KFC

Jan 9, 2021 | Report Announcements

KFC is a leader in traditional hand-breaded, bone-in Southern fried chicken with considerable brand equity around its Original Recipe seasoning (top selling menu option) and Extra Crispy option. This iconic brand is distinguished by red & white striped buckets (featuring the Colonel’s portrait) which represent an indulgent, pampered home meal replacement option that works particularly well post-lockdown during a time when families have returned to the practice of eating together at home. KFC’s relevancy improved dramatically following a “re-colonelization” of the brand several years ago with very humorous ads featuring various renditions of Colonel Sanders supported by creative social media marketing. Menu innovation also has ramped-up over the last couple of years, significantly outperforming the segment average and KFC has been doing a good job of using innovation to break-through the clutter with: “mash-ups” like chicken & donuts; Secret Recipe Fries; and a new KFC Signature Sauce. An upgraded chicken sandwich also better positions the brand relative to Popeyes. A solid value strategy further offers consumers price certainty for complete, “real” meals across a broad range of price points. Having said all this, KFC’s pre-lockdown annual comp growth over the last couple of years has not been as robust as would be expected given the totality of its brand improvements. This reflects that KFC continues to struggle with overcoming the challenge of: turning-around an older system (KFC was essentially built out nationally in the 1980’s with 5,000+ locations); and Millennial oriented advertising which is intended to grow another wave of customers but, perhaps, at the expense of its core urban, lower-income demo. The brand also faces strong competition from: Popeyes’ chicken sandwich; compelling chicken offerings from QSR sandwich players; and grocery stores selling rotisserie chickens and buckets of their own. In conclusion, KFC is making Southern fried chicken cool again with its holistic, 360-degree concept upgrade in a new post-lockdown world that buys the brand time for its over-haul to gain long-term traction after an eventual return to normal.

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