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CONSULTORÍA INTERDISCIPLINARIA EN DESARROLLO CID/GALLUP, S.A . KFC Value Research - Focus Group Report- Costa Rica, Nassau, Ecuador, and Trinidad. June, 2012. PRESENTATION.
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CONSULTORÍA INTERDISCIPLINARIA EN DESARROLLO CID/GALLUP, S.A. KFC Value Research-Focus Group Report-Costa Rica, Nassau, Ecuador, and Trinidad June, 2012
PRESENTATION At the request of YUM! International Restaurants the qualitative study “KFC Value Research” was conducted with the objective of understanding the lifestyle decisions and trade-offs associated with maintaining a “balanced wallet” between daily wants and needs among young adults. In order to accomplish the objectives of the study, sixteen focus groups among young adults between 18 and 30 years old were conducted in Costa Rica, Nassau, Ecuador, and Trinidad using a base discussion guide for the graphic analysis presented in this document. CID Gallup is grateful for having been selected to conduct this research and stands ready to respond to any questions the client may have about the way it was carried out or the contents of this particular document. The following information is confidential and may be subject to professional secrecy. It is intended uniquely for use of the addressed individual or entity and those who are authorized to receive the information. If you are not authorized to view this information, you are hereby notified that any disclosure, copy, distribution or any action taken based on the content of this document is strictly forbidden and may be illegal.
METHODOLOGICAL SUMMARY • Methodology: Qualitative. • Technique: Focus Groups. • Coverage: Costa Rica, Nassau, Ecuador, and Trinidad. • Number of groups: 16 groups in total. • Dates of groups: Between June 11 and 19, 2012. • Moderation guide: Designed by CID and approved by YUM! Executives. • Approximate duration of each group: 90 minutes. • Number of participants per group: Between 8 and 10. • Informants profile: Young adults between 18 and 30 years of age, medium KFC users, medium to heavy fast food users, and heavy competitor users, lapsed KFC users, medium to heavy fast food users, have eaten from the value menu at least 3 times in the last month.
TOPICS EVALUATED IN THE FOCUS GROUPS 1 2 3 4 Lifestyle Understand the lifestyle decisions and trade-offs associated with maintaining a “balanced wallet” between daily wants and needs. Dining Out Explore the consideration set and the path to purchase for fast food users on a budget. Value Menus Understand the value equation among fast food value menu users (“deal seekers”). • KFC • Uncover opportunities to improve KFC’s brand perception as a place that’s “affordable to eat every day”.
CONCERNS ABOUT CURRENT ECONOMIC CLIMATE When asked if they consider that the world economic crisis has had a direct impact in their lifestyles, most participants indicate not being personally affected but suggest becoming more aware of their budgets and overall spending habits… “I was still living with my parents at that moment, and I can´t really say that we were directly affected, but locally [Nassau] the price of gas and food has gone up significantly so I have to look for those places that give me the real bang for my buck”. “You realize that many people you know had lost their jobs, and you prepare yourself for the worst…so you stop splurging and start saving more” “I wasn´t necessarily affected [by the economic crisis] but I did become more aware of what was going on around me, so I started saving more and spending less, and once you learn that habit, it´s hard to come out of it specially with the price of products increasing so drastically” The rise in the price of products and services has exerted an impact on the spending habits of most participants.
BUDGETING In general terms, budgeting has become more of a lifestyle for most participants who indicate allocating somewhere between 5% and 30% of their monthly budget specifically on fast food… • Those who allocate a larger percentage on fast food consumption are specially young adults who do not have kids on their own, have a full time working schedule, and spend most of the day outside their homes.
SACRIFICES ARE WILLING TO DO WHILE ON A BUDGET When value seekers find themselves with a limited budget, going out –and thus eating out- and personal expenses (clothing, beauty supplies, etc.) tend to be the principal categories that consumers are willing to sacrifice to “make ends meet” at the end of the month… “When I have little money, I try to stay at home and watch a movie instead of going out at all” “I bring food from home to work instead of eating at a restaurant when I have a limited budget” “I usually compare the prices of different restaurants and see who has the best promotion out there”
LOCAL SUBSTITUTES When eating on a very limited budget, many indicate substituting their fast food consumption for local food and/or street food. Nonetheless, fast food remains as their primary go-to option when eating on a budget especially because most perceive there is an added benefit or value that is being offered by fast food brands that is not being delivered by their substitutes … • Nassau • Bamboo Shack • Imperials • Sammie Chicken • Chinese food • Costa Rica • “Sodas” • Cafeterias • Chinese food “I´d rather go to a fast food restaurant because it´s more convenient” “I visit those places [local restaurants] only when necessary because it´s usually less comfortable eating there” • Trinidad • Indian food • Gyros • Roti • Doubles • Chinese food • Ecuador • Chaufa • TropiBurger • Mayflower • American Deli • La González
PRICE SENSITIVITY What customers are expecting in return to an increase in the price of meals It is possible to infer that value seekers are highly sensitive to very small changes in the price of fast food… “I stopped visiting some of the fast food restaurants because they increased the price of their combos and it wasn´t like the size of their products were getting any bigger” • Larger portion size • Additional products (sides, desserts, drinks) • Drink refill • Better service • Better quality of products Some informants indicate being willing to sacrifice the sides, drinks, and even the size of their meals when on a really tight budget, though the quality of products and customer service are not part of this trade off.
