By Rajasik Mukherjee

March 31 (Reuters) - Australia's Collins Foods ( CLLFF ) said on Tuesday it would hand over 20 of its 27 Taco Bell restaurants in the country to an affiliate of Yum Brands ( YUM ) and Restaurant Brands, moving closer to a full exit from the loss-making business.

The remaining seven would be closed in the coming weeks, the fast-food chain operator added.

The transaction was part of its previously flagged strategy to exit Taco Bell in Australia and refocus on its core KFC ( YUM ) franchise in Australia and Europe, particularly Germany.

Yum owns several fast-food chains including KFC ( YUM ), Pizza Hut and Taco Bell, while Restaurant Brands, formerly listed in New Zealand, was acquired by Mexico's Finaccess last year.

The deal involves a nominal purchase price, with the new owners assuming lease liabilities for the 20 restaurants from completion.

"On balance, we view the transfer of the 20 TB stores for a nominal amount as a slight positive," said Michael Toner, RBC Capital Markets analyst.

"For the remaining 7 locations, we note heightened competition between QSR operators to secure sites, and are optimistic that CKF is able to dispose of these leases relatively cleanly."

Collins has been paring back its Taco Bell exposure as it doubles down on KFC ( YUM ), its biggest revenue generator.

Last April, the company said it planned to open 40-70 new KFC ( YUM ) outlets in Germany over five years, arguing that the fried chicken brand was "under-penetrated" in the country.

Meanwhile, KFC Australia posted interim revenue of A$563.8 million ($385.6 million), while Taco Bell recorded a nearly 4% drop in revenue for the half-year ended October 12, 2025.

Shares of Collins fell 3.8% to A$8.450, their lowest since June 24, 2025, as of 0032 GMT.

($1 = A$1.4620)