It’s more than just drive through for fast food in the fast lane as Covid changes behaviours

Accelerated shift to digital platforms and home deliveries witnessed through COVID-19 expected to continue.

Accelerated shift to digital platforms and home deliveries witnessed through COVID-19 expected to continue. Picture: Adam Smith

Collins Foods chief executive Drew O’Malley, whose fast food chains include KFC and Taco Bell in Australia as well as the Sizzler chain in Asia, believes the accelerated shift to digital platforms and home deliveries witnessed through COVID-19 will continue even after the pandemic disappears.

The comments came after KFC was one of the most popular fast food chains for consumers stuck at home to binge on, with the restaurant group gaining about 1 per cent market share within the fast food industry, of which a large slice is believed to have come from smaller, independent food outlets.

Mr O’Malley said the KFC chain proved strong during the worst months of the health crisis, with half-year same-store sales for the outlet up 12.4 per cent, although its KFC chains in Europe were hit by severe lockdowns and home isolation.

“I think what has been particularly noticeable is that we have certainly proven our resilience through COVID but we actually think we are well positioned for the period beyond because COVID, if anything, just amplified trends that were already there, by that I mean delivery and digital transformation — and all that plays into our strength in the convenience space,” Mr O’Malley said.

On Tuesday, Collins Foods posted an 11 per cent increase in revenue to $499.64m for the half-year ended October 18, but profit for the period fell 19 per cent to $16.477m. The slide in statutory net profit was mostly driven by a $3.3m cost associated with the closure of its remaining Sizzler stores in Australia.

But Collins Foods attracted increasing consumer visits, online or in person, to its flagship chains consisting of 242 franchised KFC restaurants in Australia, 17 franchised KFC restaurants in Germany, 24 franchised restaurants in The Netherlands and 12 franchised Taco Bell restaurants in Australia.

“The company has delivered a strong result over the first half, effectively managing the economic and operational challenges brought on by COVID-19,” Mr O’Malley said.

“While KFC Europe had to manage through stricter lockdowns and a second wave of restrictions, sales momentum in Germany remained positive, and our Netherlands restaurants saw promising growth in drive-through sales. Taco Bell’s freestanding drive-through restaurant sales have now fully recovered to pre COVID-19 levels, and the brand has adapted well to place a greater focus on delivery and takeaway, enabling further rollout of new restaurants over the coming months.”

Mr O’Malley said the group had maintained its momentum even as some government stimulus had started to taper off, and this was helped by its delivery and digital platforms.

KFC Australia revenue rose 15.6 per cent to $415.5m with same-store sales growth of 12.4 per cent. For the half, underlying EBITDA at KFC Australia was up 22.4 per cent to $77.2m. Europe same-store sales declined by 4.2 per cent while overall revenues rose 1.1 per cent to $64.3m.

Collins Foods declared an interim dividend of 10.5c, up 10.5 per cent, payable on December 18.