‍👉 Background: Collins Foods is the ASX-listed restaurant operator that runs more than 275 KFC's in Australia, 16 in Germany, 56 in the Netherlands. Not to forget, it also runs 27 Taco Bells in Australia.

‍👉 What happened: Last week, Donald Trump whacked a baseline 10% tariff on Australian goods, including beef exports. And interestingly, Collins Foods, a predominantly chicken restauranteur, has seen its share price fall nearly 3%.

‍👉 What else: With Australian beef looking likely to become more expensive in the US, investors fear that Australian beef producers will start selling the beef domestically at more competitive prices. This ain’t finger-lickin’ news for Collins Foods’ investors who are worried about a price war between fried chicken and burger chains.

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‍What's the key learning?

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‍💡When a major export destination becomes less attractive, supply often shifts back to the domestic market. In 2024 alone, nearly 30% of Australian beef exports were headed to the US.

💡With a 10% tariff on these exports, it could lead to a sharp reduction in US demand and a sharp reduction in the profit margin for beef producers, who are selling their products cheaper, locally. That could become a win for burger chains like McDonald’s and Hungry Jack’s, which may benefit from lower beef costs.

💡For chicken-centric businesses like Collins Foods - it’s a different story. Approximately 95% of Australia's chicken is consumed domestically so their cost structures are set up for the Australian market only. And they are certainly not set up for a trade war against the big producers of beef.