kfc nassau problem detection study highlights report august 2011

KFC Nassau Problem Detection StudyHighlights Report

August 2011

BACKGROUND

2

BIT Key Opportunities: Awareness ,Product, Price

Attribute 3Q10 4Q10 Vs. Key Competitor

TOM Awareness 18.7 7.1 -78% vs Wendy’s

P3M Usage 77.2 66.6 -26% vs Wendy’s

P4W Frequency 3.40 3.16 -39% vs Wendy’s

P3M Brand Share 23.2 14.6 -59% vs Wendy’s

High Quality Food 3.79 3.24 -19% vs Wendy’s

Great Tasting Food 4.25 3.78 -10% vs Wendy’s

Freshly Prepared 3.94 3.56 -9% vs Wendy’s

Eat Inexpensively There 3.17 2.93 -23% vs Wendy’s, -26% vs Bamboo

Good Value for Money 3.39 3.32 -20% vs. Wendy’s, -16% vs Bamboo

• KFC Nassau wants to investigate the root of brand and business problems contributing to sustained declines in sales and transactions as well as declines in Brand Image Tracker key measures.

• A Problem Detection Study was conducted among current and lapsed KFC customers in order to determine the key factors driving these declines

OBJECTIVES

Key research objectives include:

• Identify a hierarchy of problems for KFC in the areas of service, menu, product , asset, value, etc.

among Current and Lapsed customers.

• Determine opportunities for improvement in the absolute and versus competition.

• Understand changing perceptions of the problems.

- Have the problems gotten worse recently?

• Understand whether these problems are specific to KFC or are more general QSR/QSCR problems.

• Profile lapsed/less frequent KFC customers on key issues vs. those who have at least maintained

their KFC usage:

- Hierarchy of problems

- Demographics

- Psychographics

- Restaurant Behavior

METHODOLOGY

WHO: 400 past 6 month KFC customers who eat fast food at least 4+ times/month.

• 200 Current KFC customers: Visiting KFC at least as often as usual in past 3 months • 200 Lapsed KFC customers: Going less often/stopped going in past 3 months or

planning to visit less often in next month. WHAT: A 2-cell Problem Detection Study conducted via 28-min telephone interviews. A total of 42 potential problems were tested on rate of occurrence and degree of annoyance, as well as if the problem was getting better or worse at KFC as compared to other fast food locations.

WHEN: June 15, 2011 with The Research Group Limited, Nassau, Bahamas

Quantitative Problem Detection Study

ANALYTIC OVERVIEW

Problem Scores were developed along 2 dimensions:

• Incidence - % experiencing “occasionally,” “often,” or “always”*

• Salience - % bothered “very much” or “extremely”*

Problem Score Indices were calculated to create a hierarchy per each target segment:

• Lapsed Customers & Maintained Customers

Incidence x Salience = Problem Score

Index Vs. Average Problem Score

Average of all problems (for restaurant/segment)

25% 15% 375 100

The stores are dirty inside 35% 15% 525 140

Employees are rude and unfriendly

35% 25% 875 233

Example:

*Among total respondents

ANALYTIC OVERVIEW

The following analyses were conducted:

1. A Problem Score Index was created among Maintained KFC customers and Lapsed

KFC customers to identify top problems for each.

2. Top Problems also had to occur among a high percentage of customers, in addition to

having a high problem index.

2. Problems were then prioritized as follows:

• Top problems among both current and lapsed customers -- issues for total KFC

customer base (“Top Priority” issues)

• Top problems among lapsed KFC customers only -- additional key issues to

address to reverse decline in visitation (Secondary issues)

• Top problems among maintained customers only -- additional key issues to

address to increase/maintain frequency of visitation (Tertiary issues)

KEY FINDINGS

• Overall prices are perceived to be too high, whether buying for yourself or buying for your family, and 40% say the problem is getting worse at KFC, 20% say price is worse at KFC than other QSRs.• There appears to be an unbalance in what consumers get vs. what they pay for, citing issues with portion sizes too small and problems with consistent product taste & quality.

