KFC’s iconic fried chicken buckets are no longer enough to allow the company to stay ahead of its rivals as consumer preferences shift.
The global fast-food restaurant chain owned by Yum Brands is trying to rejuvenate itself by leaning into its own version of the chicken sandwich, an item that’s stoked intense rivalries among major chains, and other new innovations such as spicy wings and potato wedges, which have proven popular among new customers.
JPMorgan analysts said in a research note that KFC’s U.S. division, led by President Catherine Tan-Gillespie, is trying to win back customers through new marketing and menu ideas, which are boosting sales. For instance, KFC’s U.S. sales rose 2% in the third quarter of fiscal year 2025 largely due to spicy wings and potato wedges attracting new diners, the analysts said.
IS THERE A FAST-FOOD PRICE WAR LOOMING?
KFC’s new restaurant concept, Saucy, which is focused on fried chicken tenders and sandwiches served with a wide variety of signature sauces, has also proven successful, according to the analysts.
The smaller version of KFC was launched in Orlando earlier this year. Since then, analysts noted that it has been selling about twice as much as a typical KFC store, or roughly $2.6 million in annual sales. KFC plans to open 10 more locations.
MCDONALD’S CEO WARNS OF ‘TWO-TIERED ECONOMY’
The company is also launching a one-day-only pop-up restaurant in New York City on Nov. 9 called “Sundays,” where customers can order the company’s new, larger, versions of its classic chicken sandwich.
It’s a jab at Chick-fil-A, which is closed on Sundays.
It’s also launching a “Size Matters Tour,” a nod to the larger size of its sandwich, offering free KFC Chicken Sandwiches in more than a dozen cities across the country.
Competition in the fast-food sector has become tougher in the current economic climate. Brands are scrambling to attract customers as rising menu prices have forced many people to cut back on dining out. Lower-income consumers, who make up a large share of the industry’s customer base, have been hit the hardest, adding pressure on chains to find new ways to stand out.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| YUM | YUM! BRANDS INC. | 149.01 | -0.37 | -0.25% |
Some brands, such as McDonald’s and IHOP, are leaning on value meals, while others are focusing on menu innovations to drive traffic.
MCDONALD’S BRINGS BACK EXTRA VALUE MEALS TO LURE BUDGET-CONSCIOUS CUSTOMERS
KFC’s renewed focus on relevance and innovation appears to be resonating, according to Alex Fasciano, an analyst at CFRA Research, who noted that KFC’s quarterly results with this strategy “have been encouraging this year, with improvements in U.S. traffic trends and even stronger demand internationally.”
Building off this momentum, Fasciano said he expects to see more new product launches across the U.S. chicken market due to growing consumer demand and an increasing number of restaurants leveraging chicken as a cost-effective alternative to higher-priced beef.
“We think KFC’s strategy is centered on driving growth through brand relevance, marketing innovation, operational excellence, franchise partnership, technology, and scale, with ongoing efforts to adapt and expand in both the U.S. and international markets,” he said.
Read the full article here
