New fast-food products from Restaurant Brands

Restaurant Brands is looking at introducing new product lines and concepts as its shareholders bask in the knowledge their earnings per share are fat, dividends plump, share price healthy and earnings forecast upbeat.

Yesterday's annual meeting in Auckland, which finished with a KFC and Pizza Hut lunch, was told the company expected to push group net profit past this year's $19.9m (20.5 cents per share) to $24 million-$26m next year.

Chairman Ted van Arkel, who tucked into some of the colonel's fried chicken after the meeting, told shareholders he normally would not comment on the company's share price, but said it was worth mentioning as it had been the best-performing share in the past 12 months on the NZX 50, leaping 120 per cent.

Those who bought at lows of 65c and even 100c were well ahead, with the shares yesterday at 235c. At the 1997 float of the group, shares were 220c.

"Even those early investors have recovered and they have had a reasonable dividend stream."

Group chief executive Russel Creedy announced he was just back with a team from an "eye-opening" product innovation and marketing conference in Dallas, Texas, hosting Pizza Hut, Taco Bell and KFC. He said the group was looking at new products in the next year and new concepts in the next two to three years. He could not divulge those plans.

Mr Creedy also said the group would soon stop using palm oil, and instead use possibly a canola/sunflower oil blend for cooking its chicken and chips.

It was also working on delivering KFC again, using its original 0800 KFC KFC number, a practice phased out because of difficulties with drivers.

KFC remains the group darling, accounting for the lion's share of sales in 2010 of a record $223.2m, up 9.2 per cent on a same-store basis. Pizza Hut revenues were $64.2m (up 3.9 per cent) while Starbucks Coffee finished at $30.5m (down 2.9 per cent).

KFC's continued growth is put down to the group's refurbishment programme, which began in Frankton in late 2004 and which has now seen 43 of its 86 KFC stores transformed. Ten more will be completed in the next year. Mr Creedy told the meeting that Pizza Hut, "the problem child in our stable", had finally added to the top and bottom lines – the first time since 2003.

Mr van Arkel said the group had drastically cut debt from $55m to $18m because of the strong performance of the business. "The cost of debt is around 5 per cent ... less than the cost of equity."

He said profit could reach $26m this year – "there's still nine months to go".

"The recession has given us a 20 per cent lift in sales performance. We know it won't last forever," Mr van Arkel said.

Mr Creedy added: "Internationally, it's almost the reverse ... it's devastated the fast-food business. New Zealand has done a particularly good job in this financial crisis."

The group's total store sales for the year were $317.8m, up 2.8 per cent, with same-store sales up 6.8 per cent.

The full-year dividend rose 79 per cent to 12.5c.

- © Fairfax NZ News