KFC Got Fried in the Chicken Wars. Can It Come Back?

0:04America is clear about its preferred protein. It's chicken, especially fried chicken, in sandwiches, tenders, nuggets, and preferably dipped in sauce. On average, each American eats 100 pounds of chicken a year, and much of that comes from fast food chicken restaurants. My colleague Heather Haddon, who covers the restaurant industry, has tracked it all. Chicken is definitely booming. You've got Chick-fil-A with their sandwiches. And what makes the Chick-fil-A chicken sandwich original to me is the crispiness of the breading and the tenderness of the filet. You've got Raisin Cane's with their fingers.

0:45Raisin Cane's chicken fingers. One love. You've got Dave's hot chicken. What is the best fried chicken in America? I'll go try it. Honestly, I think it's Dave's hot chicken. There's Wingstop, Zaxby's, Popeye's, Bojangles. I could keep going. It is just everywhere. And it's the area of restaurants that's really growing. You know, fast food in general is not doing well except for chicken and beverages. So chicken is one of the areas where everyone is flocking. Hey! I'm the one who does puns around here. Just kidding. But one company that isn't riding the chicken wave as much as you'd expect? The OG of fried chicken.

1:26KFC. KFC. It's finger licking good. KFC. For decades, Kentucky Fried Chicken was the biggest rooster on the block. KFC is really kind of the originator of what we think of as fried chicken sold in mass, so sold at fast food restaurants all over the country. And they've been doing this for decades and decades. And yet in the last decade or two, they've really lost their crown as the chicken champ as all these other newer competitors have come around. And so that's presented a real issue for this company.

2:04Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Friday, November 21st.

2:17Coming up on the show, how KFC lost its chicken crown and its plan to take it back.

2:39Kentucky Fried Chicken Kentucky Fried Chicken traces its roots back to the 1930s at a gas station, obviously in Kentucky. It was founded by Harlan Sanders, known as the Colonel. He set up a small restaurant at the station and started to serve his iconic chicken. Here's Sanders on a talk show in the 70s. I wanted to have the best chicken in my restaurant that any competitor has. So I was on the highway where they go to Florida or to Smoky Mountains. And as they went down to there, I wanted to get them as they come back. There, he honed his mix of 11 herbs and spices and experimented with a pressure cooker instead of a traditional fryer to make his chicken crispy.

3:19He perfects this recipe and he starts selling it at his restaurant and it does great. You get some write-ups from folks who have sampled it on road trips. He gets that colonel designation from the state. He is not an actual military colonel, but it is honorific. He got the honorific colonel title, like legitimately, because of his chicken was so good? Yes. It was not for any military service. The strangest thing about KFC's history that Heather told me about was that at one point, Sanders got into a gunfight with a rival gas station owner. The other competitor in that town who had a gas station did not like that he had set up a gas station.

4:00And there was a shootout between these two gas station owners and Harlan Sanders, one of his workers, was killed. Holy cow! Talk about chicken wars. Indeed. OG chicken wars here. And so the other gas station owner actually went to jail, eliminating his competition.

4:23Business was good until the 1950s, when a new highway was built and Sanders' gas station stopped getting as much traffic. But he is a wily, crafty entrepreneur. And so around 1950, he starts looking for ways to sell his special fried chicken in other restaurants. I had nothing, no, anything to go by. It'd be an opportunity for that. But anyhow, I undertook the franchise. I was getting my chicken, and I called it Kentucky Fried Chicken. And so he finds a restaurant owner who's pretty popular in Utah to sell his chicken. That restaurant owner licensed the recipe, established Kentucky Fried Chicken the restaurant, and invented those red and white buckets of drumsticks and thighs that they still sell today.

5:12And it was those buckets that eventually proved to be a big hit with busy families. All over town, women have a question on their minds. What should I serve for dinner tonight? Let Colonel Sanders answer the question. Pick up Kentucky fried chicken in your neighborhood. Colonel Sanders makes it bigger, licking good. You can have a family meal of chicken and sides. You know, I think it was the original pre-mentation of this was 14 pieces of chicken with gravy and your biscuits or mashed potatoes. You can sit down with your family, spread all that bounty out. serve it up, you know, maybe even put it in actual ceramic bowls and dishes.

