Finger-lickin' good digital transformation as KFC aims to be in the RED

Profile picture for user slauchlan By Stuart Lauchlan December 9, 2018
Summary:
The demise of fried chicken as a favored fast food hasn't come to pass, but there's a need for omni-channel transformation nonetheless.

KFC
There aren’t many CEOs who want to see their businesses in the red, but that’s what Greg Creed is setting out to achieve with Yum! Brands.

We actually want to make all of our brands RED.

Those brands are incredibly well-known. Yum! Brands is the parent company to three of the world’s largest fast food chains - Pizza Hut, Taco Bell and KFC - and Creed wants to see all three become so-called RED brands. That’s Relevant, Easy, Distinctive. Creed explains:

RED brands have something that other brands don’t have. They have something really powerful…RED brands are magnets, non-RED brands are mirrors. What’s a mirror brand? A mirror brand is just a brand that reflects back whatever they hear from their customer, whatever they hear is happening in society. But you don’t actually have any soul as a mirror brand. You just wiff and waft wherever the consumer insights are telling you to go.

RED brands like magnets are incredibly powerful. Why? Because RED brands have a very clear understanding of who they are, they have a very clear understanding of the functional and the emotional benefits they’ve been to their customers and they have the very clear understanding of how they make their customers' lives better.

Red of course is also one of the primary colors in the corporate livery of KFC, which Creed sees as a good exemplar of how digital tech is going to help in achieving his brand ambitions, with initiatives such a click-and-collect, self-serve kiosks and app-enabled delivery services.

At the helm of this transformation is incoming KFC CEO Tony Lowings, who notes that the rumors of death around this particular sector of the fast food industry have been greatly exaggerated:

When I joined KFC in 1994, I had a bunch of people say to me, ‘Are we coming to that five to 10 years before fried chicken is going to be dead?’. How wrong could they be? Today, fried chicken is probably the fastest growing protein amongst all of our QSR [Quick Service Restaurant] competitors. It's incredibly popular in fine dining and is growing in restaurants everywhere around the world.

But change is needed to adapt to new market realities. Lowings defines his goal in simple omni-channel terms: allow customers to access KFC through whatever channel and whatever means that customers choose:

This largely started out with install through the old convenience way of drive thru, but today is much more through things like kiosks. But more and more it’s about…home delivery and click-and-collect. Given the scale that we have globally our ambition is to become an omni-channel global powerhouse.

Progress

Lowings argues that KFC has made “dramatic progress” from a standing start three years ago, citing click-and-collect as a case in point:

We have 10,000 restaurants that now offer this particular service. We’ve got places like Taiwan, where we have 14% of all of our transactions going through the click-and-collect platform. In Australia , 98% of all of our restaurants are on this particular service. We will get to at least 50% of our restaurants on this platform in the next 12 months and we can get to 18,000 quite soon…In terms of click-and-collect, we will have more outlets having click-and-collect than the entire portfolio of Walmart, Kroger, Costco and Target put together.

Self-service kiosks are also expanding their footprint, he adds:

In France, we’ve had kiosks for many years and 60% of our front counter transactions go through kiosks and we think that we can have 5000 restaurants on kiosks in the next few years…if you think through the next two years from now as far as kiosks are concerned, we will have more kiosk in our global currency restaurants than Bank of America has ATMs.

As noted previously, delivery is the other dthat sits alongside digital in the fast food industry and KFC has work going on here as well:

Delivery…is growing rapidly everywhere around the world and KFC is incredibly well positioned to take advantage of this trend. We do this via two ways. In markets [where] the economic model allows us to do it, we own the entire end to end delivery service. But in other markets, we partner with aggregators in market where it makes common sense for us. Then of course we have hybrid models in different countries around the world.

In the US KFC in February announced a tie-up with Grubhub as its delivery partner with plans for more investment to come, says Lowings:

We’ve got 70 countries delivering at the moment and our intention is to have 70% of all of our restaurants delivering in the near future.

Spicing up marketing

Digital tech and skills are also being applied to marketing and data analysis, he adds:

In terms of digital and technology, it goes a lot more than just the consumer interface. With the data that we've got and the knowledge that we have on digital, it's allowed us to make our marketing much more effective. Globally, we've got a very sophisticated team of tech savvy marketers and they're applying their knowledge on digital and data in different ways.

We all know that TV advertising is massively inefficient. You push it out to a lot of people who don't need to have that advertising.Through digital and data analysis, we are able to identify much more precisely which are our target audiences we need to go after and secondly, exactly which messages resonate best with those people.

When it comes to conversion, the old way was billboards or leaflets and even radio advertising. Today, we are investing heavily in proximity marketing. We've got partnerships with Waze in a number of countries around the world. We invest in geo- targeting and of course we advertise on aggregator websites as well.

And then lastly in terms of loyalty, we're doing the same as what a lot of retailers are investing in our own media channels, so that we can communicate directly with our favorite customers through CRM, again making our communication and marketing significantly more efficient and effective.

That in turn has thrown up some interesting stats, as seen when it was realised that the KFC corporate twitter account only follows 11 people - the 5 Spice Girls and 6 guys named Herb. The resultant viral twitter frenzy is the kind of social marketing success most companies can only dream of.

My take

Finger-lickin’ good work underway. KFC is always my choice of fast food, although the brand had become somewhat tarnished and frankly shabby. The pace of change set by McDonalds put it to shame, but as Lowings notes, the past three years have seen some remarkable transformational catch-up in play. The omni-channel ambitions are commendable, even if the in-store experience can remain uneven. Now, if they can only fix their fries problem