KFC Grilled: Plenty of Sizzle – But Not Enough Sales?

The introduction of grilled chicken was an unprecedented sensation for fast-feeder KFC last year. Remember the coupon giveaway by Oprah and how restaurants across the U.S. simply couldn’t keep up with resulting demand for the new product?

Well, a year later, the purported genius behind KFC’s management of its new sub-brand — which was to be the key to the chain’s turnaround — is up for debate.

Is Kentucky Grilled Chicken the company’s “nonfried salvation,” as purported this week in a story by QSR magazine? Or, as Ad Age puts it, has grilled chicken “failed in its primary objective: staving off additional share loss?”

As it turns out: Both.

No doubt the grilled chicken lined, supported by traditional advertising, social media and a "Chicken Dance" advergame, has created a lot of new buzz around KFC and helped establish a new product platform for a chain in desperate need of avenues for future growth.

After “15 years of misfiring” with other non-fried options, as QSR points out, KFC Grilled Chicken was projected to earn $1 billion in sales in its first year on the market, the company said.

While franchise owners were less than thrilled with the brand extension into grilled chicken, KFC's R&D folks are excited about the potential for adding flavor variations and other innovations on the grilled platform. Among the first of such products was Fiery Grilled Wings, a hot-wing version of Grilled that KFC introduced in January.

Nevertheless, KFC already has seen its market share fall back barely a year after the introduction of its grilled sensation — and despite recent marketing stunts such as launching the 500-calorie Double Down sandwich, which replaced bread buns with chicken breasts. (One ad, created by KFC Australia, ruffled feathers when shared on YouTube beyond Australia).

According to restaurant consultant Technomic, KFC’s share of the fast-food chicken market has tumbled six full points since 2005, down to 30% at the end of last year — even accounting for the sensation created by the introduction of grilled chicken. Sales for KFC fell by 4% for 2009 as a whole.

Meanwhile, the fast-food chicken category as a whole has continued to grow, from $14.5 billion to $16.1 billion, according to Technomic. A bit like a tortoise to KFC’s hare, the brand that has continued to win customers and market share all along is Chick-fil-A.

KFC is regrouping yet again and promises not only more product innovations but improved operations. But in the case of the chicken market, the bird may already have left the coop. And it’s called Chick-fil-A.