Collins Foods is one of the largest fast-food franchises in Australia, owning 263 KFC outlets across the country. The company has recently announced that it expects to see more “menu pricing” in 2023 as it battles higher costs for ingredients.
The company has stated that it expects the trend of rising costs to continue into 2023, and as such, more menu pricing should be expected. This will likely lead to higher prices for customers and a greater cost burden for the company.
The increasing prices of food items like chicken, lettuce, and oil that are used to produce KFC’s products have adversely affected the company’s revenue, and the gap in costs is projected to not be bridged until 2025.
It is anticipated that the introduction of further menu pricing and procurement strategies will reduce the cost inflation going into FY24, though recovering the full margin is likely to take until FY25 and beyond.
The company has not disclosed the exact extent of the price rise, however, according to company documents, plans are ongoing to keep the increases “at or below” inflation.
Despite the increased prices, KFC Australia says it is still committed to providing its customers with value for money. The company has assured customers that the same great taste will remain in its products, while the price increases will be implemented in a gradual manner.
The move is likely to be a blow to KFC customers, who have become used to the low prices that the chain has been able to offer in the past. However, with rising food costs, the company has had no choice but to raise prices in order to stay competitive.
Three times in 2022, KFC has increased their prices, with Drew O’Malley, the chief executive, attributing the prior hikes to rising inflation.
Despite a 5.6% increase in sales over the past six weeks, and a 5.1% growth rate from May to October, a price hike is still being implemented.
The company also reported that revenue for the last six months had increased by 15 percent, amounting to $614 million.
