Hey, Yum! KFC Needs to Have Its Own 'Doritos Locos Taco' Moment

KFC, Kentucky Fried Chicken bucket and Drumsticks
Going over Yum Brands' (YUM) disappointing third quarter report from Tuesday night makes it clear that it's not just the chicken that's boneless at KFC.

The poultry fryer is struggling -- particularly abroad where something fowl has gone foul in China. Comparable-store sales (a measure that compares the year-over-year change at the average established store) plunged 13 percent in China during the quarter.

This is a pretty big deal. There are 4,463 KFC restaurants in the world's most populous nation, and until late last year, the Chinese couldn't get enough of the Colonel's 11 secret herbs and spices. However, with a food safety scare stemming from some of the chain's suppliers and a bird flu outbreak, KFC's sales have fallen and they can't get up.

Yum Brands figured that sales would turn positive in China by the end of this year, but now it's conceding that's not in the cards.

Flying Home

Things were only relatively better closer to home, where comps fell 4 percent at domestic KFC locations.

KFC is the worst performing chain for Yum Brands. Pizza Hut clocked in with a 1 percent slide, while Taco Bell actually posted a 2 percent gain. For all of the buzz that KFC has generated with its boneless chicken pieces -- included the clever "I ate the bones" marketing campaign that was introduced earlier this year -- the sad truth is that the average store isn't selling as much as it used to.

Something's wrong, and it's time for Yum Brands to take a page out of the playbook that helped it breathe new life into Taco Bell last year.

The leading Mexican fast food chain was meandering -- but then came the Doritos Locos Taco. Teaming up with PepsiCo's (PEP) Frito-Lay, Taco Bell took Doritos into the food lab to devise a taco shell impregnated with nacho cheese powder.

It was a huge hit. Comps soared 12 percent during the product line's first full quarter on the market. Taco Bell added Cool Ranch to its line earlier this year, and by the time that a third Fiery line of spicy shells was added, the fast food chain had served up an amazing 600 million Locos Tacos.

I Ate the Moans

Something as simple as offering a Doritos-flavored taco shell has been enough to turn Taco Bell around. The slightly upscale Cantina Bell line also helped, but clearly, Taco Bell wouldn't be doing as well as it is now if it wasn't for a single product that has evolved and expanded since being introduced 19 months ago.

So, where are KFC's Locos Tacos?

As ambitious as the boneless chicken offering has been, it hasn't helped improve sales. KFC's latest innovation are KFC Go Cups. Priced at $2.49, these essentially repackage the chain's existing seasoned wedges and fried chicken options into cups. But if offering food that conveniently fits in cup holders was the Holy Grail of drive-thru, we would all be eating doughnuts for dinner.

KFC needs something more to make the chicken chain trendy again, and there's certainly no shame in teaming up with Frito-Lay the way that Taco Bell did. After all, Frito-Lay parent PepsiCo once owned Pizza Hut, KFC, and Taco Bell. Why do you think these are three of only a handful of major chains that still serve Pepsi?

It's easy to spin the wheel and drum up combinations. Here are a few to get you started.
  • Cheetos Tenders: Ground-up Cheetos are incorporated in the breading of KFC's chicken tenders.
  • Fritos Famous Bowls: The classic mashed potatoes, chicken, and corn bowl can get spruced up with Fritos. If that doesn't move you, how about Fritos Bar-B-Q or Chili Cheese corn chips for a crunchy kick?
  • Tostitos Salsa Chicken: If KFC is looking for a Cantina Bell upgrade, serving its grilled chicken smothered in Tostitos salsa is a start.
See? I didn't even have to dig into the dozens of Lay's potato chip flavors and how they could add some zesty crunch to the Doublicious sandwich, or even work Funyuns into Chicken Littles or the classic chicken pot pie.

Taco Bell's success is something that Yum Brands should be porting over to Pizza Hut and especially KFC. It seems as if things can't get much worse, so why not take a bold bet?

KFC got rid of the bones, but now, it's time to grow a spine.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends PepsiCo. The Motley Fool owns shares of PepsiCo.

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I seldom eat KFC (which is a sin for a Louisville resident!) but last Friday I gave it a try. I bought the 10 piece bucket with 2 sides and was amazed at how small the side portions were. It was basically green beans and mashed potatoes for one person. The staff was quite friendly but I won't be going back. There are too many choices available now. For the same price as this meal we could have gotten Chinese take-out for 4, all been full and still have some left for a snack the next day. Kind of ironic isn't it; KFC sales in China are slumping and here I am in Yum's back yard preferring Chinese take-out to their product.

October 11 2013 at 10:48 AM Report abuse rate up rate down Reply


October 11 2013 at 9:29 AM Report abuse rate up rate down Reply
Ray Doc

I'll tell you what the problem is. Your prices are too damn high. If I have a need for chicken, I'll go to the competition. Your coleslaw use to be the greatest thing going for me. It's usually dry and tasteless now or drowning in whatever it's made of. No consistency anymore. It's always different. Your chicken pieces are small compared to others. Used to be my favorite. Stopped eating there altogether.

October 11 2013 at 7:08 AM Report abuse rate up rate down Reply

There is only one person on earth that can save KFC and that\'s me.
I was there in 1964 when Sanders opened his first successful KFC.
I\'ve actually eaten his special gravy he made personally plus a lot more. He was buried by the Gratiny Road Chapel same as my dad. Sanders was amazing. I kept right on experimenting and creating even more recipes. I have what Yum is looking for.

October 11 2013 at 7:04 AM Report abuse rate up rate down Reply

J Q Public still runs the show somewhat. When JQ finds out something is going on and it doesn't sound to good, JQ will find something else to replace what JQ usually did.

October 11 2013 at 5:14 AM Report abuse rate up rate down Reply

1. lower your prices. I almost took out a loan to pay for a 10 piece meal. 2. unclutter your drive thru menu. It took forever to find just plain chicken in a bucket. All the other crap made it frustrating to find. 3. hire nicer people.

October 11 2013 at 1:04 AM Report abuse rate up rate down Reply

keep doing what yer doing, screw the morons! 11 herbs and spices forever! if popeyes and churches are the alternative, I don\'t want it. a few stores with a buffet would be cool; vegetable diversity more than green beans. corn and mashed taters. add a breakfast menu to compete with chic filet and Ronald. better yet, hire me to solve your corporate kitchen inspirations! hell, even publix sells fried chicken, crush the competition and end the discussion! maybe it\'s time for a 12th herb...oh, and don\'t rely on poorly written articles to save yer future!

October 10 2013 at 11:17 PM Report abuse rate up rate down Reply

Author, don't quit your day job.

October 10 2013 at 10:55 PM Report abuse rate up rate down Reply

How about selling better tasting higher quality food?

October 10 2013 at 6:38 PM Report abuse rate up rate down Reply
Fred Mcbride

Try having a 12pc bucket of chicken to go at all times that would help sales. It doesn\'t matter what type of chicken I order I have to wait for them to cook it so I can get a bucket of one type.

October 10 2013 at 4:14 PM Report abuse rate up rate down Reply