The S&P/ASX 300 Index (ASX: XKO) share Collins Foods Ltd (ASX: CKF) is a compelling buy right now, according to analysts at UBS.

Collins Foods is a KFC franchisee business with operations in both Australia and Europe. It recently announced plans to exit its Taco Bell business in Australia.

After delivering that news, as well as mixed updates regarding its KFC operations in Australia, Germany, and the Netherlands, UBS gave some commentary on the situation.

Let's look at what the broker thought of the update.

Expert view on the ASX 300 share

UBS noted that KFC Australia's focus is on driving same-store sales (SSS) and managing costs, combined with "profitable restaurant development."

In Germany, a binding agreement has been signed with Yum! to accelerate growth. It's targeting (but not limited to) between 40 to 70 new KFC restaurant openings across the country over the next five years. Germany is expected to become the second strategic growth pillar for the company.

Yum! has granted a period of exclusivity to open and operate KFC restaurants in certain areas in North Rhine Westphalia and Badan-Wurttemberg, where it already operates. The company said there are potential acquisition opportunities, as well as an appetite for additional opportunities in Europe.

The news was less positive in the Netherlands. It's focused in that market on lifting same-store sales performance and improving cost efficiencies. It's reviewing and optimising its existing restaurant portfolio. The ASX 300 share is expecting to include an impairment charge of between $25.5 million to $32.7 million in FY25.

Collins Foods is also discussing with Taco Bell International a potential transition to new ownership. This business only represented 3% of revenue and 0.5% of operating profit (EBITDA) for what UBS was projecting in FY26. The intention is to complete the transition within the next 12 months.

UBS said it was positive on the store roll-out in Germany. Due to the challenges for Taco Bell to date, the broker thinks this is a "sensible redistribution of capital". However, the impairment for the Netherlands business suggests there is "a risk that operations have not materially improved" since the FY25 first-half result. UBS is expecting Collins Foods to show a 1.2% decline for SSS in the remaining 19 weeks of the second half of FY25.

Rating on Collins Foods shares

UBS has a buy rating on Collins Foods shares, with a price target of $9.80. That implies a possible rise of 21% from where it is today, as well as whatever dividends the company pays in the next 12 months.

The ASX 300 share seems to have a compelling future with its expanding KFC network and relatively low valuation.