One of the world’s most progressive populations in the world is set to enjoy the pleasures of Kentucky Fried Chicken with Collins Foods (ASX: CKF) taking a major step forward in their European expansion project, signing a franchise agreement to launch KFC in The Netherlands.
The corporate franchise agreement (CFA) with KFC Europe enables Collins Foods to develop, manage, market, support and operate the KFC business in the Netherlands, including the introduction, management and oversight of existing and future franchisees. Plans have already been declared to target up to 130 new retail stores over the next 10 years in a mixture of Collins-owned restaurants and independent franchisees.
For the Dutch, this will be a welcome alternative to vending-machine fried foods (see Febo) commonly frequented after a boozy night out on the town.
“Today’s announcement marks a true milestone in the progression of Collins Foods’ strategy in Europe,” said Collins Foods Managing Director, Drew O’Malley.
“The corporate franchise agreement in the Netherlands is an exciting opportunity that allows us to more fully leverage our scale, experience, and operational capabilities in Europe for the benefit of both the Company and the KFC brand.
“We believe there is substantial opportunity for restaurant growth in the Netherlands, given KFC’s low penetration rate relative to developed markets and other Quick Service Restaurant brands.”
The CFA will commence on 31 December 2021 for an initial term of 5 years where Collins will acquire all relevant assets, contracts and employees of KFC required to run KFC Netherlands.
Managing Director for KFC Europe, Oleg Pislov said, “We have full confidence that Collins Foods will be able to drive rapid growth of the KFC Netherlands restaurant network, rolling out new restaurants that they will operate, while supporting existing and new franchisees. We look forward to partnering with Collins Foods to provide more Dutch consumers with the opportunity to enjoy KFC’s craveable chicken in a variety of convenient formats.”
Collins Foods reported a $1,065 million revenue for FY21 which represented a 12.4% increase on the previous year. Underlying net profit after tax saw a similar rise of 15.2% to $54.6 million.
In their market commentary, the Company specifically called out the “exceptional performance of KFC Australia” as a driving force behind the profits as Australians turned to finger licking goodness to overcome the pandemic.
Beyond operating KFC in Australia and Europe, other brands managed by Collins Foods include Taco Bell in Australia and Sizzler in Asia.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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