KFC chain owner Collins Foods warns on profit as Aussies has issued a profit warning

The operator of 279 KFC stores in Australia has revealed the extent of cost of living pain in the community as stretched households struggle to find room in their budgets for a bucket of fried chicken.

KFC sales in Australia are struggling as households rein in their spending.

Collins Foods, which operates 279 KFC stores across Australia, has issued a profit warning in the face of slumping fried chicken sales to further highlight the cost of living crisis now playing out.

Only a day after Domino’s Pizza issued its own warning that sales had significantly slowed since July, Collins Foods on Thursday issued a trading update that revealed the real extent of economic pain in the community as cost of living pressures meant even chicken – among the cheapest form of protein – was being shunned.

It also comes as fresh data showed that chicken sales had fallen in Australia for the first time in decades, falling as much as 9 per cent in the retail category. Typically, stretched households switch from red meat to chicken in challenging economic times and when household budgets are under strain, but now it looks like chicken too is off the menu.

Shares in Collins Foods sank 13 per cent on the profit warning to as low as $7.66 and are down 35 per cent since the start of calendar 2024.

Collins, which also has a portfolio of KFC stores in Germany and the Netherlands and which were also suffering from dwindling sales, said that in the first 16 weeks of its 20205 financial year, total company sales rose 1.1 per cent.

However, the profit gains on higher sales were more than offset by the impact of persistent inflation on cost of sales, labour and energy. Same store sales performance continued to reflect weaker consumer sentiment in Australia and Europe and the impacts arising from the conflict in the Middle East, it added, which has affected sales in the Netherlands.

Collins Foods warned that as a result, first half 2025 margins are expected to contract relative to prior year, reducing in the range of 1.3 per cent to 1.6 per cent while underlying profit margins expected to decrease, in the range of 1.5 per cent to 1.8 per cent.

KFC Australia comparable sales for the first seven weeks of 2025 were down 0.8 per cent and down 0.3 per cent for the first 16 weeks. Sales in Germany slid 4.5 per cent over the first 16 weeks.

“Current conditions remain challenging for consumers. This, and the impact of continued cost inflation, albeit moderating, will impact first half margins,” said Collins Foods interim chief executive Kevin Perkins.

On Friday, Australia and New Zealand’s largest poultry producer Inghams Group will report its full-year results, which should shed further light on the challenges facing the sector given it is the key supplier of chicken meat to supermarkets, restaurants, cafes, fast-food chains and other venues.