KFC Australia operator Collins Foods bracing for lower profit margins amid slumping fried chicken sales

The KFC fast-food chain operator is expecting lower profit margins for the first-half as higher living costs dampen demand for fried chicken. While total sales rose 1.1 per cent in the first 16 weeks of the new financial year, Collins Foods on Thursday said the profit gains on higher sales were more than offset by the impact of persistent inflation on cost of sales, labour and energy. The company operates 279 KFC in Australia, 75 KFC in Europe, as well as 27 Taco Bells in Queensland, WA and Victoria. Same store sales for KFC Australia slipped 0.8 per cent in the first seven weeks of fiscal 2025, while KFC Netherlands and Germany posted bigger declines — down 2.3 per cent and 2.8 per cent, respectively. Collins Foods said comparable sales performance continued to reflect weaker consumer sentiment in Australia and Europe, as well as the impacts arising from the conflict in the Middle East, affecting sales in the Netherlands. As a result, first-half margins are expected to be in the range of 1.3 per cent and 1.6 per cent, compared with the prior year’s 15.8 per cent. Collins Foods interim chief executive Kevin Perkins said current conditions remained challenging for consumers. “This, and the impact of continued cost inflation, albeit moderating, will impact H1 margins,” he said. The trading update came after the Bureau of Statistics this week revealed chicken meat production in the June quarter rose 5.4 per cent to to 374,602 tonnes. One of Australia’s major poultry producers, Inghams, will reveal its full-year results on Friday, which could reaffirm the drop in consumption.