Collins Foods signs deal to acquire eight KFC restaurants in Bavaria as it accelerates German expansion
Collins Foods (ASX: CKF) has signed a binding Asset Purchase Agreement to acquire eight KFC restaurants in Bavaria, centred around Munich, for approximately €31.1 million plus working capital. The acquisition represents a near 50% increase in the company’s German portfolio and is expected to complete in May-June 2026, with the acquired restaurants anticipated to generate revenues of approximately €28.2 million and restaurant-level pre-AASB16 EBITDA of approximately €5.3 million in the first 12 months post-completion.
The Bavaria acquisition forms part of a broader Collins Foods German KFC expansion strategy, with the company simultaneously expanding its German Development Agreements to target 45 to 90 new restaurants over four years from 2026 to 2029. The acquired restaurants comprise seven existing locations and one new restaurant in Freiham, a suburb of Munich, expected to open prior to completion.
Xavier Simonet, Managing Director & CEO
“The acquisition of a high-quality KFC portfolio in Bavaria, centred around Munich, will provide us with a platform to expand in one of Germany’s most populated and wealthiest states. These restaurants will bring us immediate scale and importantly, create a strong foundation for accelerated development. The acquisition meets the financial hurdles that guide our investment decisions, with the network to be acquired operating at higher margins than our existing German restaurants.”
The transaction is subject to standard conditions precedent, including lease assignments, business operating licences, and execution of the expanded German Development Agreements. Yum! Brands has provided conditional consent to the acquisition. Bavaria represents one of Germany’s wealthiest and most populous states, providing Collins Foods with a strategic platform for further expansion in a high-value market.
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Expanded development agreements target 45 to 90 new German restaurants over four years
Upon completion of the Bavaria acquisition, Collins Foods will expand its German Development Agreements to cover three key states: Baden-Württemberg (including Stuttgart), North Rhine-Westphalia (including Düsseldorf and Cologne), and Bavaria. These three states collectively account for more than half of Germany’s 83 million population and rank amongst the country’s most prosperous regions.
The expanded development agreements include conditional exclusivity and right of first refusal rights in certain areas of Baden-Württemberg and North Rhine-Westphalia for the term of the agreements. The 45 to 90 restaurant development target over the four-year period from 2026 to 2029 provides Collins Foods with a defined growth pipeline in Germany’s largest population centres.
Key geographic expansion targets:
- Bavaria – Centred around Munich, one of Germany’s wealthiest and most populous states, now anchored by the eight-restaurant acquisition
- Baden-Württemberg – Includes Stuttgart, providing access to Germany’s industrial heartland with conditional exclusivity rights in certain areas
- North Rhine-Westphalia – Germany’s most populous state, encompassing major cities Düsseldorf and Cologne with conditional exclusivity and right of first refusal in certain areas
The geographic scope of the expanded agreements positions Collins Foods to capitalise on Germany’s strongest economic regions whilst building density around the newly acquired Bavaria portfolio. The development pipeline establishes Germany as the company’s second strategic growth pillar alongside its mature Australian operations.
Dhruv Kaul, Managing Director EMEA at KFC (Yum! Brands)
“We are excited to extend our partnership in Germany with Collins Foods to the state of Bavaria. KFC sees immense opportunities in the German market where the brand is already very strong. Partnering with companies like Collins Foods, which has the financial and operational resources to accelerate the build-out of the German KFC network, is an essential part of our German growth strategy.”
Understanding KFC franchise expansion and why Germany matters
Quick service restaurant (QSR) franchise operators like Collins Foods generate growth through two primary mechanisms: acquiring existing restaurant portfolios and developing new locations under franchise agreements with brand owners such as Yum! Brands. The franchise model allows operators to leverage established brand recognition and operational systems whilst deploying capital into restaurant ownership and network expansion.
Collins Foods operates under Corporate Franchise Agreements and Development Agreements with Yum! Brands, the franchisor of the KFC brand. These agreements grant Collins Foods the rights to operate KFC restaurants in specific territories and, in the case of Development Agreements, require the franchisee to open a minimum number of new restaurants within defined timeframes. The franchisor provides brand standards, marketing support, and operational systems, whilst the franchisee manages day-to-day operations, capital investment, and local market execution.
Germany represents a particularly compelling opportunity within the QSR landscape. Despite strong brand awareness and consumer appeal, KFC maintains approximately one-fifth of the store footprint of its largest competitor, McDonald’s, in the German market. This lower restaurant density relative to brand recognition suggests significant whitespace for network expansion.
Bavaria adds strategic importance as one of Germany’s wealthiest and most populous states. The acquisition of eight restaurants in this region provides immediate scale and establishes an operational platform for further development. The acquired portfolio’s higher operating margins compared to Collins Foods’ existing German restaurants demonstrates the quality of the assets and the potential for earnings accretion alongside expansion.
For investors, the Collins Foods German KFC expansion combines immediate earnings contribution from the Bavaria acquisition with long-term growth potential from the expanded development pipeline. The €31.1 million acquisition price for restaurants generating €28.2 million in anticipated annual revenues and €5.3 million in restaurant-level EBITDA suggests attractive returns, whilst the 45 to 90 restaurant development target provides a multi-year growth trajectory in a market with demonstrated structural opportunity.
