Sizzler a fizzer for Collins Foods

Sizzler, the once popular all-you-can eat family restaurant chain, has lost its sizzle.

杭州桑拿

Its owner Collins Foods says it won’t be investing in the chain any more and will close a number of restaurants after deciding Sizzler was no longer a key part of the company’s future.

Collins, which also owns KFC stores, has written down the value of the Sizzler brand by $37.5 million amid falling revenue as it struggles to compete with an explosion of cheap family dining options.

Chief executive Graham Maxwell said the closures are expected to cost about $900,000, however he declined to say how many of its 26 Sizzler restaurants across Australia will go.

The Sizzler writedown dragged Collins into the red, with the company posting a $10.4 million loss for the year to March 3, compared to a $14 million profit a year ago.

However, Mr Maxwell said Sizzler was expected to generate positive underlying earnings in 2015/16.

“We believe we have taken the necessary course of action to allow the company to pursue attractive growth opportunities,” he said.

“There are a number of Sizzler stores that are very profitable so we will assess each one individually.”

He said the closure plans won’t affect Sizzler Asia, with Collins planning to open two new restaurants in Thailand and expand the restaurant chain further in China.

Shares in Collins Foods rose seven cents to $2.73 as investors focused on the group’s 37 per cent rise in underlying profit to $24.6 million, which excludes the Sizzler writedown.

Motley Fool Australia research analyst Scott Phillips said Sizzler – famous for its cheese bread and food buffets – was a huge hit when it burst onto the Australian dining scene about 30 years ago.

“Sizzler was at the vanguard of family dining when they came out but as other stores popped up they failed to remain relevant,” he said.

“It became too expensive. That’s not what families are looking for, and it has been something of a slow death for Sizzler.”

He said the key challenge for Collins was to create growth in its KFC chain.

“Its same store sales growth is good but they are going to have to demonstrate that there is sufficient opportunity for expansion and I think the market is waiting to see a little bit more success there,” he said.

KFC same store sales, which strips out store openings and closures, were up 4.8 per cent from a year ago, while Sizzler’s slumped by 8.5 per cent.

Collins operates 172 KFC stores and has 61 franchised Sizzler restaurants around Asia.

The company plans to open eight new restaurants and revamp another 18.

SIZZLER DRAGS COLLINS FOODS INTO THE RED

*Full year loss of $10.4m, vs $14m profit in 2014/15

*Revenue of $571.6 million, up 29.7pct from $440.6m

*Fully franked final dividend of 6.5 cents per share, up from six cents