Fast food slows down
The company behind the KFC and Sizzler restaurant chains says sales are slowly improving, but trading conditions remain challenging.
Collins Foods operates 122 KFC restaurants and 27 Sizzler restaurants in Australia, and owns 53 Sizzler restaurants in Asia.
It has described retail conditions as the worst it had yet experienced, which has contributed to a major slump in its share price since listing on the Australian Securities Exchange (ASX) in August 2011.
Collins Foods shares first traded at $2.50 and closed on Tuesday at $1.14.
“To say we could not have picked a worse year in which to make our IPO (initial public offer) and list now sounds a gross understatement,” Russell Tate, chairman, said.
Sales since the company’s current fiscal year began in May were higher than during the same period in the previous year, Kevin Perkins, CEO, said.
But challenging economic conditions and cost pressures were expected to continue in the short term, he said.
A recently launched marketing campaign had boosted KFC’s performance, where same-store sales growth in the three months to the end of July was 3.5 per cent, Perkins said.
Same-store sales growth over the same period in Sizzler was just 0.1 per cent, well below the company’s previously stated full year target of 2.4 per cent.
Perkins told the meeting that severe drought in the United States could lead to higher wheat prices and, in turn, higher poultry prices from early in calendar 2013.
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