Collins Foods (ASX:CKF) has entered into a legally binding conditional arrangement to transition the majority of its Taco Bell operations, marking a definitive step in its strategic withdrawal from the brand in Australia.
Under the new partnership arrangement, 20 of the 27 existing Taco Bell restaurants will be transferred to an affiliated company of Taco Bell—part of the global YUM! Brands empire—and Restaurant Brands Australia.
The transaction includes the transfer of employees who accept new offers of employment, while the purchase price consists of a nominal amount plus the value of stock and cash floats.
The new owners will assume all lease liabilities upon completion.
To ensure a smooth handover, Collins Foods will be reimbursed for any net operating losses and necessary capital expenditure incurred for these 20 sites from April 1 until the deal is finalised.
The deal remains subject to customary conditions precedent, including ACCC clearance, landlord consents, and the finalisation of the new partnership structure between the buyers.
Completion is currently projected to occur between June and August.
For the remaining seven restaurants not included in the transition, the outlook is more terminal; these sites are slated for closure in the coming weeks.
Collins Foods is currently engaged with multiple interested parties to assign the leases for these locations to new tenants.
The divestment allows Collins Foods to sharpen its corporate focus on its core KFC franchise across its primary markets in Australia and Europe.