The Collins Foods Ltd (ASX: CKF) share price has surged 10% today after the company revealed positive growth in Australian sales despite coronavirus restrictions. Collins Foods is behind fast-food brands KFC in Australia and Europe, Sizzler, and Taco Bell in Australia.
Australian business resilient
Collins Foods released its latest update on the impacts of COVID-19 on its business today, revealing KFC Australia has continued to show improvements in sales trends through this difficult period. Increased drive-thru and home delivery sales have offset negative impacts from government restrictions banning dine-in transactions.
The KFC food courts division has, however, been significantly affected due to the significant decline in mall foot traffic. Over the past 5 weeks, same-store sales were down marginally by 0.9% versus the prior year. Excluding the net effect of food courts, the remainder of the network traded positively with growth of 4% over the prior year.
After an initial decline in sales, Taco Bell has had a positive recovery with sales over the last few weeks returning to pre-COVID levels. Sizzler Australia saw a significant fall in sales due to dine-in restrictions but has now implemented takeaway and home delivery services.
European business declines
In Germany, KFC restaurants continue to trade through takeaway, drive-thru, and delivery channels. Government restrictions have reduced dine-in sales, with same-store sales falling 28%. This is nonetheless a sizable improvement over the initial sales drop at the onset of COVID-19.
In the Netherlands, dine-in has been banned but takeaway, drive-thru, and delivery have continued. Same-store sales declined 40% over the previous 5 weeks. The business has been particularly affected by the number of in-line restaurants in city centres. Drive-thru restaurants have performed comparatively well with same-store sales down around 15% over the same period.
Outlook
Collins Foods' operating environment remains challenging and fairly unpredictable. Nonetheless, the business has shown its resilience in the face of government restrictions. Sales have improved in recent weeks and talk is now turning to the easing of restrictions in both Europe and Australia.
CEO Graham Maxwell said, "our business continues to show strong resilience despite the very challenging operating environment and is well positioned to manage through the recovery period of the respective markets we operate in."
