Collins Foods, the operator of KFC outlets across Australia and Europe, reported a strong start to the 2027 financial year, driven by extended trading hours and new menu innovations such as the Kwench drinks range. The company expressed confidence in its growth strategy, highlighting plans to expand late-night trading and introduce promotional initiatives aimed at boosting sales in its core product offerings.

Collins Foods’ shares experienced modest gains on Tuesday, initially climbing more than 5 percent before settling at $8.33, up 2.2 percent by the close of trading.

Despite overall optimism, the company acknowledged that its European operations had a slower than expected start to the fiscal year. CEO Andrew Simonet attributed this softness to several factors, including subdued consumer confidence across the continent, a prolonged heatwave, and a challenging year-on-year comparison due to a large Squid Games promotion during the previous period. He emphasized that these conditions impacted the broader KFC system, not just Collins Foods’ portfolio.

In the first 17 weeks of the fiscal year, total sales in the Netherlands declined by 2.5 percent, with comparable sales down 3.4 percent. Germany posted a 44 percent increase in total sales, largely reflecting the acquisition of eight stores in Bavaria; however, comparable sales in Germany fell by 5.3 percent. Simonet noted that the newly acquired Bavarian stores were performing above the average for the existing network.

There were signs of improvement in sales momentum across Europe. Comparable sales figures transitioned from a 7.7 percent decline in the opening eight weeks to a 2.6 percent drop in the subsequent five weeks before rising by 2.4 percent in the following four weeks. The Netherlands notably outperformed with the successful launch of Halal menu items in 13 restaurants.

Market analysts offered mixed perspectives on the update. Citi analyst Sam Teeger described the report as showing improvement over recent results but cautioned that Europe remained a challenging market—particularly Germany, which Collins Foods is targeting as a key growth area. Teeger also noted a slight weakening in Australian sales growth and expressed concern over intensifying competition from McDonald’s in the chicken segment, as well as the potential impact of further interest rate increases anticipated by Citi later this year.

Consensus forecasts for Europe’s fiscal 2027 same-store sales growth were expected to see slight upward revisions, while Australian sales growth projections remained largely unchanged.

UBS analyst Tim Plumbe presented a more positive view, particularly emphasizing the encouraging trajectory in Europe. Plumbe called the results "very pleasing" and remarked that the region was trading ahead of the levels needed to meet both consensus and UBS forecasts, reflecting progress since the last fiscal year when concerns had prompted a downgrade to “neutral.”