Popeyes down under? Collins Foods’ (ASX:CKF) KFC may have a new competitor

Collins Foods Ltd (ASX: CKF) might have a new competitor for its Kentucky Fried Chicken franchise: the American chicken chain Popeyes.

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Collins Foods Ltd (ASX: CKF) is not as much of a household name as the KFC (Kentucky Fried Chicken) restaurants that it runs. Collins Food has the license to own and operate KFC stores in Australia, as well as a few other countries. And it has done a pretty good job of carrying out the Colonel’s vision.

Collins Foods shares are up 168% over the past 5 years (not including dividends). They are also up close to 75% over the past 12 months.

The KFC franchise has likely benefitted from a lack of competition in Australia. Compared to the US, where there are dozens of fast food chains, only a few big names truly dominate the national Australian market. These include the famous golden arches in McDonald’s Corp (NYSE: MCD), as well as the Burger King affiliate Hungry Jacks and Dominos Pizza Enterprises Ltd. (ASX: DMP). But it’s relatively safe to say that KFC benefits from being one of the only chicken-focused chains out there. Other competitors in this space are the much-smaller Oporto and Red Rooster brands.

But that could be about to change.

Popeyes: another dirty bird down under?

According to a report in the Australian Financial Review (AFR) today, another US fast food giant with a focus on fried chicken might be about to launch down under. That would be Popeyes Louisiana Kitchen. Popeyes is a US-based franchise owned by Restaurant Brands International Inc (NYSE: QSR). It was founded in 1972 in the Southern state of Louisiana, and specialises in fried chicken.

According to the AFR report, Restaurant Brands International has “contacted Australian food services business and private equity firms to gauge their interest in bank-rolling the launch of Popeyes”.

We could well end up seeing Collins Foods itself take charge of Popeyes. But, as the report notes, this is a long-shot given Collins’s already dominant chicken presence in the Australian market. The report states that ‘bankrollers’ could include Dominos Pizza, Pizza hut-owner Allegro Funds. Or Cravable Brands, which owns Red Rooster and Oporto in Australia.

Either way, it will be an interesting shakeup to watch if Popeyes does enter the Australian fast food scene.

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Motley Fool contributor Sebastian Bowen owns shares of McDonalds. The Motley Fool Australia has recommended Collins Foods Limited and Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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