Some stock analysts and investors have questioned KFC’s new Colonel-based marketing campaign, but it’s hard to argue with numbers.
Brand awareness is up 60 percent, according to the Louisville-based chicken chain and Yum Brands subsidiary. Sales also have grown by nearly $1 billion in the 12 months prior to Sept. 3, and KFC has reported 12 consecutive quarters of positive growth in sales at stores open a year or more, known as same-store sales.
“KFC is a growth machine,” Roger Eaton, CEO of KFC Global, said. “We know how to put value in our consumers’ hands. We’re very good at innovation. I think the brand is positioned well.”
During the third quarter, KFC reported a 4 percent same-store sales increase, despite a protest impacting KFC sales in China, where the company sees its greatest growth potential. During that same quarter, KFC’s U.S. division had a 6 percent bump in same-store sales.
Because of the results KFC executives are seeing, Eaton told investors at Yum Brands’ annual investor conference Tuesday that KFC expects to reach systemwide sales north of $60 billion and have 60,000 restaurants. He did not provide a timeline for when the company might reach that goal; however, he said KFC has almost 21,000 stores worldwide.
Eaton attributed the positive numbers, at least in part, to the new marketing campaign, which Portland, Ore.-based advertising firm Wieden + Kennedy created. More than a year ago, the campaign kicked off with actor Darrell Hammond portraying KFC founder Colonel Harland Sanders and declaring “I’m back, America.”
Since then, seven other actors have played the role of Colonel Sanders, including most recently Vincent Kartheiser, known for his role as Pete Campbell in the hit show “Mad Men.” In his debut commercial, Kartheiser is only seen pictured on an album cover as a young girl swoons over him and enjoys KFC’s Nashville Hot Chicken.
The marketing efforts have gotten people talking about the brand and started to engage the key millennial demographic, the company says. The number of millennials “using the brand” has gone up 8 percent, Eaton said. “Millennials are now considering the brand in a way they hadn’t previously.”
It sister company, Taco Bell, has found considerable success during the last few years after finding a way to connect with millennials via social media, unique menu offerings and value deals. Yum Brands CEO Greg Creed recently said that half the U.S. population eats Taco Bell at least once a month, and the average customer visits a Taco Bell every 11 days.
KFC is still trying to achieve that same level of business success, but has made strong strides during the past year. Improvements include the company’s “Herculean effort” to renovate roughly 3,000 KFC locations, and product innovation, such as the spicy Zinger Stacker chicken sandwich in Australia and India’s KFC Chizza, a small pizza in which fried chicken serves as the crust.
“When you get the innovation right, you can get great margins,” he said.
While most of the growth will be from new stores and repeat customers, KFC will likely benefit from lower administrative costs as well. During the investor conference, Yum Brands announced plans to create a leaner company and reduce its general and administrative expenses to roughly $300 million by fiscal year 2019.
Yum Brands’ chief people officer Tracy Skeans told Insider Louisville that the company will eliminate 2,100 jobs worldwide during the next two years. Globally, it employees more than 400,000 people.
Around 1,500 jobs will disappear as Yum Brands looks to refranchise many of its international stores. The remaining 600 jobs will be eliminated from the various global corporate offices of Yum Brands and its subsidiaries.
Yum Brands offered early retirement packages to some of its employees in August and eliminated some unfilled positions. All those jobs are above-store jobs, meaning they aren’t sales associates or in-store managers.
“We did have a good take rate,” Skeans said of the early retirement packages. She declined to provide any more specifics about what employees were offered.
In Louisville, Yum Brands and KFC’s headquarters employs some 1,000 people. With the job cuts, that number will go to about 800 employees locally, she said, adding that Yum Brands will still have a substantial presence in Louisville.