Updated

Serving up more fried chicken instead of all-you-can eat buffets is paying off for restaurant operator, Collins Foods.

The company has bounced back into the black after it stopped investing in its struggling Sizzler chain to focus on its successful KFC outlets.

Collins on Wednesday served up a $14.3 million net profit for the six months to October 18, a dramatic turnaround from a $22.9 million loss a year earlier.

The strong first half result impressed investors, driving its shares up 44 cents, or 11.3 per cent, to $4.33 by 1243 AEDT.

The return to profit comes after the company decided in June to stop investing in Sizzler’s Australian restaurants after making a $37.5 million writedown in goodwill, which pushed the company into the red.

Since then, Collins has focused on investing in the successful KFC fast-food franchise and growing its new chain, Snag Stand.

During the first half, KFC’s same-store sales jumped 5.2 per cent, while Sizzler’s fell 12 per cent.

Graham Maxwell, CEO, Collins Food, said ongoing strength in the group’s KFC businesses, particularly in Queensland, West Australia and the Northern Territory, offset Sizzler’s problems.

“(KFC stores) have achieved strong same-store sales growth and continue to deliver improved margins resulting from our ongoing focus on operational performance,” he said in a statement on Wednesday.

Three new KFC restaurants opened during the half year and 15 underwent refurbishments, while three Sizzler restaurants were closed and one opened in Asia.

Collins owns five Snag Stands and operates one franchised stand after closing two in Melbourne and opening one on the Gold Coast.

Michael McCarthy, chief market strategist, CMC Markets, said the results showed Collins Foods strategy is working.

“The underlying earnings are painting a positive picture and investors are responding to that,” he said.

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