Weaker-than-expected revenue from Sizzler restaurants has contributed to a $23 million half year loss for its parent company.
Collins Foods has revised its forecasts for its Sizzler business after same store sales dropped 8.4 per cent in the six months to October 12.
That resulted in a $33 million after tax impairment charge that offset improved earnings in the company’s other business, KFC.
“Overall revenue for the first half of the year for Sizzler Australia was below expectations,” Collins Foods said.
The company recently rolled out a “new look and feel” in its 26 Sizzler restaurants, and more substantial refurbishments in three Queensland restaurants which, it said, were so far producing signs of a recovery in the business.
But the company will conduct a strategic review of Sizzler at the end of summer, with the outcome to be announced before the end of April.
“We need now to see how the brand trades through the summer period to get a better understanding of the sustainability of these initiatives,” chief executive Graham Maxwell said on Wednesday.
Sales in the 128 Queensland KFC restaurants operated by Collins Foods rose three per cent, while the 42 KFC restaurants Collins Foods recently bought in the Northern Territory and Western Australia posted 4.3 per cent sales growth.
That contributed to a 43 per cent rise in Collins Foods’ underlying profit to $10.7 million (excluding finance revenues) in the six months to October 12, and the company has increased its interim dividend 11 per cent to five cents per share, fully-franked.
Collins Foods shares were up five cents at $2.29 at 1205 AEDT.