Convenience is more important that improving quality at Pizza Hut, Taco Bell, and KFC.
“Easy trumps better,” Yum Brands CEO Greg Creed said an earnings call for the fast-food parent company on Wednesday.
The belief that customers care about convenience more than food quality is guiding Taco Bell’s future, as well as Pizza Hut’s comeback efforts.
Taco Bell’s sales have skyrocketed in recent years. However, in the most recent quarter, business slowed (in part due to the late-in-the-quarter introduction of the Quesalupa), with US same-store sales increasing by 1% in the first quarter, compared to 6% last year.
Instead of attempting to battle fast-casual chains like Chipotle with higher-quality and more expensive offerings, Taco Bell is doubling down on making food easier to purchase, with a focus on delivery and digital innovation.
“We’ve got to find ways to make it easier for customers to get to our brands,” said Creed. “We do that two ways: we build more units, but we also look at delivery as a way to get our food to customers in their homes.”
Taco Bell has expanded delivery to about 500 locations in the US, through a partnership with DoorDash. According to the company, delivery has been customers’ No. 1 demand for the chain.
Taco Bell is also majorly invested in boosting digital orders. In 2015, Taco Bell launched online ordering and payment. It has one of the most convenient mobile apps in the business, with 30% higher average order values on mobile compared to in-store purchases. The chain is even testing a “TacoBot” that allowed customers to order on workplace messaging service Slack.
Pizza Hut has been even more strongly guided by the “easy trumps better” philosophy, with the brand’s team coming up with the concept. The lightening bolt of inspiration came last year when Pizza Hut executives realised the chain had focused too much on making pizza that customers enjoyed, instead of cutting delivery time, reports the Associated Press.
So far, the idea of “easy trumps better” has helped reinvigorate the brand. Pizza Hut reported a 5% same-store sales growth in the US, outpacing both KFC and Taco Bell.
Pizza Hut’s conception of “easy” is similar to that of Taco Bell, with a focus on delivery and digital innovation. Today, 46% of delivery carry-out orders at the chain come from digital channels. While that’s a huge percentage, it lags behind rivals Papa John’s and Domino’s, both of whom report that more than half of sales are from digital — something Pizza Hut needs to fix if it wants to catch up.
Of the Yum sister brands, KFC seems like the odd chain out the issue of the supremacy of convenience, especially with recent marketing campaigns focused on authenticity and quality.
The chain, which grew same-store sales 1% in the first quarter, launched a “Re-Colonelization” process earlier in April. Through Re-Colonelization, KFC is publicly recommitting to quality, with employee retraining and a new satisfaction guarantee.
That’s certainly an emphasis on “better” trumping “easy.” It’s a prioritisation that has yet to show major positive results for the chain — though it has prompted some buzz about KFC.
“It’s the brand that’s now being talked about,” said Creed. “I think for a long time it wasn’t on anyone’s radar screen.”
Convenience is certainly key for fast-food chains. On the other hand, as KFC’s new campaign demonstrates, there is something to be said for making foods “better” — at least in customers’ eyes.
Ultimately, the one thing that drove sales and made it easier for customer to eat at KFC, Taco Bell, and Pizza Hut in the most recent quarter was an emphasis on value across the chains. The return of the $5 boxes boosted sales at KFC, the new $1 breakfast menu increased transactions by 8% at Taco Bell, and the $5 flavour menu was identified as helping growth traffic at Pizza Hut.
It’s key for chains to make it easy for customers to order fast-food — but even more important to make it an easy financial decision to do so. As for high-quality food, it seems like many customers can take it or leave it in 2016.
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