Collins Foods signs deal to exit Taco Bell franchise
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The news: Collins Foods has entered into a legally binding conditional arrangement to sell most of its Taco Bell franchise stores to a company affiliated with the brand owner of Taco Bell and Restaurant Brands Australia Holdings. Collins Foods will close the rest of the stores.
The numbers: It will now sell 20 of its 27 Taco Bell stores for a “nominal amount plus the value of stock and cash floats”, according to the company.
A one-off cost relating to the closure of seven restaurants and other transactions costs are expected to total between $1 million and $2 million.
Lease liabilities for the 27 restaurants as of 31 March were about $24 million, which is “expected to be reversed” once new tenants are found, according to the company.
The context: Collins Foods previously announced it intended to exit the Taco Bell brand in April 2025 and plans to focus on its German expansion.
The Taco Bell affiliate company, which is part of US multinational YUM! Brands, and Restaurant Brands Australia will jointly operate these businesses under a partnership agreement.
The partners will also take over lease liabilities for the 20 stores and repay Collins Foods for any net operating losses and necessary capital investment incurred from 1 April to completion of the transaction.
The remaining seven stores will be closed in coming weeks. Collins Foods said it is working with “multiple interested parties” to reassign the leases for these sites.
What they said: “Collins Foods is pleased to announce the transition of 20 Taco Bell restaurants to the brand owner, Taco Bell, and its local partner, subject to completion of the proposed transaction,” Collins Foods managing director and CEO Xavier Simonet said.
“This will enable Collins Foods to focus on our core KFC business in Australia and Europe, including accelerating profitable development in Germany.”
The source: ASX
