In a significant shift for the fast-food landscape in Australia, Taco Bell may soon be exiting the market as Collins Foods, the operator of the brand, has announced plans to sell or close its network of stores. This decision comes amid fierce competition from the Mexican food chain Guzman y Gomez, which has been rapidly expanding and outperforming Taco Bell in sales.
On April 15, 2025, Collins Foods revealed its intention to seek a buyer for its Taco Bell operations. If a buyer is not found within the next twelve months, the company will consider other exit options, which could include closing the 27 Taco Bell locations it currently operates across Queensland, Victoria, and Western Australia. Notably, the 10 Taco Bell stores in New South Wales, which are operated independently, will not be affected by this decision.
“As part of our commitment to sharpen our focus and align resources to profitable growth, we have made the decision to exit the Taco Bell business,” said Collins Foods Chief Executive Officer Xavier Simonet during an investor call. He emphasized the company's ongoing commitment to its KFC brand, stating, “We will continue to deliver high-quality food at accessible prices, leveraging the heritage of the KFC brand at a time when consumer trust has never been more important.”
The decision to exit Taco Bell comes on the heels of disappointing financial performance. Taco Bell was responsible for a $36.7 million impairment on Collins Foods’ balance sheet in 2023, and the chain's earnings before interest, tax, and depreciation fell by 1.3 percent in 2024, following a 3.2 percent decline the previous year. In contrast, Guzman y Gomez reported sales soaring to $573 million in 2024, with plans to open 31 new stores this year, indicating a robust growth trajectory that Taco Bell has been unable to match.
The history of Taco Bell in Australia has been tumultuous. Originally founded in California in 1962, Taco Bell first attempted to enter the Australian market in 1981 but faced legal challenges from a local chain, Taco Bill, which blocked its entry. A second attempt in 1997 also failed, leading to the closure of its stores after eight years. Finally, in 2017, Taco Bell made its third and successful entry into Australia, opening its first restaurant in Brisbane, with ambitious plans to expand to more than 50 locations by late 2021.
However, the competitive landscape has shifted dramatically in recent years. Guzman y Gomez has rapidly established itself as a dominant player in the Mexican fast-food segment, outpacing Taco Bell in brand recognition and customer loyalty. This has prompted Collins Foods to reassess its strategy under Simonet, who took over as CEO in November 2024. He concluded that Taco Bell lacked the brand clout necessary to justify further investment in expansion.
Collins Foods is not abandoning its growth ambitions altogether. The company is planning to expand its KFC operations significantly, with plans to open 40 to 70 new KFC restaurants in Germany over the next five years. This expansion reflects a strategic pivot towards markets where the brand has a stronger foothold and growth potential.
Despite the challenges faced by Taco Bell, Collins Foods remains committed to its core operations. Simonet stated, “We remain laser-focused on delivering operational excellence in our core market, Australia, where we continue to successfully adapt to a dynamic consumer landscape.” He indicated that the company is prioritizing investments in KFC, which has been a staple of its business for over 50 years.
The announcement has led to a notable reaction in the market, with Collins Foods' shares experiencing a nearly 8% drop, marking one of their worst days in months. Analysts have expressed concerns about the lack of detailed plans for KFC's expansion in Germany and the implications of exiting the Taco Bell business.
As the situation unfolds, Collins Foods has stated that discussions are ongoing with Taco Bell International regarding the potential transition of the business to new ownership. If a suitable buyer cannot be identified, the company will explore other exit options, which could significantly alter the fast-food landscape in Australia.
In a related development, Krystal Zugno, the former general manager of Taco Bell in Australia, has been promoted to general manager of Australian operations for both Taco Bell and KFC. This change reflects Collins Foods' effort to maintain continuity in leadership as it navigates this challenging transition.
As the fast-food sector continues to evolve, the fate of Taco Bell in Australia remains uncertain. The next twelve months will be crucial as Collins Foods seeks to either find a buyer or make a difficult decision regarding the future of its Taco Bell stores. The outcome will not only impact the brand's presence in Australia but also the competitive dynamics within the fast-food industry as a whole.
In conclusion, while Taco Bell's future in Australia hangs in the balance, Collins Foods is clearly committed to focusing on its more profitable KFC operations, aiming for growth in international markets while navigating the challenges at home.
