Restaurant Brands posts encouraging full-year earnings

Restaurant Brands increased its annual profit by 2.8 per cent in the year to December.

The owner of KFC, Pizza Hut, Carl’s Jr and Taco Bell restaurants in New Zealand, Australia, Hawaii and California, posted a $30.9 million net profit after tax in the 52-week period compared to $30.1m in the previous year. The company changed its balance date in 2019 so comparison results cover a 44-week period.

Its posted revenue of $892.4 million in the year, a 26.5 per cent increase of the $705.5m sales recorded in the 44 weeks of FY19.

Total group sales were up 7 per cent or $58.6m in the period.

Combined store ebitda for the period was up 7.5 per cent or $10.3m.

Restaurant Brands acquired 69 KFC and Taco Bell stores in California in September, which generated an additional $51.9m in sales and $8.5m in ebitda in the last four months of the financial year.

Mexican-inspired fast food brand Taco Bell launched in New Zealand and Australia in late 2019, with eight transtasman stores, contributing to the FY20 results.

“Covid-19, whilst creating considerable disruption across all four operating divisions, was particularly testing for the New Zealand operations with the entire business being closed for nearly five weeks in March-April 2020. The Australian, Hawaiian and Californian operations, whilst adversely affected, have generally continued to trade through the crisis (with some limitations) and consequently have sustained much less of an adverse profit impact,” Russel Creedy, chief executive of Restaurant Brands, said in the market announcement.

Total store sales in New Zealand were $410m in the period, up $42.9m or 11.7 per cent, when compared to the previous 44 week period.

It lost $40m worth of sales in the period due to the five-week lockdown in March and April 2020. The local business, however, recovered well following re-opening with same-stores sales up 5.3 per cent.

New Zealand sales growth was driven by another strong performance by breadwinner brand KFC and better than expected Carl’s Jr sales.

Restaurant Brands has received $22m in government wage subsidies following the onset of the coronavirus pandemic.

Local store numbers decreased by 11 in the 12-month period, with 16 Pizza Hut stores sold to franchisees in the year and new openings including one KFC location in Christchurch, and three Taco Bell stores in Auckland. KFC Kapiti was acquired from an independent franchisee.

Restaurant Brands’ Australian business turned over $214.9m, up 27.1 per cent, in the year. The market also faced significant disruption from the pandemic due to mandatory lockdowns and subsequent store closures.

Hawaiian operations contributed $215m in revenue and $33.5m in ebitda for the year, while the recently acquired Californian business contributed to $52m in sales revenue in the four-month period of ownership.

The company’s balance sheet remains strong and is focused on the expansion of the Taco Bell store roll out in New Zealand and Australia. Ten more Taco Bell stores are expected to be open and operating by the end of the current financial year.

Restaurant Brands now operates 348 stores, including 137 in New Zealand, 72 in Hawaii, 70 in Australia and 69 in California.

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