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[12 comments]

Kentucky Grilled Chicken

April 20, 2009

By George Anderson

If at first you don't succeed...

Kentucky Fried Chicken, which became KFC, in part because the company was looking to present a public image that did not so clearly identify with fried (see unhealthy) foods, is launching a new grilled chicken menu even though previous attempts have failed.

Richard Hopkins, president and part owner of two KFCs in Whittier, CA, told the Pasadena Star-News that the addition of the grilled chicken amounted to "a revolution" for the chain owned by Yum! Brands. "There's a huge demand for a healthy product," he added.

According to Mr. Hopkins, KFC tests of the grilled chicken menu in Austin, Colorado Springs, Indianapolis, Jacksonville, Oklahoma City and San Diego over the past two years has the company and its franchisees excited about the prospects of the new items.

KFC developed the new grilled chicken over a six-year period. Roger Eaton, president of Yum! Brands, told Bloomberg News, "The technology has developed over the years to give us the taste and flavor we were unable to produce in the past. We've been able to create a product that can stand beside our original recipe."

Ron Paul, president and CEO of Technomic, doesn't see grilled items cannabilizing KFC's fried chicken offerings. "It's to gain some attention, to give consumers a reason to try something different," he told the Star-News. "It's a logical time to do it."

Steve West, an analyst with Stifel Nicolaus & Co., told Bloomberg News, "This will really help eliminate some of Mom's veto vote. It will get people thinking about KFC as a place to go for healthier items."

KFC plans to introduce the new menu with a full-page ad in USA Today on April 24. It also plans to distribute roughly 4 million free samples of the chicken on April 27. The company's ads, billboards and in-store signage will include the tagline: "Unthink what you thought about KFC," according to Mr. Eaton.

Discussion Questions: Are consumers ready to buy grilled chicken at KFC? What will it mean for the fried items on the KFC menu?

FINANCIALS:     [NYSE:YUM]

Discussion Questions



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Comments:

It's hard for KFC to fight its own image as a purveyor of fried foods, and its own marketing of items like the Big Bowl (take a look at the nutritional info on their website) doesn't help. But KFC is first and foremost in the business of selling chicken, and in order to gain market share it needs to figure this out. At this point, McDonald's buys more chicken than beef from its suppliers and other fast-food chains have reinvented themselves in a similar way over the years. To ignore this trend will keep KFC in a box (or a bucket) and will really hamper its growth potential in the future.

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Richard Seesel, Principal, Retailing In Focus LLC

KFC has undoubtedly done its homework and I'm optimistic that the market researchers within have identified a "grilled" marketplace for the brand. However, as the population ages a great many baby boomers are looking to purchased "baked" chicken more so than grilled. This is evident in many supermarkets where “baked” chicken is being served up in “ready” packages and in one supermarket chain in particular, I’m told that they can hardly cook enough baked chicken to satisfy demand on any given day.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates

It is a great time to do this as fast food is not in higher demand. If they can pull this off, it is an excellent time to think about expanding.

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John Crossman, President, Crossman & Company

My sense is that this is not something they are moving into without a lot of thought and research, especially after their last attempt. There is no reason they can not be thought of as a “chicken” destination and not a “fried” chicken destination. Dunkin Donuts has figured a way to be a “breakfast” destination beyond just coffee and donuts and I think consumers are happy to receive more options at places they trust and enjoy.

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Charlie Moro, President, CFS Consulting Group, LLC

Great marketing combined with a great product is usually a recipe for success. With fast food sales on the rise, it’s a great time to introduce something new. The big question is, what does a piece of grilled chicken that took 6 years to develop but only 3 minutes to cook taste like?

Marc Gordon, President, Fourword Marketing

I don't know. That greasy fried chicken is pretty good. Grilled? How good could it be?

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David Livingston, Principal, DJL Research

The name change to "KFC" was always a wink-wink effort. People with a hankering for some really delicious greasy fried chicken have headed to the Colonel for decades. But if KFC can come up with a compelling grilled chicken offering (perhaps to compete with the wildly popular Central-American specialty restaurants) they'll prove again that they can adapt to the times.

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Cathy Hotka, Principal, Cathy Hotka & Associates

McDonald's, Burger King and KFC (again). They keep trying to reinvent themselves, and failing. They are known for their fried chicken (thus the name). There is nothing wrong with fried chicken. Eliminate the trans fats and focus on the things that you do best (i.e. frying chicken). People do not go to KFC to eat healthy, they want fried chicken. There is nothing wrong with giving your customers what they want!

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Kai Clarke, President, Miraclebeam Products, Inc.

Finally! I love the chicken, but hate the calories. I stopped going there years ago. A typical KFC fried meal with an extra crispy breast and wing with fries, slaw and medium Pepsi adds up to over 1600 calories. I can't believe it's taken them this long to get on board with a healthy menu.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

The grilled chicken offering could work if it is more than bland grilled chicken. The seasoning and overall taste appeal of the product which, as mentioned by another respondent, could emulate the Central American offerings at places like Pollo Campero is key. While it will not likely be why people stop at KFC, it could help to attract more diet and health conscious members of families and couples, for example, so KFC gets the purchase of an entire family or couple unit versus just a few (e.g. the kids or the guys) as might be the case right now.

Rochelle Newman-Carrasco, Chief Hispanic Strategist, Walton Isaacson

KFC would seem to have one reason for being - fried chicken! While the 6% of the media and population scream about calories and cholesterol, the remaining 94% clamor for real food and KFC falls into the real food category. You may not think so but frying chicken properly is a time consuming process and getting it right isn't easy.

I fear "grilling chicken" will take time away from the core product and end up giving us inferior fried chicken as a byproduct. Let's hope not!

Ed Dennis, president, Dennis Enterprises

I think they can be successful. They are known for great chicken and if they make the grilled chicken great, they will succeed.

However, I tried their grilled chicken and have two complaints. First, they don't have any boneless chicken. That makes the idea a waste for me since I eat my meals on the road and there is no easy way to eat chicken on a bone when driving. Even if I was at home, I wouldn't eat it because it's messy. People who are health conscious generally care about how they look and don't want chicken juice all over their fingers, faces and clothes.

Second, it had zero flavor. They need to spice it up. For now, it tastes like my Irish, grandma's chicken...and she was not a great cook. Kick it up a knotch KFC, healthy doesn't have to mean tasteless.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

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