Top problem for KFC is price.

• Health is another primary concern for KFC customers. They want healthier options available on the menu, also citing the food is too fattening and too greasy.

Health falls right behind price.

Lapsed Users…• In addition to these problems, lapsed users add long line wait times, not enough side items, and no visible manager on duty to address issues as key problems associated with KFC.

Maintained Users…• In addition to these problems, maintained users add that they find it very bothersome to often have mistakes made to their orders, getting the wrong order upon receipt.

KEY FINDINGS (cont’d)

• Lapsed users say lower prices and healthier options could draw them back to KFC.• KFC may benefit by focusing targeted efforts to younger adults and Moms, key traits of Lapsed users.

To Regain Lapsed Users...

• Among customers who are visiting KFC less often, most are substituting eating at home or visiting a different fast food location instead.• Wendy’s is the most commonly visited fast food alternative to KFC, attracted primarily because of lower prices and healthier choices.

Visiting Less at KFC...

Problems with KFC Products…• Consumers site problems with KFC products tasting inconsistent from visit to visit – most commonly Original Recipe and Hot & Spicy chicken.• Over half of customers say that OR has not tasted good (too salty and too greasy), dry and 20% believe it has been undercooked. • 48% of customers say KFC does not offer the beverages they are looking for, and they want more beverage variety beyond sodas, primarily fruit juices, lemonade and iced tea.

Priority of Problems

TOP PROBLEMS:

1. Food too expensive to buy for

myself

2. Prices too high

3. Food to expensive to buy for

group or family

4. Portion sizes too small.

5. Don’t have enough healthy

selections available.

6. Chicken too greasy.

7. Mistakes made with

order/delivery of order.

8. Taste or quality not consistent.

9. Food too fattening.

10. Lines too long to wait on.

1. Food too expensive to buy for myself.

2. Taste or quality not consistent.

3. Food too fattening.

4. Portion sized too small.

5. Food too expensive for group or family.

6. Prices too high.


8. Don’t offer special deals /discounts

often.

9. Don’t have enough healthy selections.

10. No manager present or visible on site.

11. Lines too long to wait on.

12. Don’t have beverage variety I want.

13. Not enough side items/dishes.

1. Prices too high.

2. Food to expensive for me to buy for

myself.

3. Mistakes are made with

order/delivery of order.

4. Portion size is too small.

5. Don’t have enough healthy selections.

6. Food is fattening.

7. Don’t have beverage variety I want.

8. Food too expensive for group or

family.


10. Don’t offer specials /discounts very

often.

PRIORITY PROBLEMS: Among Total Customers

SECONDARY PROBLEMS: Among Lapsed Customers

TERTIARY PROBLEMS: Among Maint’d Customers

Unique as top problem for that segment

PROBLEM SCORES:AMONG TOTAL LAPSED & MAINTAINED

PROBLEMS Problem Scores Index

Problem Scores / Formula:

% on Q1

Q2-Number of time %

Always/Often/ Occas.

Q3-How much it bothers % Extremely/Very

Unweighted Totals: 401

The restrooms are dirty and messy 252 532 12.7% 76.9% 69.2%

The food is too expensive when buying for a group or family 251 530 61.1% 91.4% 58.0%

The portion sizes are too small 215 453 67.8% 84.5% 53.6%

The prices are too high 199 420 80.8% 86.5% 48.6%

The lines are too long 195 411 50.9% 92.6% 44.4%

The food is too expensive when buying for myself 188 396 73.3% 82.4% 48.1%

The chicken is not properly cooked 152 319 37.4% 47.9% 66.7%

The chicken is too greasy 132 279 69.6% 81.6% 34.2%

They make mistakes on the food you ordered/you don't receive what you asked for 132 279 57.1% 60.7% 45.9%

