Dive Brief:
- Kentucky Fried Chicken is expanding its Taste of KFC Deal, a $5 value promotion it introduced in April. The chain added two meals to the deal, which runs through the end of the year.
- Customers can now get an eight-piece nuggets meal with fries and two sauces, and a Famous Bowl with nuggets, in addition to the wing-and-thigh deal included in the original version of the promotion.
- KFC U.S.’s same-store sales were anemic in Q2, despite the value deal, which was a relatively early entrant in the 2024 QSR value wars. In the quarter, KFC’s sales in the U.S. fell by 7%, with same-store sales down 5%, according to Yum Brands’ earnings release.
Dive Insight:
Digital channels have emerged as a focus for KFC U.S. this year, with the launch of a points-based reward program in February, almost four years after Taco Bell, also owned by Yum, launched a similar program. The new exclusives could help drive traffic to the chain’s digital channels.
Yum’s other major brands have also launched aggressive discounting schemes in the U.S., with Pizza Hut offering the $7 Deal Lover’s Menu, and Taco Bell offering a permanent value menu and its $7 Luxe Cravings boxes. Overall, QSRs have resorted to value deals, LTOs, and discounting to drive traffic this year, especially in Q2 and into Q3, as traffic has fallen after years of rising menu prices.
In addition to the two new value meals, KFC is offering four digital exclusive deals: A $19.99, 40-piece Saucy Nuggets pack; a $15 nuggets-and-sandwich combo that includes two chicken sandwiches, 10-piece nuggets, two sides and two medium drinks; a $15 five-piece chicken meal with two sides, two biscuits and two medium drinks; and 50% off chicken sandwiches ordered on the app or on the brand’s website.
The expanded Taste of KFC Deal and the new digital exclusives could help KFC drive traffic, especially if the discounting is significant enough to shift consumer perceptions of value.
Measuring KFC's discounting
The original Taste of KFC Deal represented a roughly 29% discount when compared to the same food items as a combo, based on pickup prices at a Maryland KFC.
An eight-piece nuggets combo on the KFC website costs $9.59, but includes a biscuit and beverage, neither of which are included in the Taste of KFC Nuggets deal. Subtracting the cost of a biscuit, ($0.99) and a drink ($2.99) means a customer buying a combo is paying $5.61 for the nuggets, fries and sauce. The $5 deal, then, offers a roughly 11% discount on the nuggets and fries.
The $5 Famous Bowl is in line with previous promotional prices for the item, which cost $5 in late 2022.
The discount rate for the 40-piece nuggets pack is harder to calculate accurately, because the chain does not sell a 40-piece nuggets option outside the value deal. The best point of comparison is KFC’s 36-piece plain nuggets order, priced at $22.99. The 40-piece pack, which can come in saucy or plain, is priced at $19.99. The standard menu item costs $0.64 per nugget, while the digital discount costs $0.50, about a 21% per nugget discount.