Netherlands Corporate Franchise Agreement refocused and extended
Collins Foods has signed a revised Corporate Franchise Agreement for the Netherlands, extending the agreement by three years to 31 December 2029 whilst restructuring operational responsibilities. Under the revised terms, Yum! Brands will resume responsibility for marketing activities from 1 January 2027, allowing Collins Foods to refocus on its core role as a restaurant operator.
Marketing-related employees will transfer from Collins Foods to Yum! Brands by 1 January 2027, with the service fee payable to Collins Foods adjusted to reflect the reduced scope of responsibilities. Collins Foods will continue to provide operational, IT, supply chain, and sub-franchisee management services under the revised agreement.
The company’s development targets in the Netherlands have been moderated, as previously highlighted, providing greater flexibility to optimise the existing restaurant portfolio rather than pursuing aggressive network expansion. These changes are not expected to materially impact the profitability of the Netherlands business.
The Netherlands restructuring allows Collins Foods to concentrate capital and management resources on the higher-growth German expansion opportunity whilst maintaining a stable operational presence in the Dutch market. The transfer of marketing responsibilities to Yum! Brands reduces overhead costs and aligns the Netherlands operating model more closely with Collins Foods’ Australian and German markets.
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Trading update confirms sales momentum ahead of FY26 results
Collins Foods reported continued total sales growth across its three operating markets in its 11 March 2026 trading update, with sales acceleration evident in Australia and sustained momentum in Germany. The update covers performance year-to-date in FY26 and specifically highlights second-half FY26 trends.
| Market | Total Sales YTD | Total Sales H2 | SSSG YTD | SSSG H2 |
|---|---|---|---|---|
| Australia | 5.6% | 6.2% | 2.7% | 3.2% |
| Germany | 8.7% | 9.1% | 4.5% | 4.1% |
| Netherlands | 4.4% | 4.1% | 0.1% | (0.3%) |
Australia delivered total sales growth of 5.6% year-to-date, accelerating to 6.2% in the second half of FY26. Same-store sales growth (SSSG) improved from 2.7% year-to-date to 3.2% in the second half, indicating strengthening underlying demand across the mature Australian network.
Germany continued to demonstrate strong momentum, with total sales growth of 8.7% year-to-date and 9.1% in the second half. Same-store sales growth of 4.5% year-to-date and 4.1% in the second half reflects both network expansion and positive comparable store performance. The German sales trajectory validates the strategic rationale for accelerated expansion through the Bavaria acquisition and expanded development agreements.
The Netherlands showed more modest performance, with total sales growth of 4.4% year-to-date moderating to 4.1% in the second half. Same-store sales turned slightly negative in the second half at (0.3%) after marginal positive performance of 0.1% year-to-date. The company’s continued focus remains on returning the Netherlands market to profitability, supported by the revised Corporate Franchise Agreement that reduces marketing overhead and allows portfolio optimisation.
Collins Foods reaffirmed FY26 full-year guidance of mid-to-high teens growth in Group Underlying NPAT (post-AASB16), as provided at the time of the H1 FY26 results. The trading update demonstrates the earnings momentum underpinning the company’s ability to pursue the Collins Foods German KFC expansion whilst maintaining performance in its core Australian market.
Investment case strengthens with dual growth engines
The 11 March 2026 announcement positions Collins Foods as a multi-geography growth company with clearly defined expansion targets and disciplined capital allocation. The Bavaria acquisition, expected to complete in May-June 2026, delivers immediate earnings accretion through higher-margin restaurants whilst establishing an operational platform for the expanded development pipeline of 45 to 90 restaurants across 2026-2029.
Three-pillar geographic strategy:
- Australia – Mature, cash-generating base delivering consistent same-store sales growth and providing capital for expansion
- Germany – High-growth expansion market with defined multi-year development pipeline and structural whitespace opportunity
- Netherlands – Optimisation focus with refocused franchise agreement reducing overhead and improving portfolio efficiency
The German expansion transforms the company’s growth profile. The acquisition meets management’s stated financial hurdles, with the €28.2 million in anticipated annual revenues and €5.3 million in restaurant-level EBITDA from eight restaurants demonstrating attractive unit economics. The acquired portfolio’s higher operating margins compared to existing German operations suggests quality assets in premium locations.
The expanded development agreements provide geographical diversification across three of Germany’s wealthiest states, representing over 50% of the country’s 83 million population. Conditional exclusivity and right of first refusal rights in certain areas of Baden-Württemberg and North Rhine-Westphalia provide competitive protection as Collins Foods builds network density.
Management will hold an investor webinar at 8am AEST / 9am AEDT on Thursday 12 March 2026 to discuss the European expansion strategy and provide additional detail on the Bavaria acquisition and expanded development agreements. The reaffirmed FY26 guidance of mid-to-high teens Underlying NPAT growth indicates confidence in executing the expansion whilst maintaining earnings momentum.
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