You have to wait too long to get your food 129 273 41.1% 77.1% 35.4%

Menu board is confusing 126 265 11.2% 72.7% 36.4%

The food is not served hot 123 260 32.2% 65.8% 39.5%

The taste or quality of the food is not consistent 115 242 47.9% 63.8% 37.9%

The food is too fattening 112 237 78.3% 88.0% 26.9%

Employees don't know how to answer questions about the menu 108 228 27.9% 53.8% 42.3%

They don't have good options for a snack between meals 100 212 41.6% 73.3% 28.9%

The food is not served fresh 97 204 37.7% 40.0% 51.1%

They don't have the variety of beverages I'm looking for 97 204 48.4% 63.8% 31.9%

They don't have enough healthy selections available 95 201 66.6% 81.5% 24.7%

Don't offer special deals/discounts very often 95 200 51.1% 74.6% 26.8%

Employees are rude and unfriendly 94 199 23.2% 46.4% 42.9%

PROBLEMSProblem

Scores Index

Problem Scores /

Formula: % on Q1

Q2-Number of time %




The stores are dirty inside 94 198 9.5% 54.5% 36.4%

The chicken does not taste good 92 195 37.7% 46.5% 41.9%

They are often out of food or drinks you order 92 194 45.4% 59.2% 32.7%

They don't use the freshest ingredients 89 188 27.7% 58.1% 32.3%

Employees don't take pride in their work 84 178 30.2% 57.7% 30.8%

The side dishes don't taste good 81 170 35.9% 53.7% 31.7%

The drive-thru communication system does not work well 77 162 37.4% 52.4% 31.0%

There are not enough side items to choose from 75 158 45.6% 67.9% 23.2%

Can't find the offers on TV in the store 73 153 35.7% 56.8% 27.0%

They don't have enough foods /drinks for kids or that kids like 63 132 44.1% 63.8% 20.7%

They don't have a good variety of sandwiches 62 130 44.4% 68.3% 19.0%

There is no manager present/can't tell who in the store is the manager 60 126 44.9% 67.2% 18.8%

They don't have enough selections available that are easy to eat on-the-go 52 110 35.7% 60.6% 18.2%

There are not enough employees working there to serve you 52 109 28.4% 41.2% 26.5%

There is nothing new or exciting on the menu 48 102 53.6% 81.3% 12.5%

They don't have a value menu/value meals 48 101 39.2% 62.5% 16.1%

They do not have high-quality food 47 99 35.9% 55.6% 17.8%

The locations are not convenient 37 78 23.9% 37.5% 20.8%

Their advertising is irritating/unappealing 30 64 26.7% 62.1% 10.3%

They no longer offer items I liked a lot 28 59 32.9% 47.5% 12.5%

The stores are not modern or up-to-date looking 7 15 31.2% 40.7% 3.7%

PROBLEM SCORES:AMONG TOTAL LAPSED & MAINTAINED (CONT’D)

PROBLEMS Problem Scores Index

Problem Scores /

Formula : % on Q1

Q2-Number of time %

























PROBLEM SCORES:UNIQUE TO LAPSED USERS

Problems Problem Scores Index

Problem Scores / Formula

% on Q1

Q2-Number of time %







They make mistakes on the food you ordered/you don't receive what you asked for

74 1759.2%

47.4% 36.8%


















PROBLEM SCORES:UNIQUE TO LAPSED USERS (Cont’d)

PROBLEMSProblem Scores Index

Problem Scores /

Formula: % on Q1

Q2-Number of time %










They make mistakes on the food you ordered/you don't receive what you asked for 184 333 21.6% 66.7% 50.0%















PROBLEM SCORES:UNIQUE TO MAINTAINED USERS

PROBLEM S Problem Scores Index

Problem Scores / Formula:

% on Q1

Q2-Number of time %

























PROBLEM SCORES:UNIQUE TO MAINTAINED USERS (Cont’d)

Top Problems Reported as Getting WORSE: Top Problems Reported as Worse at KFC vs. other QSRs

TOTAL• Food is too expensive when buying for a

group /family(-0.40)• Prices too high ((-0.37)• Prices too high when buying for self (-0.32)

