QSR May 2022

FRANCHI SE PERSPECT IVES

emerging in a post-COVID world.” Ref lecting trends seen across quick service, Next-Gen packs digital integration into a smaller footprint, anywhere from 1,300 square feet to 2,200. The lower end is an off-premises-centric model without a dine-in element. There’s a lobby for custom ers, or couriers, to walk in and grab their food. The signage is deliberate, too. Dedicated parking spots for online orders. Visible wayf inders to lead customers to an entrance for online orders. And the Quick Pickup shelves are a part of all Next-Gen builds to remove friction inside. The dual-lane drive-thru is something that can f lex as well. Bendre says there are options, based on trade area and markets, and, essentially, how much digital business is part of that loca tion’s mix, to use them as multiple order points or to dedicate one as an “express lane” for order-ahead guests. Adding dual lanes is an option KFC wanted to make available for franchisees, she adds, due to how challenging it is (or virtually impossible) to retrofit to current locations. Meanwhile, there’s work being done in the back of the house to create more efficient f low, Bendre says. “How our back-line responds to the online channel, or how the cook-line responds to the drive-thru channel—it was very important for us that we put focus on those aspects,” she says. Cahoe says the COVID real estate market has been a jum ble, varying wildly from market to format. In the early days, forecasts of mass closures suggested sites would be up for grabs in the fallout. That hasn’t quite come to fruition, Cahoe says, at least not for KFC, because the quick-service sector isn’t where the retraction pulsed. Especially at drive-thrus. That and off-premises “has been a strength that has been part of our momentum,” he says, “but it’s also been a part of the momen tum for competitors.” In turn, there’s a mixture of availability and cost of real estate as it relates to existing drive-thrus or pads that can be permitted or zoned for drive-thru. “That, arguably, has got more com petitive since the pandemic started,” Cahoe says. And not only are brands like KFC jostling for drive-thru, or pickup lane space with other established players, but fresh entrants are f locking in, like Shake Shack, sweetgreen, CAVA, Chipotle, Noodles & Company, etc. All that said, however, KFC ended 2021 with 26,934 restau rants—22,981 internationally and 3,953 in the U.S. Back in 2000, there were 5,364 KFCs stateside. The figure started to fall from 2010–2011, when KFC’s system retracted by 388 locations. It would drop by at least 100 units for the next six years, going from 4,780 to 4,109. And then, the comeback mentioned earlier picked up. Closures slowed to 58, 35, and nine, before 122 in COVID’s first year. As noted, the number f lipped into the green for 2021. Yum! CFO Chris Turner called this past year an “inf lec tion point in development” for KFC, and one Cahoe believes will only shoot upward. Additionally, 3,953 locations presents “tremendous runway for growth,” Cahoe says. “Really, in every market through out the U.S.” For a national brand with massive awareness and equity,

sub-4,000 gives it plenty of space to infill, enter new markets, and everything along the way. There are 11 quick-service brands with more locations than KFC today. Subway, at the end of 2020, had more than five times the number of domes tic units (22,190 ). “In some cases, competitors that are larger than us today might have that cannibalization or infill challenge. We don’t,” Cahoe says. “So we can be opportunistic and competitive and go after those sites and continue to grow.” A key part of KFC’s go-forward strategy will unfurl across urban inline expansion. KFC’s Next-Gen design and features are f looding this arena as well, where the chain has aggres sive plans for New York and St. Louis, and other city centers. Cahoe says this is one U.S. area where KFC is underpen etrated versus its national footprint. The company opened its f irst Next-Gen urban inline in 2021, and more are coming down the pipe. Bendre says KFC’s Next-Gen hallmarks, like Quick Pickup and digital call-outs, are taken to “the next level” with urban designs given the consumer that generally comprises those mar kets. “Their expectations are a little different,” she says. “Their lifestyles are different.” Interiors are designed to ref lect communities and stores fea ture 10–20 seats, including more countertop seating as opposed to the typical four-top tables seen in suburban KFCs. There’s also designated signage to direct customers and delivery driv ers to in-store mobile pickup areas. The Next-Gen urban inlines, which range from 1,400 to 1,800 square feet, are modern in look and spend even more time on the kitchen layout to ensure tight spaces don’t stall through put. Six are planned for this year. The foundational unlock, Cahoe says, is access through digital channels. It alleviates the must-have of a drive-thru to deliver on convenience. In time, all new builds and formats, in the suburbs or cities, will be Next-Gen assets. Bendre says franchisees are clamor ing to open them, and the brand is seeing “more traction than we expected.” Cahoe believes that can be traced back in time as well. Off premises, as recent a movement as it feels, is something that’s actually been in KFC’s DNA for decades. Picnics. Buckets of chicken on the Sunday dinner table. The brand didn’t have to cross many awareness gaps when it came to serving at-home occasions spurred forward by COVID. Digital simply made it all work faster, and in multiple formats. “As much as you can talk about that being nostalgic, the reality is that it’s very fitting to where the consumer has already moved,” Cahoe says. “And where we think the consumer con tinues to stick as we go forward.” Current conditions are also helping to democratize KFC further. Delivery, in particular, is bringing KFC to a broader audience and allowing it to reach different demographics. “I like to think these are exciting times,” Bendre says. “We don’t see them as challenging times.” q

Danny Klein is Food News Media’s editorial director. Contact him at danny@QSRmagazine.com .

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MAY 2022 | QSR | www.qsrmagazine.com