Inflation pressures KFC to put chicken feet on menu in China

For years, KFC customers in China have wondered why the chain didn’t sell chicken feet, which are a delicacy in the country.

Now, “I can inform you that for this year, for 2022, we are finally selling chicken feet,” Yum China CEO Joey Wat told CNN Business in an interview on Monday (1st).

The reason for the change is that customers may not have expected it: high oil prices.

Wat said the addition is part of a wider effort by the chain to increase efficiency and use more ingredients, which has also seen KFC introduce offerings like chicken wing tips to its menu.

Rising oil and food prices have significantly increased costs for businesses.

“We’ve tried to absorb this increase in commodity prices, with… full utilization of chicken,” Wat said, laughing. That means using every part of the chicken, “except the feather, I think”.

Yum China is emerging from what Wat calls its toughest quarter ever.

The Shanghai-based company owns KFC, Pizza Hut and Taco Bell chains in China, where recent Covid-19 lockdowns have affected hundreds of millions, keeping many at home for weeks on end.

From April to June, Yum China said that sales at locations open for at least a year were down 16% compared to the same period a year ago.

This could have been worse. While “the second quarter has been the most challenging to date,” says Wat, the drop in foot traffic was offset by higher demand for deliveries, which increased about 8% for KFC and Pizza Hut year-over-year.

Still, the company had to adjust. During the second quarter, the company pulled back on marketing and advertising, asked landlords for a discount on rent, and asked restaurants to make the most of what they had.

Despite headwinds, Wat has vowed to avoid layoffs this year.

“We will look at all cost reduction opportunities, except layoffs,” she said. “We have 450,000 employees and 450,000 families to care for.”

Wat said she was determined to maintain a “safety net” for her staff, adding that the company was not blocking store openings either.

Earlier this year, Yum China set a goal of opening 1,000 to 1,200 new stores by 2022 and remains committed to that plan, she said.

Unlike other restaurant chains, the company also avoided raising meal prices. Instead, he decided to go the other direction: trying to hook more customers with better deals.

Pizza Hut, for example, recently brought back the buffet, as well as a promotion that offers discounts for larger purchases.

“The value for money resonates well with customers in the current circumstances,” Wat told analysts on Friday.