5:54And, you know, you've got a meal for your family with sides. They really tapped into that demand that I think a lot of Americans had at that time to, you know, feed their families, have it relatively inexpensive, have it be tasty and fresh and hot. And more and more of these restaurants were built. By the 1960s, Kentucky Fried Chicken had hundreds of franchise stores and was the biggest fast food chain in America, and it remained near the top for decades. The company also expanded beyond the U.S. pretty early. In 1987, it was the first Western fast food chain to open up in China. There are now KFCs in 150 countries around the world.

6:36They have really become successful internationally, and a lot of that is because the world eats chicken. The world loves fried chicken. You know, Africa, Asia, China, Europe, South America. I mean, the world really loves fried chicken. So they started to see that there was a good business for them abroad, and that has really become true. But it wasn't long before other chicken restaurants started crowding into KFC's Coop. A big one was Chick-fil-A from Georgia. Hey, Chick-fil-A, today Chick-fil-A, the taste worth shopping for. And Chick-fil-A was doing something new. It only sold boneless chicken in sandwiches and tenders.

7:21And people loved it. As it grew, people really loved this chicken. And they loved also the hospitality that Chick-fil-A is really known for. This southern-style hospitality. They also liked the iced tea and other things on the menu. And so as Chick-fil-A grew, I mean, it really posed a new threat to KFC, where they really didn't have much of a threat before. I mean, it really was, you know, burgers and pizza that was dominating the market at the time. This led to a boom in boneless chicken spots that's continued through today, like Raising Cane's and Dave's Hot Chicken, which specialize in strips and sandwiches.

8:01KFC, meanwhile, did tiptoe into the boneless market with sandwiches and popcorn chicken. But its main focus was always on its buckets, filled with meat on the bone, which didn't seem to be meeting American families' needs anymore. These days, there's just less of the full meals on real plates at the dinner table thing going on. Families have gotten busier. Instead of grabbing food on the road and eating it when they get home, consumers are eating 26 % of fast food orders in their cars, according to one research firm. And eating a chicken sandwich with one hand and driving with the other is a lot easier than eating a drumstick.

8:37Though, honestly, I wouldn't recommend either. People really want portable meals these days. They want sandwiches. They want tenders, things they could eat on the go, things that they could eat in their car. And I think this does speak to, you know, the way Americans are eating is changing. And that's really a problem for companies that sell meals, group meals for families. You know, they have to think of new ways to sell that's for individuals, for lunch, or for just people, you know, eating on the go, eating it late at night. Chicken sandwiches became so popular that in 2019, an all-out brawl broke out, known as the Chicken Sandwich Wars.

9:18The fast food chain Popeye's has a new chicken sandwich, but here's the real story. Popeye's pitted against Chick-fil-A for the best chicken sandwich after both restaurants took to Twitter. Popeye's issuing the challenge to Chick-fil-A, y 'all good? And the battle began. I'm rooting for Popeye's, and I'm definitely going to get another sandwich after this. The Chick-fil-A is a thousand percent better than Popeye's. A thousand percent better. Yeah, that was easy.

9:47The chicken wars were a boon for most fast food chicken joints. Popeye's had lines out the door. And its year-over-year sales in the fourth quarter of 2019 went up 42 percent. And it forced other fast food restaurants to introduce or re-release their own chicken sandwiches. In consumer news this morning, get ready Chick-fil-A in Popeye's because McDonald's is entering the fried chicken sandwich war. Wendy's didn't start the chicken wars. They just ended them with Wendy's new classic chicken sandwich. KFC was missing in action. By the time it reintroduced a chicken sandwich, it had missed the moment.

10:29As all this chicken was exploding in the marketplace, what was KFC doing? I mean, they're still selling their buckets, right? They were still catering to their core market, and they were trying to come up with new things. Like I said, you know, they do have their own chicken sandwiches. Some folks really like their chicken sandwich. And they were trying to, you know, experiment with new marketing, but they just weren't breaking out as much. Part of the issue is they just became associated with the bucket. They just became associated with this bone-in way of eating chicken in a bucket. Why was the original king of chicken not making chicken enticing in all of its forms?

