KFC and Taco Bell Amp Up Efforts to Captivate Gen Z

Yum Brands is keenly focused on winning over the Gen Z cohort, as declared by CEO David Gibbs in his concluding shareholder update on Tuesday.

Gibbs, who is set to be succeeded by CFO Chris Turner in October, updated investors in the company's Q2 earnings discussion. He shared that the company is implementing an effective innovative approach, honing in on popular drink and sauce themes to cater to younger demographics.

Yum Brands—a parent company encompassing Taco Bell, KFC, Pizza Hut, and The Habit Burger Grill made public its quarterly financial performance before trading hours. The firm reported an adjusted earnings per share of $1.44 and revenue amounting to $1.93 billion, just short of Wall Street projections.

Taco Bell's Live Más Café, emphasizing the personalization of beverages, is scaling up this year. Also expanding are the Saucy chicken strip and sauce scheme at KFC, accompanied by the Kwench line of beverages. These tailored offerings are appealing to Gen Z, markedly boosting sales figures, according to the company's financial call.

In March, Taco Bell declared a plan to roll out twice the number of new menu options in 2025 compared to 2024, primarily spotlighting short-term promotions intended to spark customer interest. Since the December inauguration of Live Más Café, these introductions have been quite advantageous for the corporation.

Driven by Gen Z's craving for crafted, customizable drinks, the café presents an assortment of over 30 unique beverages, ranging from Churro Chillers and special coffees to Refrescas and Dirty Mountain Dew Baja Blast Dream sodas," Gibbs informed investors, noting an impressive rise in sales at the trial site, as more patrons engage and opt to eat in.

Information from location analytics and foot traffic software developer Placer.ai highlighted that Taco Bell was instrumental in carrying Yum Brands' US customer foot traffic in Q2. The introduction of cost-effective menu selections resulted in Taco Bell's visits increasing by 2.6% year-over-year, with per-location visits edging up by 1.5%, as per the firm's analysis.

Last month, Yum Brands disclosed plans to disseminate its Live Más Café concept into 30 existing Taco Bell sites across Southern California and Texas by the year's conclusion.

Exploring Further Opportunities

"Taco Bell is pioneering the beverage entry points for Yum!, and we foresee similar potential for KFC," Gibbs stated. "KFC is introducing its own initiative, Kwench, which is currently under testing. The impact on the enterprise could be substantial, and I am thrilled about it."

The Kwench range from KFC, incorporating refreshers, shakes, and cold coffees, is being trialed at select outlets, mainly in Australia and the UK. Gibbs refrained from discussing potential testing in the US market for these new beverages.

While domestic numbers were less robust, KFC's global operations in regions like South Africa, Spain, Canada, and Japan buoyed the company's sales performance in Q2.

Reports from Business Insider previously conveyed that the inaugural week of KFC's "Kentucky Fried Comeback" initiative in the US witnessed a remarkable surge in enrollments for KFC Rewards, unprecedented digital engagement for the brand, as well as a notable rise in foot traffic relative to the previous week, hinting at potential early success.

Seeking to capture younger patrons in the US, KFC plans to persist with its new Saucy food outlet model, centering on bespoke chicken tenders and multiple dipping sauces. Gibbs shared intentions to introduce "several more experimental units" by year-end near the original Saucy venue in Orlando, established in December.

"Weekly sales have notably outpaced our prior KFC locations since launch, and we've managed to engage a youthful audience as around a third of Saucy consumers are below 30," Gibbs mentioned in Tuesday's update. "We have substantial learning ahead, and we're eager to utilize the invaluable customer insights pertinent to our larger KFC US network."