KFC Pins Turnaround Hopes on Grilled Chicken

But Franchisees Skeptical About Resurrected Strategy

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CHICAGO (AdAge.com) -- Kentucky Fried Chicken is hoping this time's the charm when it comes to more-healthful products. Over the years, it's tried marketing non-fried fowl, once even changing its name to KFC to distance itself from the "f" word. But there was one problem: The products didn't sell well.
KFC's chief marketing officer, James O'Reilly, said, 'Probably what we're most excited about is the taste of this product.'
KFC's chief marketing officer, James O'Reilly, said, 'Probably what we're most excited about is the taste of this product.'

Which is why it seemed rather surprising when Yum Brands CEO David Novak recently told analysts that grilled-chicken products would form the "centerpiece" of KFC's much-needed turnaround. The chain has begun testing grilled chicken on the bone in San Diego; Jacksonville, Fla.; Austin, Texas; and Colorado Springs, Colo.

Hard sells
The strategy surely fits with fast feeders adding fewer fatty and high-calorie options to their menus to assuage concerns that they are contributing to America's obesity epidemic. But some KFC franchisees, having been burned before, aren't sold on the strategy.

"KFC says we need to get grilled items on the menu," said Joe Farley, operations director for a prominent franchisee group in New York. "I don't understand it. The grilled items in the past have been excellent, but we just didn't sell them."

The franchise owner, Darlene Pfeiffer, said some consumers come into KFC ready to order non-fried chicken, but change their mind when once they get inside the store. "People talk about wanting healthy options, but whether they'll get it when they come is another thing," Ms. Pfeiffer said. "When we had the Rotisserie Gold [chicken], people talked one way and they acted another way."

A matter of taste
KFC's plan is to talk up the taste of the grilled products in its marketing. "Probably what we're most excited about is the taste of this product," said KFC's chief marketing officer, James O'Reilly. He added that it was too soon to give specifics about marketing efforts on a product that won't be available nationwide until 2009.

Analysts indicate it isn't a significant risk for KFC, given that similar products have worked at other chains. "This is the first step in a move to broaden KFC's usage and move its brand boundaries beyond fried chicken," said UBS analyst David Palmer. "This isn't the first time that they've tried to do this, but the odds are it's a good start, trying to do something that has worked already in other concepts."

While KFC doesn't now market national grilled products, it does offer a tender-roasted chicken sandwich and a roasted version of its Twister sandwich. Roast chicken is also available on salads.

Getting hip to wraps
In the meantime, the staid brand is working on its hip factor with toasted wraps, marketed with a "toasted-wrap challenge" that will appear on TheOnion.com, ColbertNation.com, DailyShow.com, and its own website, where vintage t-shirts are also for sale. "The idea was more of a way to kind of make the campaign feel like something that was ownable; something that could be more television show than advertising campaign," said Tom O'Keefe, exec creative director of the Chicago and West Coast offices of DraftFCB, KFC's ad agency.

Mr. O'Reilly said KFC found huge opportunities for its chain in the chicken-sandwich space, particularly among young people. The chain did nationwide taste tests between its product and McDonald's snack wraps.

Fried chicken crucial to brand
He said the chain is spending more ad dollars online to launch the toasted wrap than it did in all of 2007, although he declined to specify an amount or percentage. According to TNS Media Intelligence, KFC spent less than $3 million online in the first nine months of 2007, and less than $1 million in all of 2006. Its total measured-media budget was $251 million in 2006 and $205 million in the first nine months of last year.

Mr. O'Reilly stressed that while the chain is looking for "ways to be relevant to more people," and said that fried chicken will always be an important part of the brand.
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