LAPSED• Food too expensive when buying for a

group/family (-0.48)• Food too expensive when buying for self (-0.40)• Prices too high (-0.35)

MAINTAINED• Prices too high (-0.36)• Food too expensive when buying for a

group/family (-0.31)

TOTAL• Food is too expensive when buying for self (-

0.15)• Food is too expensive when buying for a

group/family (-0.14)• Prices are too high (-0.12)

LAPSED• Food is too expensive when buying for self (-

0.26)• Prices are too high (-0.21)• Food is too expensive when buying for a


MAINTAINED• Menu board is too confusing (-0.20) • Food is not served hot (-0.13)• Food to expensive when buying for a


SUMMARY:DEGREE OF TOP PROBLEMS

ProblemsProblem Getting

Worse (-1),Same(0),Better(+1)Problem vs. Other QSR

Worse(-1), Same(0), Better(+1)

Total LAPSEDMAINTAIN

ED Total LAPSEDMAINTAIN

ED

The chicken does not taste good 0.08 0.26 -0.11 0.26 0.26 0.26

The side dishes don't taste good -0.03 -0.06 0.00 0.10 0.05 0.15

The food is not served fresh 0.27 0.16 0.36 0.31 0.42 0.22

You have to wait too long to get your food 0.20 0.15 0.24 0.42 0.41 0.42

Employees don't take pride in their work 0.04 0.00 0.08 0.35 0.42 0.29

They don't have enough healthy selections available 0.01 -0.06 0.08 0.05 0.03 0.08They don't have enough selections available that are easy to eat on-the-go -0.03 0.13 -0.19 0.34 0.50 0.19

There are not enough side items to choose from 0.08 0.00 0.18 0.23 0.13 0.35They make mistakes on the food you ordered/you don't receive what you asked for 0.20 0.42 0.10 0.29 0.42 0.22

The chicken is too greasy 0.04 -0.05 0.15 0.20 0.20 0.20

The prices are too high -0.37 -0.39 -0.36 -0.12 -0.25 0.02

The food is not served hot 0.11 0.09 0.14 0.00 0.09 -0.13

They are often out of food or drinks you order 0.09 0.18 0.00 0.18 0.13 0.23

DEGREE OF PROBLEMS

The stores are not modern or up-to-date looking0.13 0.00 0.25 0.44 0.50 0.38

They don't have the variety of beverages I'm looking for0.12 0.10 0.13 0.29 0.17 0.38

The taste or quality of the food is not consistent0.04 0.00 0.07 0.23 0.21 0.25

Employees are rude and unfriendly0.00 -0.08 0.10 0.32 0.46 0.17

The drive-thru communication system does not work well0.26 0.00 0.45 0.39 0.25 0.50

The stores are dirty inside0.00 0.20 -0.17 0.64 0.40 0.83

Employees don't know how to answer questions about the menu 0.29 0.23 0.36 0.13 0.00 0.27

The restrooms are dirty and messy0.27 0.25 0.29 0.23 0.17 0.29

There is nothing new or exciting on the menu-0.02 0.10 -0.13 0.22 0.29 0.16

The food is too expensive when buying for myself-0.32 -0.40 -0.20 -0.15 -0.26 0.00

The food is too expensive when buying for a group or family-0.40 -0.48 -0.31 -0.14 -0.21 -0.06

The food is too fattening0.02 -0.02 0.06 0.03 0.04 0.02

The portion sizes are too small-0.16 -0.19 -0.12 0.08 -0.08 0.32

They no longer offer items I liked a lot-0.08 -0.02 -0.04 0.21 0.15 0.24




Total LAPSEDMAINTAINE

D Total LAPSEDMAINTAINE

D

DEGREE OF PROBLEMS (CONT’D)

DEGREE OF PROBLEMS (CONT’D)

There are not enough employees working there to serve you 0.18 0.09 0.40 0.61 0.48 0.90

