KFC Plans to Fire Up the Grill

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KFC Plans to Fire Up the Grill

LOUISVILLE, Ky. -- KFC, a quick-service restaurant known for its fried chicken, plans to introduce a new grilled option across the country next year in hopes of lifting lagging sales—a key ingredient in parent company Yum Brands Inc.'s strategy for strong U.S. profit growth.

Yum chairman and CEO David C. Novak revealed plans for a second-quarter rollout of the grilled chicken product during a recent investment conference in New York, The Associated Press reported. The Louisville, Ky.-based company also predicted 15 percent growth in U.S. operating profit next year, a projection that includes $60 million in cost savings from refranchising efforts. Excluding those savings, ongoing operating profit is expected to rise 5 percent next year, according to the AP.

KFC is pinning much of its hopes for a U.S. turnaround on Kentucky Grilled Chicken, which will hit stores nationwide after the longest market test in KFC history. "This product will be a major transformational product for us, that it's not the same KFC," Novak said.

KFC has introduced grilled products in the past, but couldn't sustain an initial sales upturn because of operational or marketing factors, Novak said, predicting this rollout will have lasting, positive results. "We have a winning concept," he said.

KFC hopes the grilled chicken will appeal to health-conscious consumers, allowing the chain to "overcome the key barrier of being a fried-only concept," Novak said. The chain announced last year that fried chicken at all its U.S. restaurants had zero grams of trans fat per serving after it switched cooking oils.

With the grilled offering, KFC is hoping to replicate the success of Pizza Hut's introduction of a pasta line this year, which Novak said has turned into a $500 million business.

Another KFC initiative planned for next year is a national value menu with products ranging from 99 cents to $1.99, according to the AP report. KFC hopes to compete with other fast-food chains enticing customers with low-price menus.

Yum's chief financial officer, Rick Carucci, said KFC is eyeing same-store-sales growth of 7 percent next year. Carucci also predicted a lessening of U.S. commodity inflation next year.