Restaurant chains are collapsing to open more suburban locations.
KFC, on the other hand, goes the other way by targeting hundreds of locations in urban areas.
Granted, the Louisville, Ky. Based chicken chain is opening up many suburban locations with one or two drive-thru lanes. But the chain is also taking a critical look at urban areas where its restaurants are under-penetrated, especially after more than a decade of store closures.
The company opened the first of its online urban design sites in New York in late 2019. It has six more restaurants planned in various markets and with various franchisees this year and six more for 2022. Ultimately, the director said. of Development Brian Cahoe, the goal is to develop “hundreds” of locations in these types of markets.
“We’re not as penetrated into the urban core of the United States as we are into the suburbs of the United States,” Cahoe said in an interview. “The trail is even bigger there with the asset class.”
KFC operates just under 4,000 locations in the United States and has been declining significantly for some time. Still, he has increased his growth and is hoping that new menu items and the sales force can help him achieve it. The company expects it can add 1,000 locations and revert to 5,000 American restaurants.
The chain’s system sales rose 4.3% last year despite closings. The chain is even more dynamic since the introduction of its new chicken sandwich: same-store sales over two years increased 19% in the second quarter.
This has KFC on a positive trajectory. The chain opened 19 new restaurants in the second quarter and since the start of the year it has added a network of three locations, allowing it to increase the number of units for the first time since 2004.
Executives believe the new sandwich could provide a “platform” for further innovation. But for someone like Cahoe, it gives the brand access to new types of customers and new markets that could make unit growth more accessible in the years to come.
Rather than just focusing on customers who want a bucket of chicken for dinner, it can now target customers looking for a lunch sandwich.
“We think we’re in an even better position from a menu standpoint,” Cahoe said, noting that the sandwich and fries combo works well in an “urban take-out environment.”
KFC is considering larger metropolitan areas like Los Angeles, Chicago and New York, but is also working on projects in smaller cities like St. Louis. “There is also a role for lower level cities where in many cases we have no presence and the consumer is underserved,” he said.
Online locations will generally be geared towards a more digital customer – urban stores have four times the digital mix as drive-thru locations. The chain is working to integrate digital orders throughout the restaurant and is testing menu boards and digital kiosks inside.
The layout is also designed so that delivery people can pick up their order more quickly.
From a design perspective, the locations will be somewhat unique, often adding design elements that reflect their surroundings. For example, the location in New York’s Chinatown features Mandarin script and artwork that you typically don’t see in a suburban KFC.
It is important to note that the development of drive-thru suburbs remains the bread and butter of KFC and will be the main driver of growth. Yet urban markets remain an untapped resource, a resource the chain hopes to tap more frequently in the years to come.
“Our bread and butter in the short term will be self-driving development,” Cahoe said. “But this development channel can play a more significant role in our growth.”