Don't offer special deals/discounts very often-0.06 -0.06 -0.06 0.24 0.06 0.43

They don't have enough foods /drinks for kids or that kids like-0.08 -0.07 -0.09 -0.07 -0.07 -0.08

They don't have a value menu/value meals-0.06 0.03 -0.17 0.25 0.24 0.25

There is no manager present/can't tell who in the store is the manager 0.13 0.06 0.21 0.40 0.36 0.44

Their advertising is irritating/unappealing0.07 0.10 0.06 0.14 0.45 -0.06

The chicken is not properly cooked0.02 -0.04 0.10 0.27 0.33 0.19

Menu board is confusing0.00 -0.17 0.20 -0.09 0.00 -0.20

Can't find the offers on TV in the store-0.03 0.00 -0.08 0.31 0.21 0.55

The lines are too long-0.04 -0.04 -0.04 0.43 0.43 0.42

They do not have high-quality food0.03 0.05 0.00 0.05 -0.04 0.17

They don't have good options for a snack between meals-0.02 0.03 -0.13 -0.05 -0.10 0.07

The locations are not convenient0.18 0.09 0.27 0.57 0.58 0.55

They don't have a good variety of sandwiches0.04 0.10 -0.04 -0.02 0.00 -0.04

They don't use the freshest ingredients0.04 -0.13 0.25 0.25 -0.06 0.67




Total LAPSEDMAINTAINE

D Total LAPSED MAINTAINED

Age Gender People living in your household

Have child at home 0-18 Education Work Income

TOT. 16-17 18-24 25-34 35-44 45-54 Male Female 1-3 4 5+ Yes NoH.SCOOL OR -

COLLEGE

POST GRAD. Yes Other

$29,999 or less

$30,000-

$49,999

$50,000+

Unweighted Totals: 401 40 93 90 108 70 188 213 152 114 134 283 118 180 194 23 286 112 114 96 102

LAPSED/LESS FREQUENT CUSTOMER

207 25 47 48 56 31 88 119 79 60 68 145 62 96 102 7 144 62 58 56 46

51.6% 12% 23% 23% 27% 15% 43% 57% 38% 29% 33% 70% 30% 46% 49% 3% 70% 30% 28% 27% 22%

MAINTAINED FREQUENCY CUSTOMER

194 15 46 42 52 39 100 94 73 54 66 138 56 84 92 16 142 50 56 40 56

48.4% 8% 24% 22% 27% 20% 52% 48% 38% 28% 34% 71% 29% 43% 47% 8% 73% 26% 29% 21% 29%

CUSTOMER DEMOGRAPHIC PROFILES

Lapsed Customers Most Likely To Be:• Younger (35% are 16-24)• Female • 3-person HH with kids• College Educated• Working• Low to Mid-Income

Maintained Customers Most Likely To Be:• Middle-aged • Slightly more male• 3-person HH with kids• College Educated• Working• Low & Higher Income

Supplemental: Product and Visits

Healthy food/choices

Lower prices Variety of food Variety of drinks Better service Reduce Grease Bigger portions Others, specify DNK/DNA0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

TOTAL LAPSED KFC USER LIGHT KFC USER MEDIUM KFC USER HEAVY KFC USER

You mentioned earlier that you've eaten food from KFC before, but not as much in the recent past, or you expect to eat there less often in the near future. What could KFC do that would make you want to go there more often?

Healthier Choices & Lower Prices are mentioned most often as reasons to revisit KFC. Lapsed users say a Variety of Food and Less Greasy Food will help to bring them back.

MOTIVATION FOR REVISIT INTENT

0.0%

20.0%

40.0%

60.0%

80.0%

Spontaneous Assist Total No

You said you have been, or expect you will soon be eating less often at KFC. Where have you been eating more often instead, or where do you expect you will be eating more often?

KFC REPLACEMENT DESTINATIONS

Most customers mention trading out KFC visits to eat at home or from other fast food restaurants instead.

Which fast food restaurants or local street stands or food kiosks do you expect to be eating more from instead of KFC?

