Smaller Formats Rule Chicken Chains

By Megan Pellegrini, Contributing writer

This spring, McDonald’s Corp. surpassed Kentucky Fried Chicken in chicken sales (reaching $5.2 billion in sales by March), becoming the largest seller of chicken in the United States.
To the consternation of the chicken chains, the $21.6 billion fast-food behemoth shows no signs of slowing down either. This year, McDonald’s will launch a Southern-style chicken biscuit and sandwich to its breakfast and regular menus. Chicken sales in the test markets increased about 20 percent, according to , which would result in comparable store sales rising by up to 4 percent.
The major players in the chicken industry, such as Boston Market, Kentucky Fried Chicken, Church’s and Popeyes, have all experienced little growth recently due to a somewhat saturated market, says Darren Tristano, executive vice president of Chicago-based Technomic Inc., a foodservice research and consulting firm.
“We have not seen a lot of innovation from them recently — or any exiting news,” he says.
According to Tristano, KFC has been focused on adding flavor to its products and enhancing its line of sandwiches, while Popeyes Chicken & Biscuits and Church’s work to differentiate themselves from thecompetition.
To regain its footing, the $20 billion fast-food chicken industry is advised to follow the lead of their smaller — but faster growing — competitors and focus on recreating a friendly atmosphere, emphasize the healthiness of its products, acknowledge regional flavors and specialties and embrace international concepts, says Tristano.
Zany flavors
Zaxby’s, a Southeastern chain with more than 400 units, provides a fast-casual atmosphere and serves fun and flavorful appetizers, salads, sandwiches, meals, wings, sides and desserts. To maintain the momentum and success of its Meal Dealz line, which was launched in early 2006 and includes an entrée with fries and a drink, Zaxby’s has expanded the line with quarterly limited-time-only promotions. The value offerings have featured a Sweet & Spicy Boneless Wing Meal, Bourbon Chicken Sandwich Meal and even a veteran menu item, the Kickin’ Chicken Sandwich.
“The Meal Dealz program is a strong platform we use to introduce new menu items,” says Stephanie Struble, director of research and development for Athens, Ga.-based Zaxby’s. “To drive consumer interest, and thus traffic, we capitalize on what we do best — deliver great-quality chicken products highlighted by our signature flavor. These promotional items feature some of our proprietary sauces.”
Struble notes that Zaxby’s consumers typically enjoy bold, crave-able flavors. For the past two years, the chicken chain has promoted a southwestern-style Ranchero Zalad. And this spring, the chain will offer an Asian-style salad called The Zensation.
“We feel it is important to offer our guests diverse flavor profiles, while using familiar products, such as our Zalad line, to introduce them,” she says.
Consumers today are also interested in snack-sized portions of their favorite products. Struble notes that smaller portion sizes are desired for in-between meal snacking, which can help increase traffic in traditionally slower parts of the day. She points out that sodium intake is recently becoming a popular topic amongst foodservice professionals and processors, as well.
“A number of product ideas are born from internal orvendor-supported ideation sessions,” she says. “We have to be flexible to meet the demand of our consumers and our operating system. In a perfect world we’re about 18 to 24 months out in the development process.”
Some new items are also adopted from a different genre of foodservice and tweaked to work for Zaxby’s. Every year, Zaxby’s development team builds the products “on paper” and facilitates consumer concept screens to gauge the interest of those items relative to its most successful promotions and core menu items. From that point, Zaxby’s determines which products will move forward into operations and marketing testing. The team’s goal is to test items in the same time period that they would roll out in the system. Since salads are promoted from April to June, this spring the chain will test salads slated for 2009.
Bojangles, based in Charlotte, N.C., is another Southeast regional chain that has used its distinctively spicy flavors to expand to 386 locations in the East, South, Honduras and Mexico. The quick-service restaurant serves breakfast all day; spicy, Cajun-style chicken; made-from-scratch biscuit sandwiches with spicy chicken filets; and unique sides such as Cajun Pintos and Legendary Iced Tea.
“It’s really important for regional chains to acknowledge the local tastes, such as biscuits, sweet potatoes and desserts in the South, or cheese curds in the Midwest,” says Tristano. “You can get chicken anywhere. So you want side items that are also craveable.”
