KFC ended its fiscal 2001 on a positive, and the Alexander-fronted "It's not fast food. It's KFC" campaign, which broke last July, produced strong sales for the first 12-months that it ran. But sales have fizzled recently, and one executive close to the marketer said the $200 million campaign may have run out of steam.
President-Chief Concept Officer Cheryl Bachelder told franchisees at a regional meeting last week that the Omnicom Group shop has started work on new creative, according to one attendee. An executive close to the agency confirmed this. KFC would not comment.
However, Mr. Alexander's lawyer, Michael S. Gendler, handled the contract with KFC and said it doesn't expire until June. While the deal could be renewed, no discussions have taken place yet. "That would be premature," he said.
Creative is not the only aspect of marketing under review at KFC. Last week, Chief Marketing Officer John Gilbert, who joined the company a year ago, restructured the marketing department, naming four group leaders.
He named Leigh Trescot insights and vision leader in charge of consumer insights; Matt Kelly as brand champion; Cynthia Koplos, brand mania; and Michael Tierney public relations-image. The company wouldn't provide additional information about the moves and declined an interview, but issued a statement.
"We are building a process to drive brand excellence. I have a great deal of confidence in this marketing team," said Mr. Gilbert in a statement. "We've realigned our internal resources to better address opportunities in the marketplace."
KFC is also looking at changes in its product and service offerings. During an Oct. 10 conference call with analysts, David Novak, chief executive of KFC parent company Yum Brands, blamed competition and slower service for a flat first fiscal quarter and a subsequent September sales slump of 10%. He also blamed the weak year-over-year comparison on the launch of the Alexander spots, which included a Popcorn Chicken promotion.
To turn sales around, he said KFC will improve service speed, offer plated and non-fried chicken meals and develop new flavors for chicken.
"Yum tends to turn marketing on a dime whenever sales start to soften," said John Glass, restaurant analyst with CIBC World Markets.
"The whole traditional quick-service industry is under tremendous external pressure," said Bob Goldin, exec VP of restaurant consultant Technomic. "It's a share game now," he said. With the increased competition and market saturation, "if you lose one or two percent of your audience, that's a big number in this business. I don't see big revival opportunities, quite frankly."
Another complication is that last month, the expanding U.K. KFC unit put its advertising creative into review, throwing into question the seven-year relationship with WPP Group's Ogilvy & Mather. Consultant AAR is handling the pitch and Ogilvy is defending, but some observers said Yum's U.S. agencies are eyeing the opportunity to push a global consolidation.