CONSUMPTION DRIVERS When choosing a place to eat on a budget, most suggest taking into account the following functional variables… Proximity “It is likely that when I have little money to spend on food, I don´t have money to spend on transportation either, so I would choose the nearest restaurant that´s on my way which is usually McDonald´s” Price Participants are highly sensitive to small differences in price, therefore it is common for them to compare what fast food restaurants are offering in their value menus Abundance “I´d go where I know I´ll feel satisfied with the little money I have” Service Consumers are still expecting to receive a good customer service, cleanliness, and appealing environment when eating on a budget, which is why many choose eating at a fast food restaurant instead of their local substitutes Quantity vs. volume Many suggest preferring those restaurants where they could eat several –small- products rather than one large product for a similar amount of money “In Wendy´s you can get a regular soda, regular fries, a cheeseburger, a chicken sandwich, and a frosty for $3.99”
RESTAURANTS TO EAT ON A BUDGET-Costa Rica- Informants were asked to group local fast food brands according to the statement “I can eat inexpensively there”. The following are some of these groupings… Expensive Inexpensive Inexpensive Expensive Inexpensive Expensive In Costa Rica, most suggest that McDonald´s is the restaurant that offers both value and affordability. This is true for lapsed KFC users and medium/heavy KFC users alike.
RESTAURANTS TO EAT ON A BUDGET-Nassau- Informants were asked to group local fast food brands according to the statement “I can eat inexpensively there”. The following are some of these groupings… Expensive Expensive Expensive Inexpensive Inexpensive Inexpensive -Nassau-
RESTAURANTS TO EAT ON A BUDGET-Ecuador- Informants were asked to group local fast food brands according to the statement “I can eat inexpensively there”. The following are some of these groupings… Expensive Expensive Expensive Inexpensive Inexpensive Inexpensive -Ecuador-
RESTAURANTS THAT DELIVER VALUE-Costa Rica- Informants were asked to group local fast food brands according to the statement “Gives me a good value for the money I spend/ It’s worth what I pay” .The following are some of these groupings… Poor value Poor value Good value Poor value Good value Good value -Costa Rica-
RESTAURANTS THAT DELIVER VALUE-Nassau- Informants were asked to group local fast food brands according to the statement “Gives me a good value for the money I spend/ It’s worth what I pay” .The following are some of these groupings… Poor value Good value Good value Poor value Poor value Good value -Nassau-
RESTAURANTS THAT DELIVER VALUE-Ecuador- Informants were asked to group local fast food brands according to the statement “Gives me a good value for the money I spend/ It’s worth what I pay” .The following are some of these groupings… Poor value Poor value Good value Poor value Good value Good value -Ecuador-
THE IDEAL VALUE MENU • Consumers suggest that the ideal value menu should offer the following… Users feel they are being given the option to choose from an assorted list of products, “The ideal value menu should have sides, burgers, sandwiches, soda, and desserts ”, “One should be able to put together your own combo” Variety It was suggested that most restaurants have several products made out of the same base ingredient, “In KFC everything has the same chicken in it, they should try to add other products too”, “McDonald´s is now offering a wrap, and they recently added the Bacon Cheeseburger” Innovation Consumers prefer to have the freedom of replacing some of the products from their favorite combo when they feel like it and not having to pay extra for this option, “In Wendy´s you can order chili instead of fries for the same price” Flexibility Ideal value meal Including healthy fast food meals is now becoming more of a trend and participants are now expecting to see salads, fruits, fruit salads, wraps, and grilled chicken among others, as part of their ideal value menu offering Healthy options The majority of informants agree on the fact that value menus should offer a variety of desserts such as ice cream, fruits, tiramisu, cheesecake, pies, and sundaes among others Desserts
COMPETITIVE LANDSCAPE-COSTA RICA- The majority of participants in Costa Rica are familiar with McDonald´s value menu, which is highlighted for being consistent, innovative (new products are constantly being added to the menu), affordable, fulfilling, and most important, the brand´s star products -Big Mac and Quarter Pounder- are part of the restaurant´s “Small Prices”, which is considered to add credibility to the value menu... Average expenditure on a value meal Between ¢2,500 and ¢3,000 It was highlighted that the “Small Prices” value meal was constantly being promoted not only in the media, but at the restaurant level as well, “That´s the first thing you notice when you visit a McDonald´s, they put the ´Small Prices´ ads right in front of you” “It´s more convenient because it gives you the option of putting together your own meal”
