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Current as of 09/12/16 07:39PM NZST
Retail, Innovation and Manufacturing reporter for the NZ Herald

KFC boost pushes up Restaurant Brands profit

KFC contributed $282m of Restaurant Brands' $387m of annual sales. Photo / NZ Herald
KFC contributed $282m of Restaurant Brands' $387m of annual sales. Photo / NZ Herald

Fried chicken is still the favourite, with another strong performance from KFC helping boost Restaurant Brands full year result - making up for lower Pizza Hut sales for the year.

Restaurant Brands, which operates the KFC, Starbucks, Carl's Jr and Pizza Hut brands, reported net profit after tax of $24.1 million for the year ended February 2016, up one per cent on 2015 - the slowest growth in three years.

"Whilst the reported profit for the year at $24.1 million was only one per cent up on prior year, the underlying result was considerably higher after taking into account the impact of the cost of the Long Term Incentive Scheme - $0.9 million after tax - and the due diligence and legal costs of the QSR acquisition - $1.0 million after tax," Restaurant Brands said.

KFC was the main player, contributing $282.5 million of the total $387.6 million in sales. This is expected to grow with the Groups acquisition of the largest KFC franchisee in New South Wales Australia earlier this year - 42 stores for A$82.4 million in cash and scrip.

The acquisition is expected to bring in an additional $110 million in annual revenue, and since the announcement, Restaurant Brands shares have risen significantly.

"KFC enjoyed another year of strong sales and margin growth, achieving another record annual sales of $282.5 million, an increase of $17.5 million or 6.6 per cent on the prior year," Restaurant Brands said.

"Adjusting for the extra week's trading last year, sales growth was 8.6 per cent. The strong sales continue to be driven by the store transformation program, increased marketing spend and successful promotions."

Pizza Hut sales for the year were down 7.2 per cent due to lower store numbers, after it sold several unprofitable stores including the last of its eat-in restaurants - which caused a social media stir when it was announced in February.

Year end store numbers at 173 were eight down on February 2015 with continuing sales of regional Pizza Hut stores to independent franchisees and the closure of one Pizza Hut and one Starbucks Coffee store at lease end.

Newcomer Carl's Jr continued to grow with sales up 66.3 per cent to $33.4 million. The burger chain introduced a third pounder and half pounder option to its menu, and said a number of new initiatives would help improve margins and produce a more robust profit for the coming year.

"The Carl's Jr. business in the new year will see the benefits of the appointment of a new General Manager, a heightened focus on store labour and ingredient costs, some menu rationalisation and the opening of new stores to assist in building critical mass all of which will help to improve both sales and margin," the group said.

Restaurant Brands announced a 10.5 per cent dividend gain to 21 cents a share and forecast FY17 revenue of between $28 million and $30 million, barring any un expected costs.

See more from Restaurant Brand's latest announcements here:

- BusinessDesk

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