Wednesday, October 7, 2009

Yum! steers its chains onto surprising turf

Yum! Brands has previewed some scrambles it’ll try in the next few months to juice up sales at its three major fast-food chains. But most were unrelated to the breakfast initiatives being plotted for Taco Bell and KFC.

Instead, the franchising giant is trying to remix its concepts' sales by venturing into some surprising territories. Here are some of the brand-bending undertakings Yum! described to financial analysts during a conference call on Wednesday:

--If you think Taco Bell is all about stuffing skateboarding dudes with as much bulk as they can buy for a buck, steel yourself. The chain will kick off 2010 with a national advertising for its Fresco line, a nine-item array of lower-fat and less-caloric selections.

If that's not enough of a departure from Taco Bell's traditional image, consider what looms on the horizon: "Longer term, we are most excited about breakfast," said Yum! CEO David Novak.

If the Taco Bell chihuahua hadn't passed away, he'd be letting out a Klingon death howl right about now.

--KFC--that's shorthand for Kentucky Fried Chicken, in case you're of a vintage that thinks Col. Harland Sanders was some Civil War hero--now derives 30% of its sales from Kentucky Grilled Chicken. "We have driven awareness to 75% of quick service restaurant users," said Novak, noting that the product is transforming the brand's image.

"We needed to broaden the appeal of this brand and we have done it," he said. Nevertheless, "continuing to drive trial is our top job."

--A major reason for Pizza Hut's 13% same-store sale drop in the third quarter was its image as a place for premium pizza, according to Novak. It shouldn't be a shocker, then, that the chain's new ads focus on chicken wings and a concept-within-the-concept, the bolted-on WingStreet wings brand. WingStreet is being positioned as a separate concept that piggybacks on Pizza Hut's delivery service.

Novak was far less effusive than he has been in past conference calls about Pizza Hut's new Toscani pasta line. He gave no reason why, but did note that the pizza chain has to do a better job of stressing the new diversity of its menu.

Novak noted that Yum! is in the process of choosing a new ad agency for Pizza Hut, precisely "to give the brand a fresh, more differentiated positioning." But he acknowledged that pastas already account for 10% of Pizza Hut's sales and figure into 30% of all transactions.

He also disclosed that breakfast is seen as a big international opportunity for KFC.

"When you look at KFC outside the United States, the only competitor we have is McDonald’s, so why can't we do breakfast?" he commented. "I mean, who is closer to the egg than Kentucky Fried Chicken?"

Novak also mentioned that Taco Bell is working on "a bigger beverage program," without divulging details. But the Orange County Register reported Wednesday night that at least two units in California are testing a juice bar featuring smoothies and a new frozen shake called the Frostbite.

Also available are fingerfood snacks like Mini Crispy Empanadas and Bacon Belly Bombers, along with cupcakes and cookies.

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