CHICAGO (AdAge.com) -- KFC, in an effort to transform itself into "KGC," called in the heavy artillery by way of an Oprah Winfrey tie-in yesterday that offered coupons for free samples. But a better-than-expected response seems to have resulted in an unholy mess for a fast feeder struggling against slumping sales.
The chain's grilled chicken website has been overwhelmed by downloads, and stores have been turning coupon holders away, according to some blog reports. The snafu wasn't a good sign for a brand setting itself once again to the daunting task of convincing consumers that it's more than a fried-chicken joint.
"The combination of free food and Oprah is a tsunami," said crisis expert Robbie Vorhaus. "Clearly KFC wasn't ready." He added to the adage that while one good customer can earn you another and one bad customer can lose you 10, one crisis of this nature can lose you 100 customers for every one turned away.
From a negative to a positive
Gene Grabowski of Levick Strategic Communications argued that the events could even be spun into something positive -- that the product was in such demand that there wasn't enough to go around.
"People will remember that the chicken was so popular, Oprah endorsed it, and there was a free giveaway," he said. "In the long haul, this isn't even as close to being as damaging as a crisis with cleanliness or contamination found in the food." In short, he said, this "does not even come close to Dominos."
KFC did not immediately respond to requests for comment on today's events.
The new grilled-chicken product is critical for KFC, an iconic brand that is now the laggard of Yum Brand's portfolio. Counterparts Taco Bell and even Pizza Hut enjoy a much better market position. When asked about problems with the U.S. business, Yum executives point straight to KFC. They haven't minced words about the need to make grilled chicken work. KFC's same-store sales were down 7% in the U.S. during the most recent quarter. Pizza Hut was down 3%, Taco Bell up 2%.
Flip-flopping on name
KFC has made previous attempts to go healthy, with a "rotisserie gold" product that didn't sell well. The chain has even flip-flopped with its name, rebranding as KFC to shy away from "fried," but revived "Kentucky Fried Chicken" in 2005 before switching back to KFC.
UBS analyst David Palmer anticipates that grilled chicken will be a leading component of the company's earnings-per-share growth during the second half of 2009.
But food-industry experts are still on the fence about another attempt to go grilled.
"The jury's out until the consumer votes," said Ron Paul, president of Technomic, a Chicago-based research and consulting firm. "It's not a slam dunk. It's not going to happen automatically. You've got to get trial."
Mr. Paul pointed out that KFC is likely seeking new customers, as it's die-hard fans are fried-food junkies who are unlikely to convert. The trick, he said, will be getting enough new business to justify the operational headache of offering a range of grilled options.
And if you want to get new customers through the door, turning to Oprah is a good place to start.
The coupons announced on Oprah's show are good for two pieces of chicken, two sides and a biscuit and can be downloaded at UnThinkKFC.com until the end of May 6 and must be redeemed by May 19, but not on Mother's Day.
"Given the challenging economic times, KFC is pleased to work with 'The Oprah Winfrey Show' to provide the show's U.S. viewers with a coupon for a free two-piece Kentucky Grilled Chicken meal," KFC spokesman Rick Maynard wrote in an e-mail yesterday.
This giveaway comes on the heels of a national giveaway last week, launching KFC's grilled chicken. Mr. Maynard said the chain gave away 4 million pieces of chicken last Monday, which it had dubbed "UNFry Day."
Mr. Maynard declined to disclose terms of the partnership with Ms. Winfrey's program. He said KFC has not purchased syndicated advertising during "Oprah" recently, but added that some of the chain's local agencies may have.
Not that advertising this particular deal was necessary. Word spread like wildfire in the real world and on Twitter that Oprah was giving away free KFC, leading to the long lines and, according to Gawker reports, angry customers.
Of course, turning new customers away isn't a good start to a new campaign.
Mr. Vorhaus pointed out that most of today's coupon holders probably weren't regular customers. "There are probably a lot of people who are angry at themselves for buying into [the promotion], because they wouldn't usually go to KFC."
Other free-food snafus
KFC isn't the first to get caught unprepared for such an onslaught. Quiznos, for example, had similar problems with its "Million Subs Giveaway" earlier this year. In March, Chief Marketing Officer Rebecca Steinfort said that while the chain was still in the process of reconciling with some disgruntled customers, Quiznos had built a million-customer database with which to begin targeted marketing efforts.
Sampling has become a staple of any major fast-food product launch, particularly those of a less intuitive nature, for which consumers need more of a nudge to spur mass trial. McDonald's, for example, has said that sampling will be big part of the McCafe push, which kicked off yesterday. Recently, Denny's has used massive giveaways to reinvigorate the brand and bring back former faithful.
"It's too early to compare this response to the UNFry Day giveaway," Mr. Maynard said. "Although this offer is certainly generating enormous early buzz."
Indeed "KFC" hit No. 1 in Twitter's trending topics yesterday, and was still hanging tough in the fourth spot at press time. "Oprah" was sixth, just ahead of "Star Trek."