Restaurant Brands turns mild profit, furthers Taco Bell plans

Thursday, 25 February 2021

There was a rush to be first through the door when Taco Bell opened its first New Zealand outlet in Auckland in late 2019.

The franchise operator of Mexican fastfood brand Taco Bell in New Zealand hopes to roll out more than 10 stores across New Zealand and Australia this year.

New Zealand has three Taco Bells so far, and Restaurant Brands – which also runs the KFC, Pizza Hut and Carl's Jnr franchises locally – told the NZX on Thursday that it intended to invest further in the brand over the rest of the year.

The Restaurant Association's annual report shows eateries were struck hard by Covid-19 but are slowly recovering. This video was first published in 2021.

Shares in Restaurant Brands rose 1.58 per cent to $12.24 in mid-morning trade, following the company’s annual result.

Over the year to December, the company managed to shake off Covid-19 lockdowns and restrictions to make a net profit to $30.9 million, up 2.8 per cent.

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Restaurant Brands plans to roll out another 10 Taco Bells across New Zealand and Australia in the next year.

Chief executive Russel Creedy said its outlets in New Zealand closed for nearly five weeks in March and April last year, but its Australian, Hawaiin and Californian operations generally continued to trade through the crisis and although they too faced restrictions, their profits were less impacted.

Group sales rose to $892.4 million, up 7 per cent on a year-equivalent basis.

The result was the first since a change in balance date in 2019, meaning that the company’s 52 weeks of business last year were compared with 44 weeks in 2019.

In New Zealand, sales were up 11.7 per cent to $410.4m. Creedy said this reflected an additional eight weeks of trading but was offset partially by five weeks of lockdown, which cost the company $40m in sales.

But once alert levels shifted, sales were strong particularly for KFC and Carls Jnr. Same store sales for the full year were up 5.3 per cent.

Creedy said Restaurant Brands took a government wage subsidy of $22m during lockdown, which was ‘'fully passed on’' to its Kiwi staff. However, even with the wage subsidy, there was a shortfall of about $500,00 a week.

Looking ahead, the company had high hopes for its recent purchase of 58 new KFC and 11 joint KFC/Taco Bell stores in California.

They were bought in September last year, and were already performing above expectations, adding $51.9 million in sales during the short period of ownership.

Creedy said he would have a clearer picture to give shareholders at the company’s annual meeting.

''Current trading for the new year remains strong across all divisions; however with the current uncertainties that remain with Covid-19, it is difficult to provide firm guidance,'' he said.