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KFC operator Collins Foods (ASX: CKF) has confirmed a key condition for the sale of 20 Taco Bell restaurants to a new operator has been satisfied, moving the company closer to a full exit from the Mexican fast-food brand as it doubles down on its core chicken franchise.
The deal, announced at the end of March, was conditional on the establishment of a partnership between a Taco Bell affiliate linked to parent Yum! Brands and Restaurant Brands Australia Holdings.
Under the agreement, Collins Foods has agreed to transition 20 of the 27 Taco Bell restaurants it currently operates to an affiliated company of Taco Bell, which is part of YUM! Brands, Inc., and Restaurant Brands Australia Holdings, which propose to operate the Taco Bell business under a new partnership arrangement.
Collins Foods' announcement today puts the company on track to complete the transfer of the business sometime between June and August this year, subject to landlord consents, employment thresholds and ACCC clearance.
The remaining seven of Collins Foods' 27 Taco Bell restaurants not included in the deal will be closed and their leases assigned.
Lease liabilities across all 27 sites stood at $24 million as at 31 March 2026, with one-off closure and transaction costs estimated at $1 million to $2 million.
The purchase price for the 20 transitioning restaurants has been described only as a nominal amount plus stock and cash floats.
Collins Foods first announced its intention to exit the Taco Bell brand last year as part of a broader strategic reset.
The pivot refocuses the group on KFC Australia, where it operates 292 restaurants, and on accelerating its European expansion.
The German arm of that expansion took a major step forward in March this year when Collins Foods signed a binding asset purchase agreement to acquire eight KFC restaurants in Bavaria for €31.1 million ($48.2 million).
The Bavarian portfolio is anticipated to generate revenue of about €28.2 million ($46 million) and restaurant-level EBITDA of about €5.3 million ($8.6 million) in its first 12 months of operation under Collins Foods.
Alongside the acquisition, Collins Foods secured expanded development agreements targeting 45 to 90 new KFC restaurants in Germany over four years, significantly broadening its European footprint beyond its existing Netherlands operations.
The company's half-year results to 12 October 2025 underscored the momentum behind the KFC-centric strategy.
Group revenue hit a record $750.3 million, up 6.6 per cent on the prior corresponding period, while underlying net profit after tax rose 29.5 per cent to $30.8 million.
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