If you think it’s tough trying to keep up with the dizzying pace of technology innovations in the restaurant space, try doing so across more than 22,000 restaurants in more than 135 countries. That's exactly what the KFC Global team is tasked with doing every single day.
Though there are vast disparities across many of these markets, KFC’s digital strategy is consistent across the system.
“It’s all about RED – relevant, easy, distinctive. The heart of all of that is easy and technology is the root of making everything easy,” said Gavin Felder, KFC Global’s chief financial officer, who oversees strategy, digital and technology, financial planning, supply chain and IT security for the chain.
For customers, achieving "easy" means implementing enhancements, like delivery, that are aimed at removing friction for customers and, ideally, contributing to positive sales. Doing so with such a large footprint, however, is easier said than done. That’s one of the reasons the company formed the KFC Digital Ventures Team about 18 months ago.
Based in the UK, the team essentially acts like a startup, taking on projects and developing those projects within a short time frame to see if and how they can work within the system.
“The team is trained in agile working methods. They’re product builders and developers who work in two-week sprints. We work in this waterfall way in which we advance the product piece by piece,” Felder said. “So when we’re building new platforms, we’re building the minimum skeleton first and then the flesh around it over time. This approach allows us to be more nimble. Our business is adjusting to how that little team works within the overall team.”
This process helps inform the KFC team what works where and what should be a priority. Right now, it’s clear there are three top priorities KFC is focused on to position the company as easy – delivery, click-and-collect and kiosks. How each is prioritized is different in every market. KFC has offered in-house delivery in the Middle East for decades, for example, and the mature channel drives over 30% of sales.
In the chain’s more developed markets, such as the UK, Australia and North America, the economics don’t work for an in-house model, so the team has to figure out which aggregators offer the best terms for both franchisees and customers. In the U.S., that means Grubhub, which signed a partnership agreement with parent company Yum Brands early last year.
As delivery reaches an inflection point across the world, Felder thinks KFC can differentiate by leveraging its signature offerings (bone-in chicken retains heat well) and by steering clear of the actual word “delivery.”
“’Delivery’ just feels very corporate. We don’t want just be an ‘us too’ in delivery, but something that is very unique to KFC. In the past, KFC has always been one of those unique brands that was allowed into your home and put onto the middle of your dinner table,” he said. “We know there’s a huge business to be built around delivery for us, and the question is how we build it to be more distinctive to our business.”
Click-and-collect is another priority for KFC, and for good reason. According to Nielsen, millennials prefer click-and-collect over home delivery when it comes to grocery shopping, which could easily translate into the restaurant space as more consumers get used to the channel. There are plenty of case studies to inspire KFC’s continued expansion of this channel as well. In Australia, for example, 98% of KFC restaurants offer click-and-collect and checks are 20% higher. The company is quickly ramping up this service, with plans to offer click-and-collect in about 18,000 of its 22,000 restaurants by next year.
“We have been pleasantly surprised with click-and-collect. We thought it could be interesting when we started, but we also wondered what the real benefit was since you’re still going to sit behind a stack of cars or in the queuing system in the store,” Felder said. “But it’s actually been a phenomenal success for us. It’s allowed us to access customer data, and customers are giving us credit for taking that small piece of friction away.”
Then, there’s kiosks. During Yum’s Q4 earnings call, COO David Gibbs said KFC will have kiosks in 5,000 restaurants by 2020. If McDonald’s kiosk rollout is any indication, this deployment should provide a bit of a sales lift for KFC. Last year, McDonald’s CEO Steve Easterbrook said average checks from kiosk orders are higher because customers tend to linger longer and select more offerings at a kiosk than in front of a worker.
Felder confirms that order anxiety is a real thing and is therefore optimistic about kiosks’ potential.
“You can take your time at a kiosk and not have to worry about five people standing behind you that may give you anxiety. For us, any small piece of friction we can take away–from the ordering stage to the collection stage–customers are rewarding us for,” he said. “The more we open up access and take friction away and make things easier and open up more options, that just gives customers more reasons to choose us.”
Beyond delivery, click-and-collect and kiosks, KFC is also working on a mobile app with a goal of providing a "unique" experience for fans. What that means, exactly, isn't clear at this point. Having a loyalty program within that app also remains an open question.
“If you don’t do loyalty well, you’re essentially just giving food away to your most loyal customers. If you do it well – if you can figure out how to make a seamless, rewarding experience and then use that customer data to better serve and re-target that customer, that’s where the magic is,” he said. “Everybody’s trying to figure out just what that looks like.”
The good news for KFC is that the company shares its headquarters with Pizza Hut, which Felder calls “one of the most evolved digital businesses in QSR.” Indeed, Pizza Hut was the first pizza chain to launch an iPhone app, which it did in 2009.
“We’re not starting from scratch, we’re learning from what Pizza Hut has learned around data science, loyalty, performance marketing and how to wrap that all within an app experience,” Felder said.
Employee-facing technologies also a priority
Felder also makes a point to note that the KFC Global team is focused on more than customer-facing platforms. With nearly 1 million team members across the system, the company is also exploring ways technology can make their lives easier. Right now, there are two employee-facing technologies that have emerged as the most promising–voice and Google Glass.
KFC is experimenting with voice automation in a handful of countries (not the U.S.) to facilitate back-of-house training. For example, if an employee needs to be reminded of a step in the cooking process, they can ask just ask Alexa instead of washing their hands, retrieving the textbook to find the answer, and then washing their hands again.
Meanwhile, KFC struck a partnership with Google last year in Ecuador that allows its teams there to be trained using Google Glass technology. The technology provides real-time audio/visual learning cues to tell an employee how to prepare a product step by step.
“We want to build on that because we’ve had much higher engagement levels from our team and they love the technology. It's super early, but I think it’s got broad implications,” Felder said. “We genuinely believe that if we can make a very demanding job easier for our team members, it’s going to translate into a better engaged employee and a much better customer experience. For us, it’s always about finding the right technology.”
