Collins Foods Ltd (ASX: CKF) shares are catching the eye on Tuesday morning.

At the time of writing, the ASX 200 stock is up 26% to $9.15.

This follows the release of the KFC restaurant operator's full year results for FY 2025.

ASX 200 stock rockets on results day

For the 12 months ended 27 April, Collins Foods reported a 2.1% increase in revenue from continuing operations to a record of $1,519.5 million. This reflects growth in Australia, which was partially offset by softness in Europe and the Taco Bell business.

KFC Australia's revenue was up 3% to $1,154.2 million. This reflects new store openings and same store sales (SSS) growth of +0.3%. KFC Europe's revenue was down 0.4% to $312.3 million, with SSS down 2.7%. Taco Bell sales were down 2.5% to $53 million.

According to a note out of Macquarie, its analysts were expecting group revenue of $1,519.2 million. So, this top line result is slightly ahead of its estimate.

Underlying EBITDA from continuing operations was flat at $228.5 million and underlying net profit after tax from continuing operations was down 14.8% to $51.1 million.

The latter was notably better than what analysts at Macquarie were expecting. The broker had pencilled in an underlying net profit after tax of $44.3 million.

On a statutory basis, the ASX 200 stock's net profit after tax was down 88.5% to $8.8 million. This includes $40.8 million in restaurant impairments and a $3.2 million provision for potential wage underpayments. In addition, its statutory profit last year benefitted from a $20.2 million gain from the Sizzler Asia sale.

In light of its profit decline, the company's board has cut its full year dividend by 7% to 26 cents per share.

Management commentary

The ASX 200 stock's managing director and CEO, Xavier Simonet, commented:

In FY25, we sharpened our priorities to focus on same store sales growth and profitable network expansion in Australia and Europe. Our teams delivered a resilient performance this year in a challenging consumer environment.

While trading conditions were subdued, particularly in the first half, the strength of the KFC brand held firm. Market share increased in both Australia and the Netherlands, underpinned by improvements in brand health, compelling marketing campaigns, product innovation, everyday value initiatives, and a heightened focus on operational excellence.

Outlook

The new financial year looks set to be a much better year for the company.

Collins Foods revealed that it is targeting year-on-year group underlying net profit after tax growth in the low to mid-teens in FY 2026. Simonet explains:

Our H2 FY25 performance was very encouraging. In FY26, we will be laser focused on strengthening operational performance, driving same store sales growth and margin improvement. Easing cost-of-living pressures provide a supportive backdrop for growth, while deflation in Australian input costs, particularly chicken and potatoes, and efficiency gains will assist in driving a higher margin.