As Taco Bell’s future hangs in balance, global parent Yum says Australia is part of the grand plan
Giant US fast-food chain owner Yum! Brands isn’t giving up on Australia as an outpost of the Taco Bell chain, after franchisee Collins Foods elected to call it quits and focus on fried chicken.
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
The US owner of Taco Bell wants the brand to have a future in Australia, despite the local operator of 27 Taco Bell stores across country giving up on the burrito chain.
Yum! Brands Inc, the $63bn fast-food multinational whose portfolio includes Taco Bell, KFC and Pizza Hut, has labelled Australia a “priority” region for its Taco Bell stores and is now seeking new owners for the local network after ASX-listed Collins Foods threw in the towel on the brand. Collins Foods spent eight years trying to grow the Mexican-themed franchise and make it profitable.
The commitment of Yum! Brands to Australia means that entrenched fast-food chains such as McDonald’s, Hungry Jacks and KFC, as well as newer players in the taco category such as Guzman y Gomez, will continue to face a deep-pocketed rival.
But the next owner of the Taco Bell stores in Australia will face huge challenges with a menu that has consistently failed to inspire diners, and a business that has rung up losses.
“Australia remains a priority market for our brand, and we are committed to Taco Bell’s long-term growth in the region,” the spokesman for Taco Bell Corporation said in a statement following Tuesday’s announcement from Collins Foods.
“We are actively exploring a transition to new ownership and will continue to invest in the market alongside the right franchise partners. Building on the strong foundations already in place, we will continue to deliver the bold flavours and unique experiences that Taco Bell fans know and love across Australia.”
Collins Foods, whose dominant business is KFC, first bought into the franchise in 2017. At the time it had huge ambitions, quickly building up the network to 50 Taco Bell stores to create a new earnings pillar alongside fried chicken.
Despite Taco Bell being hugely successful overseas – it claims to be the largest Mexican-inspired restaurant chain in the world with 8500 stores in more than 30 countries – it never found success in Australia.
For the first half of fiscal 2025, Collins Foods’ Taco Bell business reported a loss of $1.1m, advancing on a loss of $5.4m for fiscal 2024 and a loss of $5.9m in fiscal 2023. Its local annual sales of $54m represent a fraction of Taco Bell’s global sales of $US17.2bn ($27bn).
On Tuesday, Collins Foods chief executive Xavier Simonet told The Australian that he could no longer justify investing more funds into the loss-making business, with the company holding discussions with Yum! Brands regarding a potential transition.
“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.
Originally published as As Taco Bell’s future hangs in balance, global parent Yum says Australia is part of the grand plan
Rate cuts, equity uncertainty help revive property play
The housing market is ripe with action, but there’s a new kind of investor - not the wealthier older Australian, rather the younger ‘rentvestor’.
The glamour rebellion: secrets behind the $1bn Mecca empire
Mecca is a marketing machine that captured Australian women, but has it peaked? A rebellion among some once loyal customers suggest yes while others say it’s a brand worthy of devotion.