TOTAL LAPSED/LESS FREQUENT CUSTOMER0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Burger King

McDonald's

Wendy's

Marco's Pizza

Any Chinese Take-Away

Among Lapsed Users leaving KFC for another fast food location, Wendy’s is the primary destination, followed by Burger King.

FAST FOOD REPLACEMENTS

TOTAL LAPSED/LESS FREQUENT CUSTOMER0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Healthy choicePricesVarietyOther, specify

…And the reasons for choosing another place instead of KFC are most commonly because of Price and Healthier Choices.

REASONS FOR REPLACEMENT CHOICE

TOTAL LAPSED/LESS FREQUENT CUSTOMER


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Original Recipe Chicken

Extra Crispy Chicken

Hot & Spicy Chicken

Biscuits

Fries

You mentioned earlier that the food at KFC sometimes is not consistent visit-to-visit or store-to-store. Which items, if any, have you found to be inconsistent recently?

Across both segments, the most inconsistent products were Original Recipe Chicken & Hot & Spicy Chicken. Lapsed Users found EC Chicken & Biscuits to be more inconsistent than Maintained Users.

PRODUCT INCONSISTENCIES



0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Original Recipe Chicken

Hot & Spicy Chicken

BBQ Wings

None recently

You mentioned that the chicken at KFC doesn’t taste good sometimes at KFC, if any, have you had recently at KFC that you felt didn’t taste good?

Half of all customers said Original Recipe Chicken has not tasted good recently at KFC. Lapsed Users more likely to include BBQ Wings as not tasting good.

TASTE INCONSITENCIES

TOTAL LAPSED/LESS FREQUENT CUSTOMER MAINTAINED FREQUENCY CUSTOMER0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Was dry

Was under-cooked

Was too salty

Had too much oil/greasy

Old

CAUSES OF POOR TASTING PRODUCTSOriginal Recipe

What was the problem with the Original Recipe Chicken you have had AT KFC recently, why didn't it taste good?

One in four customers say that Original Recipe Chicken was too salty and too greasy. Maintained customers complain that it was too dry. Also concerning is that almost 20% believe the chicken is undercooked.

TOTAL LAPSED/LESS FREQUENT CUSTOMER MAINTAINED FREQUENCY CUSTOMER0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Was hard

Was dry

Was under-cooked

Other (SPECIFY:)

CAUSES OF POOR TASTING PRODUCTSBiscuits

What was the problem with the Biscuits you have had there recently, why didn't they taste good?

Half of Lapsed users say Biscuits were hard and dry.

.



0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

Tasted artificial/not realWas wateryOldStrange Taste/Indescribable tasteSeasoning

CAUSES OF POOR TASTING PRODUCTSCole Slaw

What was the problem with the Cole Slaw you have had there recently, why didn't it taste good?

All users report problems with the Cole Slaw tasting old, followed by a strange or unfamiliar taste.

TOTAL LAPSED/LESS FREQUENT CUSTOMER MAINTAINED FREQUENCY CUSTOMER

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Was dry

Had too much oil/greasy

Was not correct temperature

Cold

Mushy

What was the problem with the Fries you have had there recently, why didn't they taste good?

With fries, the primary problem was cold fries. Lapsed users were more likely to cite too greasy as another problem with fries.

CAUSES OF POOR TASTING PRODUCTSFries

Fruit Juices Lemonade Fruit-flavored sodas Iced Tea Water0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

TOTALLAPSED/LESS FREQUENT CUSTOMERMAINTAINED FREQUENCY CUSTOMER

You mentioned you are not pleased with the variety of beverages offered at KFC. What types of beverages would you like to have offered at KFC?

48% of customers said KFC does not have the beverage variety they are looking for. Among those, they most want to have fruit juices, lemonade, and iced tea.

BEVERAGE VARIETY

kfc nassau problem detection study highlights report august 2011

Documents

lapsed kfc customers

current kfc customers

maintained kfc customers

month kfc customers

lapsed customers

kfc usage

hierarchy of problems

vs bamboo kfc nassau