COMPETITIVE LANDSCAPE-NASSAU- In Nassau, Wendy´s “Mix and Match” value menu is the top choice when eating on a budget especially because of the variety of products including healthy options such as salads and fruits. It was also indicated that for a price of $3.99 users could get an assorted menu that could be enlarged for $6. Not only is this restaurant highly competitive in its value menu offering, but its environment is more appealing for young adults… Average expenditure on a value meal Between $3.99 and $6 “You go into a Wendy´s and you immediately notice the difference with KFC; the restaurants have a nice décor, dim lights, comfortable seating, it´s modern too and clean” “Their employees always welcome you with a smile”
COMPETITIVE LANDSCAPE-TRINIDAD- JAP´s value menu in Trinidad is becoming more of an option today, especially among those who have stopped visiting KFC because of its increase in the cost of meals paralleled to a reduction in the size of products and/or due to problems with their customer service. Interestingly, the brand is not necessarily aggressive in promoting their menus, and the restaurants are not that all accommodating either, but it is possible that the brand is gaining ground among those who have lost their credibility on KFC… Average expenditure on a value meal Between TT$20 and TT$30 “Jap´s is more affordable and the chicken is good too”. “I like Jap´s because it´s cheap compared to KFC, the chicken is tasty and they give you more chicken”. “Their garlic sauce is the best and the chicken is bigger!”
COMPETITIVE LANDSCAPE-ECUADOR- Many highlight the ample variety of offerings of McDonald´s in Ecuador, which include desserts, breakfast meals, salads, chicken and beef burgers, as well as other service related benefits such as expanded business hours (open 24 hours) and good customer service. Many also suggest that McDonald´s is very aggressive in promoting their value meal… Average expenditure on a value meal Between $3 and $4 “KFC and McDonald´s have similar prices, but McDonald´s is more fulfilling and has more variety”. “I don´t feel satisfied with KFC´s $2 combo”. “Unlike KFC, McDonald´s allows you to put together your own meal so you can eat something different every time”
KFC ´S IMAGE Med/Heavy Users Lapsed Users • KFC is among their top choices when eating on a budget, though it tends to be the principal one especially in Trinidad and Ecuador, whereas in Nassau and Costa Rica, Wendy´s and McDonald´s respectively are the go-to restaurants for med/heavy users as well. • It was interesting to notice that KFC users tend to criticize KFC´s value offerings and overall service more than the brand´s lapsed users, thus suggesting that this group is expecting more from the brand. • In Trinidad and Ecuador, where the brand has a wider coverage, most indicated that KFC was convenient, “There´s a KFC everywhere in Trinidad”. • Some still perceive KFC as a family oriented brand and not their top choice when eating alone, “KFC is more for families than anything else; they have the chicken buckets and mega meals that are focused on families or large groups and not for people that eat on their own”. • Many lapsed users also indicated not being aware of KFC´s value meal, “I didn´t know that KFC had a value meal”, “Does KFC have a value meal? Since when…?” • Lapsed users in Ecuador suggest that KFC needs to improve on its image positioning, “KFC needs a killer advertising campaign, it´s so worn out”
KFC´S PRODUCT Med/Heavy Users • KFC´s “unique flavor” is what drives users into visiting this brand. Most highlight KFC´s for offering the best chicken, quality products, and abundant meals. • In Trinidad it was observed that KFC´s “Munch Pack” was something participants could eat on a daily basis. • KFC value menu was considered fulfilling by many, therefore it is possible to infer that the former contributes to the perception of KFC´s abundance brand value, “Their meals look healthy, they have rice and lentils, and it´s better than eating a burger” (Ecuador). • Lapsed users indicated having problems with KFC´s consistency, “I did not know what to expect when I visited KFC, sometimes you got large pieces, and sometimes their pieces were tiny”, therefore highlighting opportunities in the consistency of products. This was noted in all 4 markets of the study.
