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KFC looks to take on Popeyes in the chicken sandwich wars

KFC U.S. President & Pizza Hut Interim U.S. President Kevin Hochman joins Yahoo Finance’s Heidi Chung and Zack Guzman to discuss the fast food chain's uptick in sales amid the coronavirus pandemic.

Video Transcript

ZACK GUZMAN: If you thought chicken-sandwich wars was a story reserved for 2019, think again. We're getting a new update in the battle carrying over here in 2020 as Yum! Brands' KFC is launching their new chicken sandwich. Announced that it's being tested right now in Orlando beginning today.

And for more on that, I want to bring on the US President of KFC as well as Pizza Hut interim US President Kevin Hochman joins us now alongside Yahoo Finance's Heidi Chung. And, Kevin, I guess for starters, so obviously it's been a hot space right now. We've talked about the chicken-sandwich wars for quite some time. Sales for you guys not necessarily pacing what we've seen from Popeye's. Popeye's is the big dog when we think about the chicken sandwich. So what's new about this? Why the push now, and how are you going to be stacking up to the competition?

KEVIN HOCHMAN: Yeah, well, first of all, thank you for having me on your show. I also need to thank our 80,000-plus employees and our 300 franchise operators, you know, for staying open during this really tough time. 99% of our KFCs have been open all throughout the pandemic, having, you know, pretty good progress on sales too. So I want to thank them.

As far as the sandwich, you know, it's about time. So competition has set a high bar. You know, we're on our seventh year right now of same-store sales growth and the turnaround in the US business. We've had to ask a lot of tough questions about what we've done well and what we haven't done so well, and obviously the sandwich that we put out there wasn't as competitive as it needed to be.

We spent the last nine months retooling. We think we have a great sandwich. We weren't ready to go to test until we knew we had some test market-- or I'm sorry, some research wins that we think we could do better than the competitors, and so now we're ready to surface.

HEIDI CHUNG: Hey, Kevin, it's Heidi here. So let's talk a little bit more about this KFC chicken-sandwich revamp because Popeye's had previously told me last year that their innovation process took two years. So I'm trying to get a sense here on how long this process took for you guys. What kind of details? What's KFC focusing on here?

KEVIN HOCHMAN: Yeah, well, the way to think about it is we've got to simply make every element of the sandwich better, and then they have to all work together better, right? So it starts with the filet. We've got a 20% bigger filet. You'd say, well, why can't you do that so quickly? That's a tough process. You know, we have, you know, over 10 chicken processors that we've got to figure out how to cut the filet just exactly so that it's consistent for the guest and that it comes out crunchy and delicious every time.

We tested over 10 different pickles to get to the right pickle, which is a more artisanal pickle. It's about 10x more expensive than our old pickle because we're going gourmet with it, right? And then we obviously have a much better bun than in the past, and that requires a lot of work too working with bakeries trying to figure out just the right amount of butter and brioche and the things that you need to do to create an unmistakably great sandwich.

So, you know, it seems really simple, making a chicken sandwich. But in honest, to make millions of them and to do it consistently every time in 4,000 stores with hand breading happening in the back of every restaurant, that's a tough-- that's a tough challenge, and it's going to take a little bit of time to get there.

HEIDI CHUNG: Kevin, can you tell us a little bit about why the test market is Orlando and, I guess more importantly, why you're testing in the middle of a global pandemic? Why not wait a little bit here before you really start to test brand-new things like this?

KEVIN HOCHMAN: Yeah, it's a great point. And I will say, like, our comfort foods and our buckets of chicken are flying off the shelves right now. We've had some really good success with, even though people are shelter in place and they're not [INAUDIBLE], you know, eating during the day, we've seen a really big pickup in, you know some of our buckets business. So why would you, you know, potentially test new things in this pandemic?

And the first thing is-- and I think one of your earlier guests talked about it-- is people aren't going to stay sheltered at home forever, and they're going to need to be able to eat on the go, and those eating occasions are going to come back. And we can either wait until all those people are back out, or we can be on the front end of making sure that we have amazing food ready to go when they're ready to come out and come back to our restaurants.

And so we chose Orlando simply because we have a lot of stores that we own there. We can go a whole lot faster. You know, in a pandemic where everything's done virtually, it's much harder to train and bring our franchisee partners along when you've got to do that virtually. When you're able to do it with your own employees like we can with the stores in Orlando is one of the main reasons why we chose that market. And we feel really good about testing there, and that will be the true test of whether we're going to go national with this.

HEIDI CHUNG: Kevin, while we have you here, I need to ask you very quickly, you are the interim US president of Pizza Hut. And that being said, Pizza Hut has had some challenges over the recent years. I just am curious to know what your strategy is for the chain going forward. What's the-- what's the thought process behind that?

KEVIN HOCHMAN: Yeah, you know, it's pretty simple. We want to get back to being America's favorite pizza, which means both having the best-tasting pizza in the industry as well as-- as well as delivering it in really a frictionless digital manner, and we're well on our way on that. We've made some tremendous progress even over the last 10 weeks during the pandemic. I'm sure you guys have reported about, you know, pizza having its heyday in the pandemic.

And I feel like we're making some big, big progress on both the taste of our pizza, both on growth as well as the reputation scores of Pizza Hut. And I think before we know it, Pizza Hut is going to be back, and I couldn't be more bullish about that brand.

ZACK GUZMAN: Well, Kevin, last time you came on, we were able to chat over a bucket of chicken. I look forward to the days that we can return to that. Hopefully the next time we chat with you we'll be there, but appreciate it. Kevin Hochman, US president of KFC and the interim president of Pizza Hit. Thanks again for taking the time.

KEVIN HOCHMAN: Thanks for having me.

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