next five years. Additionally, Yum has granted a period of exclusivity to open and operate KFC restaurants in certain trade areas within two regions (North Rhine Westphalia and Baden-Württemberg) where the company already operates. Those two regions account for approximately 35 per cent of the population of Germany.

In the Netherlands, cost-of-living pressures and a tougher economy will see Collins Foods maintain its current store numbers rather than open more stores, and the company said it is expecting to book impairments of $25.5m to $32.7m in its 2025 financial year result.

“The initiatives announced today provide strategic clarity and renewed purpose. We remain laser focused on delivering operational excellence in our core market, Australia, where we continue to successfully adapt to a dynamic consumer landscape.”

In a number of senior management changes, Collins Foods also announced the departure of its KFC Australia boss Helen Moore, to be replaced by Krystal Zugno, the current general manager of its Taco Bell operations. Collins Foods CEO of Europe, Hans Miete, has also left the business.

Shares in Collins Foods ended 7.7 per cent lower at $8.

Originally published as Australia’s Collins Foods will ditch Taco Bell to focus on making KFC big in Germany