Managing Organisational Change

KFC springs back

KFC has recovered from the widely reported chicken supply chain problem that crippled the fast-food chicken chain in February 2018. In fact, KFC saw a 4 percentage point increase in visitors from 2018 to reach 34% in 2019, matching its previous highest penetration level seen in 2016.

Its innovative strategies lead much of KFC's success. These include its push into digital technology through its KFC mobile app and the exclusive offers that come through this.

Arguably just having an app is not enough to get people to download and use it. As such, KFC has been actively finding new ways to increase downloads and the number of active app users. In June 2019, KFC offered 20 wings for £5.99 as a limited-time exclusive deal for customers with the KFC app. Such money-saving deals give customers more reason to download an app, resulting in greater value for money perceptions.

FIGURE 39: Annual changes in venues visited, June 2019

“Which fast-food outlets/restaurants have you eaten in or bought a takeaway from in the last 3 months? Please select all that apply.”

Base: 2,000 internet users aged 16+

2016

2017

2018

2019

% point change

%

%

%

%

2018-19

McDonald’s

53

54

54

56

+2

KFC

34

33

30

34

+4

Subway

30

28

28

28

0

Burger King

21

19

21

22

+1

Nando’s

17

18

17

17

0

Gourmet burger bar (eg Gourmet Burger Kitchen)

7

7

7

6

-1

Other chicken outlet (eg Southern Fried Chicken)

7

6

5

5

0

Other burger outlet (eg Wimpy)

4

3

4

4

0

Rotisserie chicken restaurant (eg Chicken Shop)

4

4

3

5

+2

None of these

28

28

28

27

-1

Source: Lightspeed/Mintel

McDonald’s continues to grow

As the market leader, McDonald’s numbers showed a continuing upward trend, with year-on-year penetration rising by 2 percentage points from 2018 to reach 56% in 2019.

Indeed, McDonald’s ‘Experience of the Future’ transformation programme, which launched in 2016, has well and truly revamped its business model. The programme included a kitchen refit, the introduction of self-ordering digital kiosks, table service, a home delivery service as well as the Signature Collection of premium burgers.

McDonald’s continues to increase its adspend to promote its non-core ranges including coffee shop-style hot and cold drinks in order to seek out further opportunities for growth (see Mintel’s Coffee Shops – UK, December 2018 Report).

McDonald’s has also benefitted from its commitment to improving the nutritional value of its meals, specifically those targeted at children. Its efforts to promote the provenance of its ingredients through its ‘Good to Know’ campaign has also paid off as the brand is now widely seen as trustworthy and good value for money (see Brand Research).

“...we don`t eat out that much but even McDonald’s has some healthy options nowadays.”

-Male, aged 45-54, socio-economic group DE

Most worse-off consumers loyal to one business

Repertoire analysis found that 25% of burger and chicken consumers visited one venue type in the three months to June 2019 vs 24% in the previous year. Whereas over-45s have a much higher tendency to visit just one (28%) or two (17%) types of venues, 16-44 year olds are more inclined to mix it up across four (15%) or five+ (12%) types of venues.

More affluent consumers are spreading their eating out budget across more fast-food venues than a year ago; 12% of those who described their financial situation as “healthy” visited four types of fast-food venues (vs 8% in May 2018).

The competitive strength of a fast-food restaurant is to meet the demand for value for money food; 75% of consumers think that burger and chicken outlets/restaurants are more affordable than other types of restaurants (see Burger and Chicken Restaurant Behaviours).

Whereas operators will have to work harder in 2019 to attract and retain affluent consumers to visit (as this group spread their visits across more types of venues), fast-food restaurants have a good chance of building brand loyalty amongst worse-off consumers who are most likely to stick to the venue that offers them the best value for money. Indeed, worse-off consumers are becoming more likely to visit just one type of venue (29% vs 24% in May 2018).

FIGURE 40: Changes in repertoire of venues visited, May 2019 and June 2019

“Which fast-food outlets/restaurants have you eaten in or bought a takeaway from in the last 3 months? Please select all that apply.”

Base: 2,000 internet users aged 16+

May-19

Jun-19

% point change

%

%

2018-19

1 type

24

25

+1

2 types

22

19

-3

3 types

13

13

0

4 types

7

9

+2

5+ types

6

6

0

None

28

27

-1

Source: Lightspeed/Mintel