Restaurant Brands’ profit spikes on further expansion

Restaurant Brands has unveiled a 36 per cent increase in its full year profit to NZ$35.5 million on strength in its home market of New Zealand and expansion of its KFC network in Australia.

Top line sales increased by 49 per cent to NZ$740 million in the 52 weeks to February 26, while combined earnings across the company’s portfolio were up 41.5 per cent to NZ$121.9 million.

RBD owns a network of KFC stores in Australia and NZ, as well as Pizza Hut and Taco bell stores in Hawaii and Starbucks and Carl’s Jr. stores in NZ.

KFC Australia, which now operates across 61 stores, booked a 50.9 per cent increase in sales on the acquisition of an additional 18 outlets, while earnings were up 42.1 per cent to NZ$20.2 million.

Sales in NZ were up 6.3 per cent to NZ$446.8 million, driven by KFC New Zealand, which saw earnings increase by 7.4 per cent to NZ$66 million.

RBD expects at least a 10 per cent increase in profits next year, revealing that it will look to further expand its KFC business in Australia and New Zealand while also possibly investing in KFC stores in Hawaii and the US.

The business recently acquired a network of 82 Taco Bell and Pizza Hut stores in Hawaii, which contributed $68.3 million in sales for the year, buoying confidence for a possible expansion of the brands into New Zealand.

“The full effects of two major acquisitions is evident in this year’s financial results with sales almost doubling over the last two years,” RBD said in an ASX release.

“From a sound, established position in both the Australian and US (Hawaii) markets the company now has significant scope to expand further in both these geographies through acquisition, store refurbishments and organic growth.”

Operating cash flows were up NZ$19.9 million for the year while net cash outflows spiked to $173.3 million, reflecting the impact of its Hawaii and Australian acquisitions.

“The company is not anticipating any significant changes in the economic and competitive environment or unusual costs in the new financial year. With a consistent performance from the existing store network and the full year effect of additional stores acquires in Australia in the second half of the 2018 financial year,” RBD said.