Dec 11, 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. Its iconic brand is distinguished by red & white striped buckets of bone-in chicken pieces featuring the Colonel’s portrait. Buckets of KFC chicken are positioned as an indulgent/nostalgic home meal replacement option bolstered by the Colonel’s high standards with taste representing a key brand differentiator (finger lickin’ good) and value primarily presented as affordable home meal replacement bundle options. The chain’s increased relevancy reflects progress in expanding into sandwiches, tenders, wings, bowls and pot pies while also increasing flavor options (spicy, Nashville Hot & KFC Sauce). A successful chicken sandwich (quarter pound filet of double-breaded chicken stacked on a brioche bun in classic or with a spicy sauce) continues to drive sales and its Secret Recipe Fries currently represents a top selling side. Notably, its digital mix has more than doubled from pre-lockdown levels, benefitting from the recent launch of its internally built KFC e-commerce website & app and its new “Quick Pick-Up” program which allows customers to place online orders for pick-up off an in-store shelf (helping DT congestion). Brand strength is reflected by its most recent 3Q21 comp performance (+13% on a 2-year stacked basis) and going forward comp tailwinds include: continued success of chicken sandwich sales; continued strength in group/bucket sales; heightened demand for drive-thru access (buckets travel well) which compliments KFC’s fast DT speed; and growth from digital helped by its new Quick Pick-Up program. A system-high AUV reflects several years of comp growth and closures of underperforming stores. Having said all this, KFC’s market share has declined by -19.5% ($1B+ chicken segment) over the last 10 years and the system has incurred 17 consecutive years of domestic net unit count declines. Current sales headwinds include stiff competition and chicken price inflation which inhibits the brand’s ability to offer lower price points for its lower income demo. Notably, chicken slaughter prices increased an astounding +42% y/y in 2021 which explains KFC’s decision to de-emphasize value/discounting. In conclusion, while KFC is making Southern fried chicken cool again, inflationary pressures pose a challenge to keep things affordable for its traditional low-income demo.

Marketing Consumer Research Weekly Banner
NoBull Posts Thumbnail
Restaurant Research

Email Sign-up

15 Second Posts

Latest Release for Personal Consumption Expenditures (PCE)

The consumer still looks good according to the government’s recent release of personal consumption expenditures (for August 2023) as there have not been any material changes in growth for either disposable income or consumption expenditures.

Small Biz Insights on Trucking Industry

In this post, we discuss the massive post-covid changes to the trucking business with Tony Lovallo who has been running his own freight company since 2010. Tony’s insights provide a 360 look into the shipping business & consumer patterns with important economic implications.

Darden 1Q24: Sales +11.6% Y/Y, Comps +5.5% Y/Y

Darden reported that industry same-restaurant sales increased +0.9% and industry same-restaurant guest counts decreased -4.2% during its fiscal 1Q24. The chain’s comps outperformed the industry by +4.1% and its traffic outperformed by +4.3% (= flattish traffic for Darden during the quarter).

Job Market Looks Solid

In this chart, we subtract total quits from total hires. The excess of hires over quits looks very good relative to the historical level even though the positive gap recently dipped slightly. Workers are staying at their jobs longer even as they continue to have new employment opportunities.

The Economics of Politics

As the U.S. gears up for the 2024 elections, it is important to consider changes to our elections and governance that can unite the citizens of this great country.

2Q23 Retail Same Store Sales

NoBull’s Retail Same Store Sales Report benchmarks 80+ large consumer retail companies by domestic same store sales including annual (2019 – 2022) and quarterly results (2Q22 to 2Q23).

Walmart Investor Presentation: Inflation Here to Stay

While general merchandise prices are lower y/y, they remain elevated compared to 2 years ago. As Walmart does not believe general merchandise and food (dry grocery) & consumable prices are ever going to completely disinflate, management suggests the need for a country-wide wage increase rebalancing.

Interesting Conversation with Fed Chair Powell

Okay, Powell didn’t actually take our call, but we offer a transcript of a potential discussion between the Fed Chair and John Q. Public. It’s very insightful, so please read on.

The Problem with Investment Diversification

Every investment advisor and business student knows that portfolio diversification is key to wealth building. Show me an investor who can beat the S&P 500 Index by buying a few handpicked stocks and I will show you a hedge fund manager in the making. However, there is a huge problem with this strategy that no one is talking about.

Part 3: Analyzing Performance of Low-Income Oriented Retail Companies

We created an index for the financial performance of 5 low-income oriented retail companies to assess the health of this demo. While we recognize that these companies have benefited from the trade-down of higher-income consumers, things look reasonable at least through calendar 2Q23. 

Digital Marketing Opportunities
Restaurant Research

A Restaurant Research LLC Company