4 COMPANIES HIT BY ‘DISRUPTOR PARANOIA’ By Tony Featherstone Thu...

4 COMPANIES HIT BY ‘DISRUPTOR PARANOIA’
By Tony Featherstone
Thu 20 July 2017 04:57 PM
3. Collins Foods (CKF)

There’s no doubt that online food-ordering platforms, such as Menulog, and UberEATS and other food-delivery services are hugely disruptive. The ability to order food online from a variety of outlets and have it quickly delivered will change how many Australians eat.

This trend is well-established in many inner-city locations in our East Coast capitals. One need only look at how the number of UberEATS, Deliveroo or Foodora couriers, or experience slow in-store service because the bulk of the outlet’s production is servicing online orders.

The trend could disrupt established quick-service restaurants, such as McDonald’s or KFC, that have low or no presence in the home-delivery market. Consumers can now access takeaway food from a wider range of suburbs and even order from fancy restaurants.
Competition, always intense in takeaway food, will go up several notches, as virtual restaurants are formed, where food is ordered online and cooked in an industrial kitchen, without the labour or rental costs of a shopfront.

But I see online food ordering and home delivery as an opportunity for Collins Foods, owner of more than 200 KFC stores and 20 Sizzler restaurants. Collins also has 60 franchised Sizzler restaurants in Asia and is cleverly expanding in Europe via KFC acquisitions this year.

Collins is delivering solid same-store sales growth, particularly at its Australian KFC outlets. The company’s European acquisitions should provide the next leg of growth over three years and underpin a share-price re-rating.

I see real potential for KFC in online food-ordering and home delivery. Its brand recognition and valuation proposition are valuable competitive advantages over smaller rivals that target the take-home market via technology.

Far from being disrupted by the likes of Menulog and UberEATS, KFC could be a disruptor as its uses technology and the logistics to service a larger market.