Collins Foods Ltd. (CKF.AX): Downgrade to Neutral: Missing the secret recipe in Europe

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Collins Foods Ltd. (CKF.AX): Downgrade to Neutral: Missing the secret recipe in Europe

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30 Jun 2026 17:45:00 ET │ 19 pages

Collins Foods Ltd. (CKF.AX)

Downgrade to Neutral: Missing the secret recipe in Europe

CITI'S TAKE

Collins is a good business (especially with the Taco Bell distraction gone),

with a strong balance sheet that should facilitate further organic and

inorganic expansion combined with a reasonably undemanding valuation. Neutral ↓ from Buy

However, the business is facing multi-year inflationary pressures in Price (30 Jun 26 16:00) A$8.15

Australia which it plans to offset partly by menu innovation (e.g., KWENCH)

and daypart expansion (breakfast and late-night trials) where the longevity Target price A$8.80↓

of these initiatives is less clear. In addition, much of the group’s expected from A$10.30

store growth is in Germany where we are incrementally more cautious Expected share price return 8.0%following the sudden slowdown in sales. Downgrade to Neutral.

Expected dividend yield 3.4%

Australia solid SSS but cost headwinds building — Strong 2H26 SSS growth (CitiE: Expected total return 11.4%

3%) and the FY27 trading update (4%) was partly driven by lower delivery fees, Market Cap A$963M

implemented on 1 July 2025 on Door Dash and shortly after on Uber Eats, the

US$675Mbenefits of which will be annualised in the near term. CitiE 3% 1H27 SSS implies a

slowdown to 2.5% for the rest of 1H27. To offset cost pressures, primarily labour,

Collins will focus on menu innovation (KWENCH, boneless and sauces) and daypart

expansion (late night and breakfast trial) which may help drive SSS. The impact from

the abolishment of junior pay rates will continue to increase until it peaks at $20 Price Performance