Yum Restaurants International cutting prices of some KFC items in Thailand to stimulate customer spending amid economic downturn; up to five main menu items to go down to pre-2009 levels

Nevin Barich

BANGKOK , October 7, 2013 (Bangkok Post) – Yum Restaurants International (Thailand) is cutting prices of some KFC items to stimulate customer spending amid the economic downturn.

Waewkanee Assoratgoon, Yum Thailand's newly appointed managing director, said up to five main KFC menu items will go down to pre-2009 levels.

"The move comes after we received a good response to some KFC items whose prices were lowered in June," she said.

Starting this month, the price for rice items with chicken and a beverage will drop to 69 baht from 75 baht.

If the reduction fails to attract consumers as expected, Yum may cut the price to 59 baht.

The price cuts will also include chicken with fries and a beverage.

The company hopes to increase its consumer traffic at all branches by 20% and boost the frequency of customer visits.

"We saw a drop in consumer purchasing power at KFC after April. Exports are not as good as expected, domestic consumption and consumer confidence are falling, and this makes people more cautious with their spending," Ms Waewkanee said.

Despite the weak economic situation, Yum still expects 11% sales growth this year, driven by sales from new branches.

The company plans to open 56 branches of KFC and Pizza Hut including KFCs operated by Central Restaurants Group (CRG).

This will take Yum Thailand's number of restaurants to 571 by year-end.

KFC will account for 493 (about 60% are Yum Thailand's own investments and 40% are operated by CRG) and Pizza Hut for 78.

Yum has also renovated stores and upgraded its information technology (IT) system and marketing activities for a combined cost of 2 billion baht.

Next year, it will spend 2.4 billion baht to open 48 KFC and 12 Pizza Hut branches and invest in store renovation and IT system upgrades.

The investment is part of company plans to have 1,000 outlets of KFC and Pizza Hut by 2020.

"With the current momentum, we may achieve our goal before 2020, as the economy will continue to grow and urbanisation remains low at 35% compared with 80% in the US. Thailand's per capita income is still low, with a lack of infrastructure," Ms Waewkanee said.

In the US, Yum has 60 quick-service restaurants for every 1 million people compared with eight restaurants in Thailand.

This means the company is confident of growing its KFC business here.

Thailand's quick-service restaurant market (fried chicken, hamburgers and pizza) has grown from 26 billion baht last year to 28.7 billion this year, according to Euromonitor International, a London-based market intelligence firm.

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(c)2013 the Bangkok Post (Bangkok, Thailand)

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