The Colonel and his restaurant chain formerly known as Kentucky Fried Chicken have pulled out all the stops to prevent the struggling QSR's sliding sales. However, the remedies they've employed may be too little, too late.
The once-booming restaurant switched their name from Kentucky Fried Chicken to just "KFC" (again), involved Oprah in a coupon debacle, sent Colonel Sanders "secretly" to the United Nations for photo opportunities with a top official, and recently launched the Double Down sandwich, a fried chicken breast sandwich -- sans bread -- filled with bacon and cheese.
As far as media coverage and publicity are concerned, KFC's efforts have built awareness by stirring up buzz. Short-term sales were good, but KFC's sales didn't improve in the long run. According to a recent article, the "stunt" marketing efforts actually confused consumers, eroded the company's brand position, and distracted customers away from KFC's main offerings: buckets of fried chicken.
KFC remained at the top of the pecking order, but slumping sales showed that the chain fell six points in an industry that grew 11 percent from 2005 to 2009. Technomic, a food-industry consulting and research firm, estimated that KFC's total market share during this time fell from 36 percent to 30 percent, while the category expanded from $14.5 billion to $16.1 billion.
KFC's problem stem from competitors within the chicken QSR category. Many serve healthier alternatives. Chick-fil-A , KFC's immediate threat, commands 20 percent market share while operating one-third the number of restaurants. Chick-fil-A, which is closed on Sundays, has 1,500 locations compared to KFC's 5,200 locations.
KFC's key to growth focused on providing healthier menu options, like grilled chicken, rather than the greasy, fried fare for which the chain became famous. The grilled chicken giveaway, promoted by Oprah in May 2009, seemed to indicate that KFC was on the right path. It increased same-store sales for the first time in two years, yet total sales for the year dropped four percent.
While a portion of falling sales could be blamed on the recession, competitor's increased sales show that this isn't the case. Chick-fil-A's sales increased nine percent, Zaxby's rose eight percent, Church's grew two percent, and Popeyes eked out a 0.3 percent increase.
KFC's grilled chicken products -- obviously launched to gain customers -- actually cut into the revenues from fried chicken offerings. According to Technomics, "What they were offering gave existing customers choice and didn't lead to customers coming from competition."
It seems the KFC brand is unsure of itself, which has led to an unclear public perception of the chain. Advertising messages are mixed: Some promote healthier alternatives, while introduction of the 500-calorie Double Down gut bomb is anything but heatlhy.
KFC closed 300 restaurants in 2009, a trend that shows no sign of slowing unless KFC can refocus their messaging to present consumers with a unified, clear perception of the restaurant.