KFC’s roadmap to digital transformation

“We believe we are one of the most iconic, relevant and distinctive brands in the world.” A lot of marketers make claims like that, but when KFC’s global chief digital officer Ryan Ostrom does it, he can back it up.

KFC has more than 22,000 stores in almost 140 countries, selling $26 billion in fried chicken and side dishes every year. It’s a powerhouse global brand, and it’s not slowing down. “We basically open a restaurant every six hours; we are the fastest growing retailer in the world,” said Ostrom.

Aside from its sheer ubiquity, KFC also boasts instantly recognizable brand elements such as its famous bucket and the even more famous Colonel Sanders. But as strong as the brand is, in recent years KFC has made a concerted effort to reinvent itself for the digital age, to stay current with culture shaped almost entirely by the internet: there is a CGI sexy influencer Colonel Sanders (that’s him up top) and, naturally, KFC has dabbled in ASMR.

Ryan Ostrom, KFC’s chief digital officer.

But Ostrom was at the Collision conference in Toronto this week not to talk about advertising and marketing, but about how KFC is using technology to transform the business at a more fundamental level—by reinventing the customer experience.

While other categories have been talking about this for a while, the restaurant industry has been slower to make those kinds of changes, he said. “The QSR business is ripe for transformation, and we’re hoping to lead that.”

Ostrom talked about larger consumer and business trends, and how KFC is adopting technology to transform both operations and the customer experience. The colonel isn’t going anywhere, but widespread adoption of technology and the application of data is being used to provide deeper and better consumer connections and, most importantly, make it easier for customers to shop at KFC. “How do we make the brand more easy?” he said. This was the first of the key points of focus underlying KFC’s digital transformation efforts.

The focus on ease: Interest in convenience and an easier customer experience is not unique to KFC—it is a larger trend across all retail, with Amazon leading the way. Its fully automated Amazon Go stores have set a new benchmark in customer ease, he said. KFC has similarly been rethinking every customer touchpoint to become a truly omnichannel brand, he said.

KFC has spent approximately four years building the “foundations for transformation” around a few key enhancements to its experience: click and collect (or order online and pickup in store), better kiosks and delivery. These aren’t innovations, but the scope of the KFC commitment is striking.

“Because of our sheer size, we will have more kiosks than terminals at Bank of America. We will be the largest delivery player—greater than any pizza company in the world—and we will have more click-and-collect points than Walmart, Kroger, Target and Costco combined,” said Ostrom. “It is going to make us one of the largest omnichannel brands in the world.”

‘Owning the point of hunger’: KFC has been exploring ways to use technology and data to connect with people when they are deciding what to eat. “A little fact: 57% of people choose where they are going to eat within one hour [of eating],” said Ostrom. “How do we get in front of those customers to make sure they choose KFC.” That means geo-fencing stores for up to half a mile to deliver the right message when a potential customer is nearby and deciding what to have for lunch.

The power of data: Traditionally QSRs did not operate using a lot of data, he said. But you don’t need a lot of data to optimize your media spend. “In some markets we only have 3% of known customer transactions,” he said. “We can take that and say, ‘What do our best customers buy? What do new customers buy? And how do we understand what is the right message, to the right person, at the right time. So we are able to impact our entire media buy to make it more efficient and drive ROI.”

The power of first-party data: “The QSR space is all about how do we use data to be more personalized,” he said. KFC is introducing loyalty programs so that it can deliver more personalization, and the next steps will be about store data generated from sensors and IoT technologies. “We need to figure out how to start putting the data together. It is one thing to collect data it is another thing to say how do you use it real time to make business decisions.”

Restaurant technology: Remember not long ago when Google Glass was derided as a rare misstep for Google. Not at KFC, which has been using Glass to train associates by showing them how to make products, and for store visits. “There are certain stores we can’t actually travel to,” he said. “[Store employees] can wear Google Glass and we can do store checks and see if they are meeting our standards.” Similarly, KFC is using Amazon Alexa to train its employees in-store. “That allows associate to ask questions while they are breading chicken,” he said.

Speed: Not long ago, speed in QSR meant a faster drive-thru. “Now it is about e-commerce, it’s how fast you can get people through the experience, how fast you can get them to purchase. It is about load time. Things that are really simple, but they make a big improvement to our business,” he said.

That’s going to require QSR to be more agile and to make changes and improvements faster. “It doesn’t have to be perfect, it is iterative. This is what we are working on: how do you give freedom to teams to develop on their own without going up the ladder. This is something that is really new in the QSR space.”

David Brown