Sizzler, the formerly popular family buffet, is reportedly closing a number of restaurants after its owner Collins Foods decided it was no longer going to be part of the company’s future. The all-you-can-eat restaurant has been gradually declining in sales for the past year falling 8.5%, compared to KFC – which is also owned by Collins – rising up 4.8%.
When Sizzler first opened in Australia, it was a spectacular hit. However, over time an assortment of cheaper family-restaurant alternatives appeared, causing the once famous buffet to struggle to keep the spotlight. The value of the brand has now been written down by $37.5 million on top of its insufficient revenue, which has caused Collins to fall into the red – posting a $10.4 million loss for the year as of March 3rd, despite the restaurant making $14 million in profit only a year ago. Chief executive Graham Maxwell says the closures are expected to cost around $900,000 in the hopes that Sizzler will generate positive income in the next year.
Although, while it’s been confirmed that a number of Sizzler restaurants in Australia will close, Maxwell says the plans won’t affect Sizzler Asia at all. In fact the company plans to open two new restaurants in Thailand and expand the chain even further across China.
“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.”
The company plans to open a grand total of eight new restaurants and revive another 18, but only time will tell if this is the right move. Scott Phillips, a research analyst for Motely Fool Australia, noted that the key to Collins bouncing back from this lies in achieving more growth for KFC.
“[Sizzler] became too expensive. That’s not what families are looking for, and it has been something of a slow death. [KFC’s] 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.
The company currently operates 172 KFC stores and has 61 franchised Sizzler restaurants spanning Asia, with more to come.