Is KFC on the Brink of Going Out of Business?

10 Red Flags Suggesting KFC’s Days Could Be Numbered

An exterior of a KFC restaurant at night | ©Image Credit: KFC
An exterior of a KFC restaurant at night | ©Image Credit: KFC

Colonel Sanders’ smiling face has been a beacon of fried chicken goodness for decades, but is KFC’s reign supreme coming to an end? Recent years have seen the fast-food giant grapple with a number of challenges. From shifting consumer preferences towards healthier options to internal struggles, whispers of KFC’s potential demise have begun to circulate. While the fast-food chain remains operational with at least 25,000 locations around the world, here are 10 signs that KFC could be on the decline.

1. Recent Localized Closures

While KFC has continued to expand its global footprint, recent years have seen a concerning trend: localized closures. Despite an increase of 2,140 restaurants worldwide in 2023 alone, individual franchisees have faced challenges leading to store shutdowns in various regions.

In the United States, franchisee EYM Chicken closed approximately 25 KFC locations in Illinois, Indiana, and Wisconsin in August 2024. This resulted in significant job losses, particularly in Wisconsin, where nearly 100 employees were affected. Similar incidents have occurred in Louisiana, California, and New Jersey, where stores have closed abruptly, often leaving employees uninformed.

Beyond the U.S., the U.K. has also witnessed KFC closures. In June 2024, 13 KFC stores owned by a single franchisee were shuttered.

These localized closures, while not indicative of a widespread decline, highlight the challenges faced by individual franchisees and the competitive nature of the fast-food industry.

2. Domestic Sales Slump

Despite its global expansion, KFC has experienced a decline in sales within the United States. In the second quarter of 2024, KFC’s U.S. restaurants saw its same-store sales shrinking 5%, while the chicken chain’s overall international same-store sales fell 3%.

While KFC has demonstrated strong growth in other regions, particularly China, the brand faces the urgent need to revitalize its U.S. operations. David Gibbs, CEO of Yum Brands, KFC’s parent company, emphasized the importance of replicating successful strategies from international markets to reconnect with American consumers. However, the question remains whether these efforts will be sufficient to reverse the current sales slump and restore KFC’s domestic dominance.

3. Crowded Coop

The fast-food landscape has undergone a significant transformation since Colonel Sanders first began serving fried chicken in 1930. Today, KFC finds itself competing in a much more crowded market, filled with restaurants offering a wider variety of chicken options that resonate with contemporary tastes.

Chick-fil-A, despite closing Sundays, dethroned KFC as the top U.S. chicken chain by sales in 2014. While KFC held onto second place for a while, Popeyes, riding the wave of its viral chicken sandwich launch in 2019, overtook them in 2023. This “chicken sandwich war” further highlighted KFC’s struggles against its innovative competitors, according to Restaurant Business Online.

KFC’s market share also took a significant dip, dropping from 16.1% to 11.3% in 2023, according to CNBC. While a turnaround is possible, KFC faces a relentless increase in competition. Chains like Raising Cane’s and Wingstop are all vying for a larger piece of the market, potentially threatening KFC’s current position as the third-biggest chicken chain in the U.S.

4. Shrinkflation Accusations

KFC has faced accusations of shrinkflation, a practice where businesses reduce product size or quantity while maintaining the same price. Customers have noticed smaller portions in various menu items, including fries, chicken tenders, and wings.

Social media platforms have been filled with images comparing KFC’s current offerings to everyday objects, highlighting the perceived reduction in size. Some customers have attributed this to a change in suppliers in 2016, while others claim that each chicken is now divided into 12 pieces instead of the previous nine.

These allegations have sparked widespread dissatisfaction among KFC patrons, who have expressed their frustration through online reviews and social media posts.

5. Questionable Food Quality

Despite its legendary secret recipe, KFC has faced increasing criticism regarding its food quality. Many customers have reported a noticeable decline in the taste and flavor of KFC’s chicken in recent years.

Online forums have been flooded with complaints about the restaurant’s food. Former KFC regulars have shared their disappointment, citing a decline in taste, flavor, and overall quality. Some have even attributed this to the use of cheaper ingredients.

These criticisms raise questions about KFC’s ability to maintain the high standards associated with its iconic brand. As customers continue to seek out alternatives, KFC may need to re-evaluate its recipe and operations to regain their trust.

6. Rising Prices

KFC has faced backlash from customers over its increasing prices in recent years. Many have taken to social media to express their frustration, citing exorbitant costs for meals that do not align with the perceived quality.

Multiple Reddit users have shared their experiences of paying high prices for KFC, with some reporting that a family meal can cost as much as $30. This has contributed to a decline in customer patronage, as evidenced by the closure of KFC restaurants in certain areas and the growing popularity of competitors like Chick-fil-A.

KFC’s rising prices have been attributed to narrower profit margins, partially due to the increased cost of chicken since the COVID-19 pandemic. However, this explanation has not been well-received by customers who are already facing rising living costs.

While other fast-food chains have also experienced sales declines due to higher prices, KFC’s pricing strategy has further alienated its customers, making it a less attractive option for many.

7. Service Complaints and Employee Discontent

KFC has been plagued by complaints regarding poor customer service and employee dissatisfaction. Customers have reported slow service, inaccurate orders, and a general lack of attention from staff.

Many of these issues have been attributed to KFC’s alleged underpayment of employees. Former and current workers have shared their experiences of long hours, overtime requirements, and inadequate wages. In some cases, employees have even walked out or filed lawsuits against KFC franchisees due to unfair labor practices.

These labor disputes and service complaints have negatively impacted KFC’s reputation and contributed to a decline in customer satisfaction.

8. Multiple Boycotts

Boycotts have become a powerful tool in the fast-food industry, with recent examples targeting McDonald’s and KFC. In 2024, McDonald’s faced calls for boycotts across the Middle East due to a franchise owner’s actions during the Israel-Palestine conflict. KFC, too, has been affected by boycott campaigns, particularly in Malaysia and China.

In Malaysia, KFC temporarily closed over 100 restaurants in May 2024, citing “challenging economic conditions.” While the Boycott Divestment Sanctions Malaysia group clarified that KFC was not on their boycott list, the perception of KFC’s association with Israel led to widespread calls for a boycott.

In China, KFC faced criticism for promoting excessive consumption through a toy giveaway campaign. The China Consumers Association urged customers to boycott the restaurant, contributing to a decline in KFC’s popularity in the country.

These incidents highlight the significant impact that boycotts can have on the fast-food industry, demonstrating the power of consumer activism in influencing corporate behavior.

9. Racially Tone-Deaf Ad

KFC, known for its unconventional marketing tactics, faced criticism in 2023 for a racially insensitive ad campaign in Canada. While the commercial featured real people enjoying fried chicken with their hands, the accompanying billboards exclusively featured Black individuals, perpetuating harmful stereotypes.

Critics argued that the ad’s focus on Black people eating fried chicken was racially insensitive and offensive. Tyra Jones-Hurst, a marketing expert, told Campaign Asia that the billboards “dampened” the campaign’s intended message and reinforced negative stereotypes about the Black community.

10. Failed AI Campaign

KFC’s April 2024 marketing campaign, which utilized artificial intelligence, sparked significant controversy. The campaign, designed to promote new saucy nuggets, played on AI’s well-known limitations in generating accurate human hands.

While intended to be humorous, the campaign faced widespread criticism on social media. Many users expressed concerns about the use of AI, arguing that it could displace human artists and designers. The campaign’s overall reception was negative, with limited participation from KFC’s target audience.

Sources: Mashed,  Economic Times, Restaurant Business Online, Campaign Asia
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