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Yum! Analyst Day: KFC turns to 'holistic' plan for more innovation

'If we can keep our lead in emerging markets, it is a mathematical certainty this will be biggest brand in world.'

December 4, 2013 by Alicia Kelso — Editor, QSRWeb.com

Yum! Brands held its annual Analyst Day today, providing an overview on the 2013 business and some plans for its Pizza Hut, Taco Bell and KFC brands heading into the New Year.

Most of the emphasis was placed on the company's largest system, KFC China, and its difficult year hurdling chicken supply chain issues and avian flu outbreaks. Despite the slump for the flagship brand, however, executives are optimistic about its continued recovery, as well as the Taco Bell "juggernaut."

Highlights from the event include:

China KFC

"Other brands lay low and let things blow over. That's not us, we're accountable and we need to make things better," said Sam Su, CEO.

Executives also admitted to not having as much innovation at the flagship KFC China brand in 2013. A focus on beef fell short of expectations and didn't bring in new customers, as anticipated. The company vowed to work on its product innovation with better consumer insight as part of a "holistic plan."

India KFC

India is projected to have the largest consumer demographic in the world by 2020. The eating out market today is, therefore, highly underpenetrated, according to Yum! Brands India CEO Niren Chaudary.

"Our vision is to be the No. 1 restaurant company in every category in which we operate," he said. The company has tripled in size in the past five years, and is aiming to triple again by 2020. Much of that growth comes from the KFC brand, which has recently introduced new vegetarian offerings for the 40 percent of Indians who identify as vegetarian.

Chaudary added that he is encouraged with the "disproportionate" success in smaller towns, where the company is focused on growth. "In the past two years, we've grown 1.5 times compared to our nearest competitor," he said.

Micky Pant, KFC CEO, said that 60 percent of the world's 7 billion people live in countries where KFC is the biggest brand. "The dream is to overtake McDonald's in India and there is no doubt we'll do that in the next couple of years," Pant said.

KFC global, U.S.

KFC's strategy moving forward, Pant said, includes:

1. Maintain the strong franchise business model outside of India and China. There are 14,000 stores and more than 90 percent are franchised. "Our franchise system is stronger than ever and we have a 120-country penetration. In countries like Nigeria, smaller African countries, we are five to 10 years ahead of our competition and we intend to keep it that way," Pant said.
2. Win in emerging markets. "If we can keep our lead in emerging markets, it is a mathematical certainty this will be biggest brand in world," Pant said. "Our track record in emerging markets is so strong. For them, KFC is a big deal, it means food that has been denied to them all along."
3. Be a strong No. 2 in Western Europe.The KFC business model in France has the highest unit volumes at KFC anywhere in world. There are "huge" opportunities in France and Germany, as well as Italy and Scandanavia.
4. Revitalize developed markets.In Canada, Japan and the U.S., the KFC brand has "become a little tired." "We are going to use our know-how to turn things around," Pant said. "I believe we have the wherewithal to do it."

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