Restaurant Brands will spend much of the current financial year focused on the launch and introduction of Mexican fast food brand Taco Bell in New Zealand.
The NZX-listed fast food operator, which owns KFC, Pizza Hut and Carl's Jr restaurant chains in New Zealand and 36 Taco Bell stores in Hawaii and Guam, plans to open 60 Taco Bell stores in New Zealand and Australia in the next five years.
While the details of where, when and what the stores will look like has been kept under wraps, the now departed chairman of Restaurant Brands has confirmed New Zealand would get a Taco Bell store in New Lynn and a range of alcohol would be on the Mexican brand's menus.
At the company's annual general meeting today, Ted Van Arkel, who at the end of the meeting finished 13 years as chairman of the company, told shareholders Restaurant Brands would look to "quickly achieve scale" in the Taco Bell brand.
Restaurants Brands plans to have two Taco Bell stores open in Auckland, and two in Sydney, this year. The remaining 50-odd will be rolled out across both countries by 2024.
Restaurant Brands group chief executive Russel Creedy gave little update on the launch of Taco Bell in New Zealand this year. Where the first two Taco Bell stores will open in the country has not yet been announced.
"Our newest brand Taco Bell presents an exciting opportunity which we are eager to get under way in New Zealand and Australia," Creedy told shareholders.
"Our plans are already progressing with the first stores expected to open during the 2019 calendar year."
Creedy said the launch of Taco Bell in New Zealand and Australia was not expected to have a material effect on the group's FY20 earnings.
Restaurant Brands, 75 per cent-owned by Mexico's Finaccess Capital, has embarked on a five-year plan to open 30 new KFC stores, 60 Taco Bell stores and refurbish 50-60 KFC stores across Australasia. It also plans to build and rebuild 10-12 Taco Bells in Hawaii, buy 10-40 KFC stores in Australia, and pursue two to three KFC or Taco Bell acquisitions on the US mainland.
Creedy said earnings in the first quarter of the current financial year were off to a good start. The group expects profit growth of at least 6 per cent this year as the firm benefits from new store openings.
Restaurant Brands announced in April that it would not pay a final dividend after lifting annual earnings 3.3 per cent in the 2019 financial year. It said that it wanted to retain cash for a capital spending programme that included the roll-out of 60 Taco Bell stores across Australasia.
The fast-food operator reported an underlying profit of $42.2 million in the 52 weeks ended February 25, up from $40.8m a year earlier. That's just shy of the $43-45m guidance at last year's annual meeting.
Net profit increased 0.8 per cent to $35.7m, which included $9m of non-trading costs, including a $3.5m impairment charge on its Carl's Jr chain, a $3.5m charge for underpayment of holiday pay, and $1.6m of worker compensation in Hawaii. A gain on the sale of the Starbucks Coffee chain offset those costs.
In his address, outgoing chairman Van Arkel said Restaurant Brands had successfully transitioned into a global company in the last financial year.
"Restaurant Brands is now firmly positioned as a growth company and this has clearly been translated in the share price. As the growth strategy begins to accelerate, this next phase will require a significant level of investment to realise the potential we are seeking."
Company shares rose 0.3 per cent to $9.45 today, taking their gain this year to almost 14 per cent.
As of February, Restaurant Brands had 283 stores across all brands, made up of 142 stores in New Zealand, 64 in Australia and 80 in Hawaii.
During the year the company refurbished 16 KFC stores and introduced self serving kiosks. It also transitioned the New Zealand Pizza Hut business to a master franchise model with the sale of individual stores to franchisees.
Van Arkel retired as company chair at the end of the meeting. Jose Pares has been appointed as the new chairman.