Restaurant Brands crosses billion dollar sales target for FY21, profit sores 69pc

KFC is one of the restaurant chains owned by NZX listed company Restaurant Brands. Photo / Dean Purcell

Restaurant Brands achieved its billion-dollar sales target for the 2021 financial year but operating earnings were weaker than expected due to cost pressures here and in Australia through lockdowns.

Group sales for the full year cleared the fast food company's long-term target of NZ$1 billion at $1.07b for the year to December 31, up 19.7 per cent on the previous corresponding period.

Net profit after tax was $51.9 million, up 69.3 per cent, but direct comparisons between the two years remain difficult due to Covid-19 disruption.

The board declared a dividend of 32 cents per share, payable on April 22 to all shareholders on the register as of April 8. The dividend will be paid fully imputed to NZ tax resident holders.

Combined store earnings before interest, tax, depreciation and amortisation (ebitda) came in at $172.6m, up 17.2 per cent and underlying profit was up 28.1 per cent at $54.3m.

Much of the uplift in sales and ebitda on the prior year was attributable to additional trading this year from the company's acquisition of two stores in California.

The fast-food chain owns KFC, Pizza Hut, Carl's Jr and Taco Bell restaurants in New Zealand, Australia, Hawaii and California. Store numbers at the end of the financial year totalled 359, comprising 137 in New Zealand, 73 in Hawaii, 79 stores in Australia and 70 in California.

Trading in Hawaii and California was largely in line with expectations.

The Taco Bell brand, launched in New Zealand and New South Wales in late 2019, has continued to grow with 18 stores now successfully operating in these markets, it reported.

Outlook

Although the current trading for 2022 remains strong, the uncertainties caused due to ongoing Covid-19 disruptions the focus for Taco Bell in New Zealand and Australia remains on opening 15 new stores by December 2022.

New Zealand Operations

In New Zealand the total store sales were $461.1m up by 12.4 per cent bringing it to $50.7m compared to the FY2020. The group said the result was adversely affected by a nationwide level 4 lockdown and lost $26m in sales just in Auckland.

"Whilst last year's result was impacted by eight weeks without trading due to Covid-19 with lost sales of approximately $40m," the company reported.

But once re-opened the business recovered with same store sales for the full year up 9.1 per cent.

Taco Bell opened six stores during the year and sales from the four existing stores continue to track to expectations.

The group also reported on getting $7.2m from the Government Covid-19 on a wage subsidy for its staff which was "fully passed on to all staff" the report revealed.

In 2020, it received $22m from the Government.

The Pizza Hut sub-franchising process continued, with seven stores sold to franchisees during the year. This included two turnkey stores.

Restaurant Brands has now consolidated on six company-owned stores with independent franchisees operating 99 stores.

Overall, store numbers remained constant during the year with the seven Pizza Hut stores sold offset by three new KFC store openings and the continued roll-out of Taco Bell, with six new stores opened across New Zealand.

Two Carl's Jr. stores were closed and rebranded as Taco Bell and KFC stores.

Australian Operations

The Australian restaurants contributed total sales of $244.1m (up 13.6 per cent) and a store ebitda (excluding the effect of NZ IFRS 16) of $31.6m (up 7.5 per cent).

In February 2021, the company bought five KFC stores in Northern Sydney that have subsequently traded above expectations. Four new drive-thru Taco Bell sites also opened during the year.

Hawaiian and Californian Operations

In Hawaii, the brand contributed $206.5m in revenues and $33.9m in ebitda for the year.

The California operations contributed $156.5m in full-year revenues and $23.8m in ebitda, up significantly on the four month period included in FY20.

The company will hold its annual shareholders' meeting on May 26.