Australians’ hunger for fast food soars as KFC and Pizza Hut franchisee Restaurant Brands reports bumper quarter

As household budgets come under pressure from the RBA’s aggressive interest rate rises, Australians are still spending big on fast food.

Demand for fast food such as remained strong, with Alice Springs KFC franchisee Sam Edelman sampling some of his goods. Picture: Chloe Erlich

Australians are still gobbling fried chicken, pizza, burritos and other fast foods, as household budgets come under pressure from aggressive interest rate rises to combat spiralling inflation.

Restaurant Brands — which owns franchises for KFC, Pizza Hut, Carl’s Jr and Taco Bell in Australia, New Zealand and some US states — reported a 16.9 per cent surge in sales to $332m in the December quarter versus the same period in 2021.

The dual ASX and NZX-listed company’s Australian stores posted the biggest quarterly sales increase, soaring 13.5 per cent to $70.6m. It cited a post lockdown bounce and price hikes across some menu items.

“Sales grew across all brands, largely driven by price increases and the benefit of the removal of Covid-19 restrictions,” the company said in a statement to the ASX.

“Worldwide inflationary pressures continue, with the company still experiencing significant cost inflation across all regions. The company continues to implement price increases where possible in response to these increased costs, but margins remain under pressure.”

Aussies consuming fast food like KFC at higher rates. Picture: NCA NewsWire / Flavio Brancaleone

The price of wholesale potatoes has soared more than 25 per cent after heavy rains and floods in the key growing period on Australia’s east coast washed away three months’ worth of supply, triggering shortages and prices across fish and chip shops, pubs and restaurants.

It comes as Australia’s headline inflation jumped to 7.8 per cent in the year to December — up from 7.3 per cent in September — thanks to a jump in holiday travel prices and surging electricity bills through the final months of 2022.

Economists had expected Wednesday’s Australian Bureau of Statistics release would show annual CPI growth of 7.6 per cent, and a quarterly rate of 1.6 per cent, and the stronger than anticipated final inflation reading for 2022 suggests that a rate hike next month is now more likely.

Reining in runaway food prices is proving difficult. Australia’s biggest supermarket chains Coles and Woolworths reported a 9.2 per cent spike in the December quarter as inflationary pressures from food suppliers to the supermarket aisle continued to race ahead.

Pizza Hut franchisee Restaurants Brands has seen a surge in sales.

Restaurant Brands also reported strong quarterly sales in New Zealand — rising 10.7 per cent to $NZ139.8m ($127.6m) — and Hawaii, which leapt 10.4 per cent to $US40.4m ($56.9m).

“Hawaii trading continues to be strong, with the Hawaiian economy improving on increased tourism over last year,” the company said.

Meanwhile, California reported a 5.7 per cent lift in sales to $US29m, but on a same store basis, declined 2.4 per cent as inflation bites.

“Same store sales have reduced on the prior year largely due to reduced Californian consumer spending in the face of high inflation levels and the absence of government stimulus payments.”

Sales for the full year jumped 12.6 per cent to $259m in Australia and 6.1 per cent on a same store basis.

Store numbers increased by one during the quarter to 83 following the opening of a new KFC store in South Kempsey, with a new Taco Bell store in Emerald Hills offsetting the closure of the underperforming Dee Why Taco Bell store

Overall sales for the company jumped 16 per cent to $1.24bn for the year. “Total sales growth was supported by the inclusion of 17 new stores (to 376 stores in total), lower levels of Covid-19 disruption and the strengthening US and Australian dollars over the prior year

Restaurant Brands will release its full earnings for the year to December 31 on February 28.