KFC plans to offer grilled chicken on menu

updated 3:13 p.m. ET March 23, 2008

LOUISVILLE, Ky. - What in the name of Colonel Harland Sanders is going on at KFC? The chain built by his secret recipe for fried chicken is about to give equal billing to, gulp, grilled chicken.

Kentucky Fried Chicken customers will be greeted eventually by lighted "Now Grilling" signs, starting in coming weeks in select U.S. cities. Storefront signs will be altered to promote the new product — called Kentucky Grilled Chicken. Even the brand's ubiquitous chicken buckets will get a makeover.

"This is transformational for our brand," said Doug Hasselo, KFC's chief food innovation officer.

Louisville-based KFC, a subsidiary of Yum Brands Inc., hopes grilled chicken will lure back health-conscious consumers who dropped fried chicken from their diets, or cut back on indulging. KFC announced last year that fried chicken at all its U.S. restaurants had zero grams of trans fat per serving after the chain switched cooking oils.

KFC says the grilled chicken has significantly fewer calories and fat, plus much less sodium, than its Original Recipe fried chicken that launched the brand more than a half-century ago.

The chain says it now serves some 12 million customers daily at more than 14,000 outlets around the world.

The grilled product, served on the bone, is being tested in six cities — Indianapolis, Colorado Springs, San Diego, Oklahoma City, Jacksonville, Fla., and Austin, Texas. A national rollout is planned early next year.

The company says prices for grilled and fried chicken will be comparable. Even while planning a big marketing push for grilled chicken, KFC executives insist the chain is not backing away from its most famous product. New fried chicken items are planned this summer.

Larry Miller, a restaurant analyst with RBC Capital Markets, said the chain faces a possible "speed bump" in winning over health-savvy consumers. But if grilled chicken becomes a hit, it could boost KFC's U.S. performance, which has lagged behind its burgeoning China business in sales and profit growth, Miller said.

Last year, Yum had 30 percent operating profit growth in its China division, where KFC is a dominant fast-food brand, while U.S. operations had a 3 percent decline. Yum's other chains include Taco Bell, Pizza Hut, Long John Silver's and A&W All-American Food Restaurants.

"If they can get people over the hump — which is `Do I believe KFC can sell me a healthy alternative' — they'll increase their (customer) frequency," Miller said. "I don't see too much risk in trying it."

By expanding into grilled chicken, the chain hopes to build on its core dinner business and strengthen lunch and snack segments, said KFC President Gregg Dedrick.

KFC has flirted with non-fried chicken before, but each initiative flopped.

In the early 1990s, the chain introduced a rotisserie-style chicken, but it was doomed after a couple of years by equipment problems and long cook times. A tender roast product followed, but it lasted only a couple of years.

KFC executives say the company has solved operational problems with a new oven that grills a batch of chicken in just over 20 minutes.

"We think we finally have cracked the code," Hasselo said.

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