Fried chicken is good for you! At least, that's what
is saying in new advertisements for its increasingly troubled KFC chain.
This week, Yum! is introducing national ads claiming KFC chicken is healthier than
hamburgers. The television spots will highlight that a KFC original chicken breast has 19 grams of fat and 380 calories, compared with a Whopper, which has 43 grams of fat and 710 calories.
"We want to set the record straight. Consumers should no longer feel guilty about eating fried chicken," said Scott Bergen, executive vice president at KFC, in a press release. "Consumers will be surprised to learn they can enjoy fried chicken as part of a healthy, balanced diet."
The campaign follows a series of, so far, successful health initiatives at other fast-food chains, including Yum!-owned Pizza Hut and Taco Bell, as well as
But experts say fried chicken is an entirely different animal. "This is a very tough sell," said Howard Penney, an analyst at SunTrust Robinson Humphrey. (SunTrust has a banking relationship with Yum!.)
According to Penney and others, it may be more difficult to convince consumers that a big piece of crispy-skinned fried chicken is healthy, despite the new ads' comparisons to the Whopper.
This could be sour news for Yum!, whose stock is up 40% this year and outperforming peers McDonald's and Wendy's. The company is already coming out of a difficult third quarter, during which the restaurant operator replaced the head of operations at KFC.
Although earnings topped expectations in the third quarter, sales were flat and restaurant margins shrunk. In the fourth quarter, management has said that margins will erode again, as food costs are expected to increase and KFC sales are forecast to decrease.
Same-store sales at KFC have been down in 14 of the last 16 reporting periods. Even though the chain accounts for only 15% of Yum!'s overall operating profit, it has been a drag on results.
"The big challenge is making fried chicken and fried products more relevant today," said Yum!'s CEO, David Novak, on a post-earnings conference call earlier in October.
Yum! is relying on its new ads to recoup sales. But if the message doesn't translate, the unit's turnaround -- which the company estimates to have made "significant" progress by summer 2004 -- could be in jeopardy. Already, there is some concern that KFC will not be able to meet that deadline.
"Management expects a turnaround at KFC to take about six to nine months. We believe it could take a bit longer, given the challenges in changing consumer perceptions in a brand with low frequency rates," said Larry Miller, an analyst at Prudential, in a research note Wednesday.
KFC is also expected to introduce new low-fat items on its menu, including roasted chicken filet strips and a salad product, as it tries to drum up sales at the chain. But some doubt that KFC's existing clientele will be interested in the lighter fare.
"Loyal KFC customers want what they have been getting for years," said Penney. "What they are trying to do is lure in new customers. That is difficult and very costly."
Meantime, others are getting in on the act. "With beef prices a big concern for the industry, everybody is focusing on chicken right now," said Penney. "There is a lot of competition out there."