KFC´S PRODUCT • Variety of the value meal was mentioned as being one of KFC´s most important weaknesses by both users. In all markets, most users ended up ordering the same for the money they were given as part of this research assignment: a two-piece chicken, fries and drink combo, or a chicken sandwich, fries and drink combo, (in Ecuador the one-piece chicken, salad, rice, lentil, fries and drink-meal was the most popular in this activity)… “I felt cheated after leaving KFC. I paid $5.99 for two pieces of chicken, a regular soda and small fries when I could have had more at Wendy´s for $3.99” (Nassau). “I left [KFC] feeling satisfied but there were not many options to choose from” (Costa Rica), “They should throw in a biscuit or a larger soda for that price” (Trinidad). “It´s the same chicken as always, everything has the same taste” (Ecuador). The fact that most informants suggest that in KFC “everything is made out of the same type of chicken”, may be driving the perception that the brand lacks variety of ´non-chicken´ products in its value meal
KFC´S PROMOTION Many participants in all 4 markets indicate having problems identifying KFC´s value menu, which for them is not very well differentiated or promoted on the restaurant´s menu boards. Although the value meal platform exists in these countries (“Justo a tu gusto” in Costa Rica and “Whattadeal” in Nassau), informants of each country suggest not having seen ads for this promotion at the point of purchase nor seen them identified as such on the menu boards… • “It´s like if they were trying to push on us their most expensive products and don´t want us to realize that they have a value meal”, “There are so many products in the menu board that it´s hard to find the value meal, it gets confusing”. -Costa Rica- -Nassau
KFC´S PROMOTION The fact that KFC has been traditionally more aggressive in promoting its bucket meals, family oriented products, and meals made for sharing while its competitors have been increasingly advertising their value meal platforms, could explain why many consumers do not recall seeing ads of KFC´s value platform… “I asked the employee about their value menu and she pointed at the combos, and that´s why I ended up getting a combo. But after I had placed my order, I realized that they had the ´small prices´ [value meal] too, which I didn´t know they had. And when I looked at the value menu, which is not evident at first sight, I wished I would´ve ordered something else instead and not the combo I bought”. In Costa Rica, participants were highly critical of KFC for not offering their specialty or “star product” -chicken on the bone- on the value menu, “I was expecting to see their chicken at a reduced price in the value menu, and was surprised to see that they didn´t have it”, “McDonald´s has their Big Mac at a reduced price and KFC should also have their chicken in their value menu”.
KFC´S PRICE Med / heavy users Lapsed users Trinidad • There was a division on KFC´s affordability to eat on a regular basis: some participants especially in Trinidad and Nassau (where it was also noted that KFC charges an additional cost for specific chicken portions and for specialty sodas), suggest that KFC´s prices have increased unlike other fast food restaurants that have kept their prices unchanged. • In Costa Rica and Ecuador, KFC´s value meal is perceived as a competitive option in terms of affordability, but not necessarily so in terms of variety. • In Ecuador, KFC´s users perceive its value meal to be on par with McDonald´s, since most tend to spend a similar amount (between $4 and $5) when visiting these restaurants. • Before participating in the focus group activity, KFC lapsed users held the notion that the brand was expensive and not affordable to eat on a daily basis, “KFC is more for a splurge than anything else”, “For me KFC is a place to visit on special occasions or with my family”. • After their visit, many lapsed users indicated being “nicely surprised” of KFC value menu, “I usually eat a lot and thought that I was going to leave the restaurant feeling hungry but I ordered a chicken sandwich, some fries and a soda and paid about ¢1,800 ($3.60) and felt satisfied”, “I think it´s possible to visit KFC when you have little money; maybe they should advertise their promotions a little more”. KFC users and lapsed users alike in Trinidad suggest that the price of meals have increased significantly in a short period of time in this market, while the size of their portions have become smaller during the same period. For many, KFC has not justified this increase by improving their service.
VISIT PROFILE Participants were asked to visit a KFC restaurant prior to their visit to the focus group activity. The following are some of the products they purchased…
VISIT PROFILE Participants were asked to visit a KFC restaurant prior to their visit to the focus group activity. The following are some of the products they purchased…
VISIT PROFILE Participants were asked to visit a KFC restaurant prior to their visit to the focus group activity. The following are some of the products they purchased…
