Kiwis will emerge from lockdown hungry for their favourite fast food, a fact that has not been lost on the investment community.
Shares in Restaurant Brands NZ, owner of KFC in New Zealand, have climbed steadily since lockdown began, up 30 cents yesterday at $11.30, and an increase of 39.5 per cent over the past 12 months.
Forsyth Barr analyst Guy Hooper said he expects the corporate franchise group to experience a strong recovery in sales and be one of the "key beneficiaries" as drive through and delivery channels resume as the country moves out of a full lockdown and into alert level 3.
The share price is trading ahead of his target price of $10.90.
In New Zealand, Restaurant Brands is synonymous with fast food, operating 100 KFC outlets, 29 Pizza Huts and 18 Carl's Jr stores.
It also operates 63 KFCs and 29 Pizza Huts in Australia and another 38 Pizza Huts even further across the ditch in Hawaii, where it also has 38 Taco Bell stores.
In December last year, the company announced it was acquiring a 70 store KFC franchisee operator in southern California for US$70 million ($116.1m), although that acquisition has been delayed until around June, likely due to the impact of Covid-19.
Hooper said the delay in settlement would limit the potential financial impact of social distancing in California, so was actually favourable for the company.
"We suspect pent-up demand through the lockdown will drive a surge in sales following the shift to a lower level, with ongoing sales activity supported by Restaurant Brand's strong digital marketing presence."
He noted that weekly sales data through March, ahead of the lockdown, illustrates robust activity at takeout operators, despite strong social distancing messaging.
While he expects near-term earnings to reflect the Covid-19 disruptions, with total earnings before interest and tax down about 41 per cent at $90.8m on revenue of $825m, Restaurant Brands was supported by a strong balance sheet, with total debt facilities of $370m with maturities of three to four years.
In relation to local operations under Covid-19, Restaurant Brands had committed to paying its New Zealand staff - the only market in which all of its operations were closed - 100 per cent of their average earnings for the month leading into the shut-down.
It had now received wage support of $22.8m for its 3,651 staff, according to government's wage subsidy search tool.
In other markets, the company has the ability to stand down staff, who are then eligible for wage relief packages.