KFC Reaches Digital Holdouts With Conversational Commerce

Yum Brands is bringing in-store customers into the digital fold with increasingly frictionless ordering options.

The quick-service restaurant (QSR) giant, parent of KFC, Pizza Hut, Taco Bell and The Habit Burger Grill, shared on a call with analysts Wednesday (Feb. 8) discussing the company’s fourth-quarter 2022 financial results that its Tictuk conversational commerce platform is expanding the company’s digital customer base.

“We processed millions of digital orders in 2022 with Tictuk continuing to prove it can bring in incremental customers and drive digital sales,” Yum Brands Chief Financial Officer Chris Turner said on the call. “This is evidenced by the chat ordering launch in KFC Mexico were more than 90% of users who transacted on the chat channel had previously not placed a digital order on other channels.”

He noted that, by the end of the year, the technology was live in more than 3,200 stores across 49 markets, and the company plans to add Tictuk ordering features to 1,000 more stores throughout this year. In addition to Tictuk’s chat capabilities, the company also began adding its white-label eCommerce platform in a couple of areas in the last few months of 2022. These moves follow on the heels of Yum Brands’ acquisition of the company back in March 2021.

These kinds of moves can help broaden restaurants’ digital customer bases from a small fraction to a sizable share. Research from this month’s edition of PYMNTS’ Restaurant Digital Divide report, “The 2022 Restaurant Digital Divide: Restaurant Apps and Websites in the Spotlight,” which drew from a survey of nearly 2,000 U.S. consumers, found that just 16% of consumers primarily order food via restaurants’ direct digital ordering channels. Yum Brands did not disclose its digital sales mix.

Expanding the eCommerce audience can be essential, as online transactions enable restaurant brands to gather valuable customer data, in turn making it possible to personalize the omnichannel experience and get more targeted with marketing. Fast-casual giant Chipotle Mexican Grill, for one, shared on an earnings call with analysts Tuesday (Feb. 7) how these kinds of personalization capabilities have been key to combatting inflationary trade-down.

Indeed, Yum Brands has been seeing the effects of inflation-related changes to consumers’ restaurant spending, but the company maintained that this has yielded positive effects for its brands.

“We are seeing some increase in [our] higher-income customers coming more frequently, and some of that, no doubt due to trade-down into our brands,” Turner said. “On the lower end, we’re not seeing the low-income consumer drop out of our business. What we’re seeing is probably a little bit more focused on value. And that’s been a trend that’s been continuing throughout 2022 and to 2023.”

Indeed, research from the December edition of PYMNTS’ Restaurant Digital Divide study, “The 2022 Restaurant Digital Divide: Restaurant Customers React to Rising Costs, Declining Service,” which drew from a survey of more than 2,300 consumers, found that across generations, the vast majority of consumers have made adjustments to their restaurant spending in response to rising prices.

Eighty-eight percent of millennials and Generation Z consumers, 87% of bridge millennials and 85% of Generation X consumers reported making such changes.

However, in contrast with Turner’s assertion, the study found that more common than trading down to lower-priced restaurant brands or menu items is cutting back on the overall frequency of restaurant purchases.