KFC fans already unhappy about the cost of their favourite fast food can expect another blow to their wallets, according to new documents.
Collins Foods, the group which owns 263 KFC outlets across the country, has flagged that more “menu pricing” should be expected in 2023 as the company battles higher costs for ingredients.
The rising cost of food such as the chicken, lettuce and oil needed for KFC’s products has eaten into the company’s revenue, with the difference in costs not expected to be covered until 2025.
“Additional menu pricing and procurement initiatives are expected to mitigate further cost inflation into FY24, though full margin recovery may extend into FY25 and beyond,” Collins Foods’ half-year results said.
The company remains tight lipped about just how much prices are set to rise, however company documents indicate plans of continuing to maintain increases “at or below” inflation.
KFC has hiked prices three times in 2022, with chief executive Drew O’Malley citing rising inflation as the reason behind the previous hikes.
“While menu pricing is factoring into our efforts to offset margin pressures, we will continue to keep value at the centre of our customer appeal,” Mr O’Malley said the last time prices were raised.
The price hike comes despite a 5.6 per cent rise in sales in the past six weeks, on top of a 5.1 per cent growth rate from May to October.
The company also announced revenue for the last six months was up 15 per cent to $614 million.
However, earnings before interest and tax fell by 6.3 per cent to $54.2 million and net profit after tax tumbled by 58 per cent to $11 million.
Mr O’Malley says the company’s brand is strong despite a “challenging consumer landscape”, warning the company expects “inflationary pressures to remain in the near-term”.
“Top-line growth has continued at an impressive rate, which has allowed us to mitigate some of the considerable margin headwinds experienced across the business while maintaining the brand’s value proposition,” he said.
“KFC’s brand strength in particular allows us to be well-positioned to appeal to consumers regardless of economic conditions.”