11:13Well, a couple of issues. One is just habit and tradition and maybe some executive choices. But when you're talking about nuggets, you know, you're talking about a whole different supply chain, right? So if you've built your supply chain about bone-in chicken, it does take time and work to reorient your chain around boneless chicken. I mean, it's just a different suppliers. And I do think it was amiss that they didn't do that sooner. It wasn't until 2023 that KFC started widely selling chicken nuggets. So what did all this competition mean for KFC? Well, it means that all this competition and the change in consumer habits really means that their sales have fallen in the U.S.

12:00You know, they are no longer one of the dominant chicken players. Last year, KFC was the fourth most popular chicken spot in the U.S. And it's been closing stores. Some customers say the remaining locations feel older and less inviting compared to its newer competitors. I have heard from customers who have just said it's just not the same that they remembered. you know maybe the restaurants look a little tired maybe the offering looks a little tired it's just not what they're looking for when they go out to eat these days what kfc is doing to revive the brand that's next

12:52KFC is owned by a huge fast food conglomerate called Yum Brands. It also owns Taco Bell and Pizza Hut. And after watching KFC slide in recent years, Yum decided to shake things up and bring on new U.S. leadership. So they have a new U.S. president who has marketing and global experience, who is coming in with fresh energy and fresh ideas. They have a new CMO. This marketing officer is from Wingstop. So folks are really hoping that she can bring some of their marketing magic to KFC. It's also testing a new restaurant concept called Saucy, a spinoff brand that only sells boneless meat, like tenders, sandwiches, and wraps, along with tons of different sauces.

13:38Let's Try Saucy, a new restaurant by KFC. It's basically a chicken restaurant with different variations of chicken tender meals. Tendies and sammies. Oh my gosh, I love that they're actually called that too. It's tenders, it's 11 different sauces, and then it's drinks. And so this is to try to appeal to younger consumers who might not want that bone-in bucket. And so they have one of them that is started in Florida, but they've just purchased 13 different restaurants to convert them into sauces and try to see how this goes. A KFC spokesman said the chain is in the early stages of a fast food comeback story.

14:16He said, quote, we're optimistic about the trajectory. As for the original KFC, the company has upped its marketing game, leaning into edgier and playful advertising. The chicken tender battle has just begun! This is going to be big for us. And already we're seeing just a different attitude with the ads. It seems like they're taking up their competitors more and naming them out. You know, they've been naming Chick-fil-A in their advertising and saying, we are coming for you, basically. An easy point with Chick-fil-A is that they're not open on Sundays, so they can easily say, you know, get our chicken on Sundays.

14:51Part of this edgier marketing where they have this colonel who's basically saying, we are not happy about our position in the chicken market these days. It's also leaning into brand nostalgia. Recently, KFC brought back potato wedges and a honey barbecue sandwich from the late 1990s. It's also been offering discounts on its original bucket. Are there any signs that these changes are working? Yeah, so we have some early signs in young brands' earnings that came out early in November. KFC US did show, I believe, it was a 2 % same-store sales growth. They had six quarters of losses before that. So, yeah, that is notable.

15:37That is something. A little bit of a win. But they have to keep showing that it works, right? Heather says the KFC story is a reminder that past results are not a guarantee of future success. And the companies always need to evolve in order to keep up with the times. You can't just keep doing the same thing over and over again and expect it to work. I mean, you look at Chili's, that's one of the big turnaround stories of the industry right now. And that took money, it took time, it took marketing, and it took investing in the quality of the product and keeping it new and fresh. to work, but it has worked.

16:15So I think you have to keep listening to your consumers, find where they are, whether it's on social media, TikTok, et cetera, and make sure you're really still catering to them. You can't just keep doing the same thing and expect the results that you want.

16:41That's all for today. Friday, November 21st. The Journal is a co-production of Spotify and The Wall Street Journal. The show is made by Catherine Brewer, Pia Gadkari, Rachel Humphries, Isabella Jepal, Sophie Codner, Matt Kwong, Colin McNulty, Jessica Mendoza, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singhi, Jivika Verma, Lisa Wang, Catherine Whalen, Tatiana Zamis, and me. Ryan Knudsen. Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Katherine Anderson, Peter Leonard, Emma Munger, Nathan Singapak, So Wiley, and Blue Dot Sessions.

17:28Fact-checking this week by Mary Mathis.

17:38Thanks for listening. See you Monday.

17:44Thank you.