Collins Foods’ (ASX:CKF) shares have fallen nearly -3% in the first hour of trade as the company’s solidification of moves to ditch its Australian Taco Bell assets wasn’t enough to put the company in green territory (so long as investors would’ve hypothetically accepted the divestment was a good move).
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It’s not necessarily news that Australian KFC-manager CKF was looking to pawn off its Taco Bell properties, but we now know who’s taking them off its hands: “An affiliated company of Taco Bell (part of YUM!)” and Restaurant Brands Australia.
“Today’s announcement represents another important step in the execution of Collins Foods’ previously communicated strategy to exit Taco Bell in Australia,” the Australian company advised on Tuesday.
“This will allow the company to sharpen its focus on its core brand, KFC, and its key markets, Australia, and Europe, particularly Germany.”
That European focus has been on the cards for a while now; last year, the company effectively stated that anti-American sentiment was hurting some of its operations in Europe.
That wasn’t directly linked to the Oz Taco Bell divestment, but does underscore the interesting dynamics the company CKF – a publicly-listed Australian entity managing a U.S. franchise brand – faces in its day-to-day operations.
The need for divestment of something or other is fairly clear. Last year, the company boasted profits after tax down -88%; the share price was only saved by a 15cps dividend (at least, according to this Market Link journalist.)
CKF had been warning of poor economic conditions since at least late CY24, and it appears that remains the case, given the Taco Bell divestment.
CKF last traded at $8.65/sh.
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