April 6, 2013

KFC (YUM) Going Boneless

KFC Going Boneless
Kentucky-based Kentucky Fried Chicken (NYSE: YUM) is responding to apparent changing market demand by introducing Original Recipe Boneless chicken on its menu.

The roll-out of the new product will launch on April 14, and comes on the heels of a weak economy in the U.S., as well as growing competition from companies such as Chick-fil-A and McDonald's with its Chicken McNuggets.

Casual places like Panera have also taken a bite out of KFC's market share. As a matter of fact, Chick-fil-A has surpassed KFC in U.S. sales, and is poised to boost its margin over Kentucky Fried Chicken.

A couple of things KFC has been slow to respond to are that most people prefer to go to the restaurant to eat dinner rather than lunch. The problem there is KFC caters largely to the lunch rather than dinner crowd.

The other change it has failed to adequately respond to is the way eating habits have changed over the years. People like to pick up and eat while on the run, something that the current KFC menu doesn't line up well with. That's why the company is focusing on less-messy boneless chicken to meet that demand going forward.

Restaurants are starting to understand that most eating is now done on while driving, and those fast-food restaurants building their menus around that concept will perform the best going forward.
Food needs to be able to be held in one hand while having very limited mess factor involved. People don't want to eat while the product drips all over their face and/or clothes. Boneless chicken is one way of limiting that experience.

It is thought that in 2014 the greatest percentage of chicken sold at KFC will be boneless. If not then, it will be soon afterwards.

The challenge for KFC and other fast-food restaurants is to be sure they don't over respond to consumers at this time, as it's possible people are still getting back into the practice of eating out after the brutal recession.

Since job numbers remain dismal, it's important to understand how much of the economy is still affecting sales, and how much of it is changing consumer habits.

No comments:

Post a Comment