For years, KFC customers in China have wondered why the chain doesn’t sell chicken feet, a Chinese delicacy.
Now, “I can report that this year into 2022, we’re finally starting to sell chicken feet,” Joey Wat, CEO of Yum China, said in an interview with CNN Business on Monday.
The reason for the change is something customers may not have expected: high oil prices.
Wat said the addition was part of a broader effort by the chain to be more efficient and use more ingredients, with KFC also introducing products such as chicken wing tips to its menu.
Soaring oil and food prices have significantly increased costs for businesses.
“We’re trying to absorb this commodity price increase by making the most of chicken,” Wat said with a smile. That means using every part of the chicken, “except the feathers, I guess.”
Yum China is emerging from what Wat said was its toughest quarter ever. The Shanghai-based company, which owns KFC, Pizza Hut and Taco Bell chains in China, has seen hundreds of millions of people affected by the recent Covid-19 lockdown, with many staying at home for weeks on end.
Yum China said sales at stores open at least a year fell 16% from April to June compared with the same period last year.
That could be worse. Although “the second quarter was by far the most challenging,” Wat said, the drop in human traffic was offset by stronger takeaway demand, which rose about 8% year-over-year at KFC and Pizza Hut.
Still, the company had to make adjustments. In the second quarter, it pulled back on marketing and advertising, asking landlords for rent relief and urging its restaurants to make the most of existing resources.
Despite the headwinds, Wat has vowed to avoid layoffs this year.
“We will look at all cost-saving opportunities other than layoffs,” she said. “We have 450,000 employees and 450,000 families to look after.”
Wat said she was determined to create a “safety net” for his employees, adding that the company was not preventing store openings either.
Earlier this year, Yum China set a goal of opening 1,000 to 1,200 new stores by 2022 and will remain committed to the plan, she said.
Unlike other restaurant chains, the company has not raised meal prices. Instead, it decided to go in the other direction: trying to attract more customers with better prices.
At Pizza Hut, for example, it recently brought back buffets, as well as a promotion that offers discounts on larger purchases. “In the current situation, value for money is resonating very well with customers,” Wat told analysts on Friday.