KFC in reinvention mode

The fast food chain is looking for a complete makeover, with digital as its media of choice

Thanks to social media, of late GIF (Graphics Interchange Format) files have really caught on. The unique image format, which appears to be a cross between a still photo and a moving one and therefore lends easily to comic messages, was presented as TV commercials by KFC in India a month ago. Given its wide popularity online, the campaign made sense for the fast food chain which directs its communication to predominantly youths. In a fast growing quick service restaurant (QSR) market in India where multinationals as well as domestic players are competing for share, how does a global name like KFC seek to push its brand value among consumers?

Lluis Ruiz Ribot, chief marketing officer, KFC India, says, “As a brand, we attract a young demographic, up to 35 years of age, which spans across children to college goers to early workers. And we believe in speaking to our customers in their language. Given how GIFs are predominant across social media these days, we decided to create a series of 10-second TVCs in GIF-like format for our disruptive value offering. With these short, quirky videos, KFC became the first brand in the country to bring to television screens something that has seen wide popularity online.”

The company followed up the TV ads with an on-ground activity titled “Tele-connect to Nashville” in a Mumbai mall. Participants had to wear a special headset that monitored their brain activity and analysed their concentration on a scale of 1-100. The ones whose concentration levels touched 100 could pop open a box with KFC’s product, Nashville Chicken. Ribot claims Nashville Chicken has a near cult-like following in the US, so the company wanted to launch it in a unique manner. “Marrying technology with food, we created a box which opened to reveal goodies, but only once your concentration levels crossed a threshold. In this day and age where our attention spans have become lower than that of a goldfish, we gave our fans a delicious and rewarding reason to challenge their minds,” he adds.

In order to capitalise on the buzz around demonetisation, recently the company also came up with a “Nashville ATM”. “Demonetisation was all that people were talking about and queues at ATMs were getting longer each day, so we installed KFC ATMs in Gurgaon and Chandigarh. These ATMs didn’t leave anyone empty-handed. Instead, they dispensed Nashville dollars, which consumers could win by answering a few questions on screen. These dollars could be redeemed at the nearest KFC,” says Ribot.

The company identifies “being true to our core” as central to its growth strategy, apart from introducing new market initiatives and also focusing on innovation. Apart from extending initiatives like the activation on Nashville Chicken to other cities, the company is also exploring a concept called KFC Hangout — stores with a new look and a modern take on ambience. “We have started with a few stores for now. Every store will have something different,” says Ribot.

After decline in sales growth for several quarters, and in 2015 the company focusing on reorganising its business, associating with like-minded and right partners and decoding its core consumer, 2016 had turned out to be a transformational year, says the CMO. “We are back on the growth trajectory with a 13 per cent increase in system sales in Q3 2016.”

Given the challenges including digital disruptions lately, the company views e-commerce and on-demand delivery as contributing to the growth of the food industry. It, therefore, also shares focus on digital with availability of products across leading aggregators. “In terms of food, we have kept ourselves continually relevant to our consumers by bringing in flavours that are bold, authentic and distinctive,” Ribot says, adding that consumers appreciate introduction of new items as they are well-exposed to global food trends.

According to Technopak, the total size of the organised QSR market in 2016 was Rs 18,415 crore and it is expected to grow at 18-19 per cent to Rs 43,435 crore by 2021. On the other hand, the size of the chained QSR market is estimated at Rs 9,125 crore ($1,405 million) as of 2016, while It is projected to grow at a CAGR of Rs 22 per cent to reach Rs 24,665 crore ($3,795 million) by 2021.

The QSR market in India continues to grow, especially with new entrants, expansion beyond metros and increasing consumer spends. An evolving consumers and consumption-centric environment is fostering the entry of many international players besides encouraging the rise of domestic chains, points out Madhulika Tiwari, vice-president, Technopak.

As regards challenges, QSRs continue to face high food costs, real estate cost, and lack of skilled staff and limited capability of establishing process-driven operations. Tiwari also identifies affordability and need for innovation in food offerings as crucial for continued success, even as consumers evolve and increasing competition within a segment and from outside make it tougher for existing players to retain customer loyalty. With growing health awareness, QSRs constantly need to address consumers’ concerns and keep up with their demands and preferences.

“In the Indian QSR segment, the market is yet to witness pure Indian concepts grow on a national level. Indian QSRs are still going through the learning curve and face the challenge of managing efficiencies, costs and consistency across locations. Serving the same food and delivering the same taste across multiple locations is the biggest challenge they face today,” she adds.