👉 Background: Collins Foods is the ASX-listed company that operates 40% of the KFC restaurants in Australia, as well as KFC and Taco Bell in Germany and the Netherlands too.

👉 What happened: Since January, Collins Foods has seen its share price jump 42% because customers have been purchasing more value-based, lower cost food options (ahem* fast food).

👉 What else: But while times have been good for Collins Food, there are a few headwinds coming up:

• US burger chain Wendy's is rolling into town to build 200 stores starting 2025 - a direct competitor for KFC and Taco Bell.
• The rising cost of raw materials (ie chicken and lettuce) is also shrinking profit margins in KFC stores.

What's the key learning?

💡As cost of living pressure builds, fast-food outlets face a very tricky to balance.

💡On one hand, they want to keep their prices low to continue attracting value-seeking customers in times of rising costs. But on the other hand, they also need to keep up with their own rising costs... like more expensive chicken or potatoes.

💡Traditionally, Collins Foods' strategy has been to increase menu prices by less than the inflation rate to maintain value for customers. But with sky-high costs this year, it has meant kissing that policy goodbye. And as a result, it has priced some fast-food-goers out.

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