It’s no secret that KFC U.S. had a tough year in 2024, with three consecutive quarters of negative same-store sales, as well as declining system sales, despite high demand for all things chicken.
In August, franchisee EYM Group closed more than two dozen KFC restaurants in Illinois, Indiana, and Wisconsin, while its largest franchisee, KBP Foods, laid off about 9% of its corporate team in November.
During KFC parent company Yum Brands’ most recent earnings call, chief executive officer David Gibbs said the chain’s challenges are driven by a “complex consumer environment,” while its limited-time offers underperformed expectations. He added, “we have fantastic leaders in place working on revised strategies to create a step-change in results.”
We now know what some of those strategies entail. During a recent interview, KFC U.S. president Tarun Lal said a “brand transformation” is underway, designed to grow both sales and transactions. The plan is driven by what he calls a “top leadership team,” including several new executives such as Catherine Tan-Gillespie, named chief marketing officer and chief development officer in August, and Jonathan Ojany, named chief financial officer in 2023. Earlier last year, Thuthuka Nxumalo joined as chief operations officer, while Christophe Poirier was named chief new concept officer, joining Heather McCoy as the new chief people officer. In 2023, Paul Tuscano was named to the newly created chief digital officer role.
In addition to getting an entirely new leadership team in place, Lal – who was named president in 2022, succeeding current Brinker CEO Kevin Hochman – said KFC is also laser-focused on delivering better guest experiences by giving team members the right tools and technology. The company is expanding its “super app” to the domestic system, for example, which offers a suite of products for managers and team members aimed at simplifying their jobs and improving operations.
KFC U.S. is also leveraging Yum’s personalized AI-driven marketing campaigns, inventory management system, consumer data insights system, and proprietary Poseidon point-of-sale system. Additionally, kiosks are now deployed in more than 1,000 locations, while the KFC Rewards program, launched in February, already includes more than 5 million members.
“The biggest enabler is team member experience. If we can provide team members with the right tools, they are able to deliver the right experience,” Lal said. “The foundation is investing in the right training tools and investing in new tech. The (point of sale) and (kitchen display system) shave hours off their time back of house. That enables them to focus on accuracy and taste and to help guests have a better experience, while the Rewards program gives customers access to KFC in a different, more personalized way.”
KFC is testing some of this new technology, as well as streamlined menus and a new restaurant design, at more than a dozen Orlando, Fla.-area restaurants. The “KFC Original” prototype has so far yielded positive results, including a 60% improvement in order accuracy, a 41% improvement in guest satisfaction, and a 30% improvement in speed of service. As such, the test will expand to Dallas in February, when six traditional restaurants will be converted to the prototype.
“The test to simplify and modernize our restaurants has shown positive results,” Lal said, adding that’s why he’s bullish for the brand despite recent struggles.
He also said the company is forging stronger partnerships with franchisees by prioritizing unit economics.
“We’re hyper focused on growing sales and driving costs down. In an environment like this, the key is having honest, open dialogue with our franchisee partners, so we recognize their challenges and are working together with them to create trust in the system,” Lal said.
The final piece of the transformation plan is KFC’s new concept called Saucy – a “flavor forward dining destination” that recently made its debut in Orlando. Saucy features chicken tenders and 11 sauce choices, as well as 11 beverage choices – a nod to KFC’s Original Recipe with 11 herbs and spices. Lal said it’s important for every brand to innovate and that now is the time to take such risks.
“Innovation is key for every business and every brand. We don’t want to be left behind,” he said. “We are pushing the boundaries of serving what we serve in KFC but in a different asset format and with a different experience.”
Lal said the intention is to grow Saucy’s footprint and iterate along the way based on how customers interact with the new concept.
“(Saucy) is best-in-class conceptability and I have tremendous confidence in it,” Lal said. “I’m very optimistic about 2025 and beyond. The macroenvironment is improving – inflation is going down and cost pressures for consumers are going down. And I’m very bullish about our transformation plan kicking in and the foundation we have put into place.”
Contact Alicia Kelso at [email protected]
