Sue Mitchell
Senior Reporter
Nov 25, 2019
AFR
KFC managing director Nikki Lawson would never describe the fast-food retailer as a technology company – unlike Domino’s chief executive Don Meij – but the restaurant chain is nipping at Domino’s heels in the race to conquer the Internet of Food.
KFC Australia has opened a digital drive-through-only restaurant – the first in the world – enabling customers to skip the queues by pre-ordering and paying through the KFC app or website.
Nikki Lawson: “It’s either going to be a novelty that wears off or a concept that really delivers value and is going to grow from here.”
When customers arrive at the drive-through, they enter a four-digit code generated by the app or website into a touch screen receiver, which transmits their order to the kitchen and opens a boom gate to the correct lane for pick-up at the kitchen window.
The first digital drive-through only outlet opened in Broadmeadow in Newcastle last week and the second is due to open at Mt Gambier in South Australia in a few months.
Drive-through is by far the largest part of KFC’s business in Australia, accounting for two-thirds of annual sales of about $2.5 billion.
But Ms Lawson said the drive-through experience was often a “slightly apologetic” part of the customer experience and needed to improve.
“What we wanted to do was say if we are truly focused on drive-through, can we deliver a superior experience? It’s the ultimate expression of ease and convenience, and still offers value for franchisees because there are no additional delivery costs,” she said.
KFC’s online sales have doubled every year since online ordering started five years ago but represent only 8 per cent of total sales, well below Domino’s’ online penetration of 70 per cent in Australia and New Zealand.
Faster and easier
The digital drive-through concept promises to boost online ordering by making it faster and easier for customers to order, pay for and pick up drive-through purchases.
“More than half our sales in Broadmeadows [which has five drive-through lanes, three of which are for online pick-up] are coming from online … we’ve made it as easy as possible for them to pre-order order through the app,” Ms Lawson said. “As consumers get more used to it we expect that to grow.”
She said the number of digital drive-through formats would depend on the appetite of consumers and franchisees, and the extent to which they cannibalised franchisees’ dine-in sales in local catchments.
“Seeing the success of Broadmeadows … has given us quite a lot of confidence there’s a role for a good number of these as we go forward, we just need to understand exactly how it interacts with the other restaurants,” Ms Lawson said.
“It’s either going to be a novelty that wears off or a concept that really delivers value and is going to grow from here – we clearly believe it’s going to be the latter but only time will tell.”
Australia is KFC’s second most profitable market and is used as a test market for the roll-out of technology such as the digital drive-through concept.
KFC is also using digital technology to reduce operating costs in restaurants and streamline financial planning, recruitment and data analytics, but Ms Lawson said the fast-food chain was not aiming to challenge the position of Domino’s as market leader in the Internet of Food.
Over the past six years, Domino’s has announced a stream of disruptive digital initiatives including mobile phone apps, GPS driver tracking, SMS ordering, electronic bikes, robotic delivery vehicles, drones and cameras that use artificial intelligence to check the quality of pizzas.
“We’ll always be a people and food company first, I’m certainly not going to say we’re a technology company first,” Ms Lawson said. “We see technology as being an enabler, so innovating in that space is important.”
KFC, which is owned by US-based fast-food giant YUM! Brands, has about 664 restaurants in Australia and plans to open 20 to 25 a year over the next three years. About 50 of its restaurants are company-operated and the rest are run by franchisees, ranging from single-store operators to multi-store ones such as Collins Foods and Restaurant Brands.
Australia is KFC’s second most profitable market and is used as a test market for the roll-out of technology such as the digital drive-through concept.
“In a highly penetrated market, you start looking for new and better ways to entice the consumer … what you have here is a very sophisticated demanding consumer base which forces us to innovate,” said Ms Lawson, who joined the Australian business nine years ago after a 10-year career with YUM! Brands in South Africa.
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