Spicy and healthy
Chicken chains are also reaching out to Hispanics and other diners who want a more authentic Latin-inspired cuisine. Pollo Camparo, a Guatemalan-based chain in 35 countries with 260 stores, features grilled and fried chicken with Guatemalan spices. Its blend of distinctive flavors and a quick-casual format with Latin décor and salsa bar is appealing to a broad audience. This year, Wal-Mart will give Pollo Camparo a huge boost by hosting the restaurant in some of its stores.
El Pollo Loco is another chain that offers Latin-inspired chicken but also takes care to stress its healthfulness. Based in Costa Mesa, Calif., El Pollo Loco has 154 company-operated stores and 226 franchised restaurants, primarily in California but also in other western states, Illinois, Georgia, Connecticut and Massachusetts.
Its menu features a signature citrus-marinated, flame-grilled chicken and a variety of contemporary, Mexican-inspired entrees, such as the specialty Pollo Bowl entrees, Pollo Salads, signature burritos, tacos, quesadillas, Chicken Nachos and Chicken Tortilla Soup. The chicken is served with flour or corn tortillas, freshly prepared salsas and an assortment of side orders.
“We’re tapping into consumers’ curiosity with our ethnic items and providing fresh, wholesome and trans fat-free options,” says Jon Miller, director of research and development for El Pollo Loco.
Last year, El Pollo Loco converted from frozen to fresh chicken, which was very powerful with its consumers who wanted flavorful but wholesome products, says Miller. He notes that El Pollo Loco’s customers are also very interested in natural and organic proteins.
Generally, the chain can move an idea through its R&D timeframe in four to six months. The new product team researches concepts through the Internet to identify powerful ideas and test markets them to gauge operational results and consumerreactions.
“If you can get health and nutrition with flavor in your item, you’ve hit a home run,” says Miller.
Retooling menus
Church’s Chicken, based in San Antonio, Texas, with 1,600 locations in 18 countries, now offers most of its products without trans fats and is researching how to remove trans fats from the remaining products. The next phase of Church’s current two-year project to improve its menu’s nutrition, says Jennie Hong, senior manager of product marketing and communications for Church’s, will include the reduction of hydrogenated fats in various food products, as well as researching technologies that reduce the overall oil pickup in fried foods.
“Processors can expect product-development requests from Church’s Research & Development to develop and manufacture products that are trans fat-free, low in hydrogenated fats, lower in total oil or fat pick-up, and have significantly improved nutritional profiles,” notes Hong.
Last year, Church’s also placed a large emphasis on portable protein items, such as sandwiches and, recently, boneless wings. Two promotions in the past year focused on boneless wings, resulting in high sales and transaction growth, says Hong. Typically these products are offered for a limited time only to reduce stress on operations and encourage consumers to try the product. 
“What we are trying to do is react to changing consumer habits,” she says. “As lifestyles become more hectic, people are looking for products they can eat on-the-go. Our traditional bone-in fried chicken will always be the mainstay of our business, but we believe the addition of boneless, portable items helps us to reach a broader base of customers, particularly younger customers, who may not be heavy users of bone-in chicken.”
A leading pioneer of the home meal-replacement concept, Boston Market, based in Golden, Colo., with 600 company-owned restaurants in 28 states, is continuing its move into a new market: the grocery store. Already offering frozen entrees, Boston Market is now offering fresh, ready-to-eat products in the deli department, besides new products planned for this year such as baked white fish and cherry cobble in its restaurants, with planned rollouts scheduled for every six weeks.
“Whenever Boston Market reviews new product rollouts, we look at what Boston Market stands for: meal solutions for families, traditional products made with quality ingredients — no fried foods — and restaurant quality flavors,” says Angela Proctor, spokesperson for Boston Market.
Originally known for its rotisserie chickens, Boston Market has branched out into other proteins such as lean sirloin, turkey and gourmet sides. However, Proctor notes that this year Boston Market will be refocusing some of its R&D around chicken again. “What’s important to Boston Market is what’s important to our customers: flavor, health and organic,” she says.