The coronavirus pandemic has created challenges for every CIO. But for the world’s second largest fast-food chain Kentucky Fried Chicken (KFC) — traditionally serving customers person to person through its 24,000 outlets in 145 markets around the world — the scale of that challenge has involved a major technology and business transformation to support new commercial models and ways of working.
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| Nitin Chaturvedi, chief digital and technology officer at KFC Global |
Nitin Chaturvedi, chief digital and technology officer at KFC Global, says the past year has been one of rapid digital growth, as KFC has sought innovative ways to continue to serve its millions of customers – either directly or via new delivery services. And for Chaturvedi, who only joined KFC in September 2019, that was accompanied by a welcome shift in perceptions about the power of digital tech to drive business transformation.
“When I first came in, a lot of my role was about convincing the organization why digital matters and why we should get future-ready,” he says. But, today, he has less convincing to do. “Covid-19 created more of a pull and now, if you ask pretty much anybody [in the organization], they would say digital is one of our big bets.”
Pivoting to new fulfilment channels
Chaturvedi says KFC (which as part of the Yum! Brands group is a sister company to Pizza Hut and Taco bell) had to dramatically change its business models, operations, restaurant designs and technology infrastructure around the world in response to the different Covid-19 restrictions and safeguarding policies.
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| KFC drive-thru, Kosovo |
A prime example was the near-universal switch to contactless payments, he says. “Even where we could still serve dine-in [meals], we had to use contactless.”
But given the company’s global footprint (some 85% of revenues are generated outside its native US, with China now its largest market) there very different approaches required in different countries.
Where customers were not allowed to dine in, the company ramped up drive through and delivery services, redesigning restaurants to accommodate that. From having partnerships with just a few third-party delivery services, such as Uber Eats and Just Eat, the company shifted to a model Chaturvedi refers to as “full aggregator penetration” around the globe. This meant going beyond such food delivery aggregators to sign up thousands of non-traditional channel from China and Japan to the UK and South Africa.
KFC also strengthened its own digital channels. Traffic to the company’s web app increased significantly as click-and-collect and curb-side pick-up became more popular.
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“In terms of business model shifts, we went from having no delivery, click-and-collect or curb-side pick-up in many parts of the world, to standing up all these channels overnight, or at most, in a few months. In terms of [the] business and operating model, it was a very, very big shift,” says Chaturvedi.
The speed of change was governed by the operating model in each market. “The degree of shift depended on the location, but it was a pretty radical shift in many places around the world. In some, where we were more dine-in heavy, we had to make these pivots much quicker and on a much greater scale. But even in markets where we already had multiple drive-thru restaurants, we still had to make the digital pivot.”
Shift to ‘stratecution’’
He sees that transformation as three-pronged. First, KFC rapidly shifted from its traditional focus on staged strategic planning and execution, to one that was much more capable of ‘stratecution’ — combining the two. “It became all about do, test, improve, repeat,” he says, referencing the iterative Agile approach that the company adopted.
Second, the transformation related to KFC’s remodeled for a social-distanced customer. “Standing up off-premise channels, reconfiguring our stores, communicating through our marketing channels: all of that pretty much was shifted on a near-overnight basis,” says Chaturvedi.
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Alongside those dramatic operational changes, there was also a shift towards a more compassionate management style. He points out that the company has always prided itself on having “heart-led leadership” that encourages transparency and acknowledges vulnerability. “During these times, given [may employees] were working remotely from each other, we saw a much greater emphasis on heart-led topics, such as mental health and wellbeing. These were always important topics, but they got elevated as the virus permeated society,” he says.
Becoming Agile
Reflects on such changes, Chaturvedi says business has embraced a culture and mindset opportunity that will make it stronger in the longer term.
“[The change] is more forward-looking than just reacting to the crisis. It has involved thinking about how we get better for the future,” he says. The situation has also encouraged flatter decision-making structures. “As leaders, we instinctively want to take control and drive things through but you’ll often get a much faster and better response if you let go of control. That’s what worked for us [through much of the pandemic].”
One of the areas where a more open mindset has produced great results is innovation. Chaturvedi says that while KFC has always been good at generating new ideas, it hasn’t always managed to scale these. But the example of curb-side pick-up shows that the company can actually go from idea to operational scale-up rapidly. And that encouraging of innovative thinking across all levels of the company or locality will become standard.
“While people were responding to the crisis, they were also looking at ways to get future-ready. As a result we started seeing many more ideas coming out of our markets, and that has driven the pace of innovation,” he says.
Robot servers
Nowhere has that sense of decentralized creativity been more evident than in technology. During the past 12 months, KFC has been applying IoT, robotics and computer vision via augmented reality to pandemic challenges. Necessity has been the mother of invention, says Chaturvedi.
“We started looking at all of these, driven by the crisis and [the need] to find ways to serve the customer in a contactless, socially distanced manner as well as to improve the team-member experience.” he says. With robotics, for example, the company has is investigating how conveyor belts and robotic arms can be used to serve the customers, says Chaturvedi.
Another innovative approach, which came out of KFC in Latin America, is using Google Glass to assist in staff training and managing store routines. “The idea of using augmented reality to train and manage stores – use cases [for Google Glass] that we hadn’t even thought of before but which I think we’ll still stick with,” he says.
Such innovations are here to stay. Chaturvedi says they are likely to represent a long-term shift in the operational models of KFC. “[They are] going to lead to the use of many more customer touchpoints, all with emphasis on trust and safety,” he says.
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| KFC, Japan (Image: Daremoshiranai/Flickr) |
The KFC that emerges from the coronavirus pandemic is likely to have a different emphasis than pre-Covid KFC. While the company will still focus on its core proposition of serving great food quickly to its customers around the globe, the channels through which it reaches these people will have changed forever.
And for Chaturvedi, there is the opportunity for KFC to be perceived as industry leader: “My aspiration would be to make KFC a brand that others look to for inspiration on digital.”
• Nitin Chaturvedi was a speaker at The Economist’s Innovation@Work virtual event.
