LOUISVILLE, KY. – Increasing digital sales stands as a main reason why executives of Yum! Brands Inc. will keep expanding the company’s technology capabilities.
“My aspiration, and it’s shared by our brand CEOs and presidents and our technology leaders around the globe, is that someday, 100% of our sales should be powered by digital,” said Christopher L. Turner, chief financial officer, in a Dec. 13 investors day. “I don’t know how long it’s going to take us to get there. I’m sure it will be a challenging journey with some twists and turns, but I know with our distinctive capabilities, our differentiated strategy, our amazing talent and the partnership of our incredible franchisees we’ll get there.”
Digital sales currently make up 40% of sales at Louisville-based Yum!, the parent company of Pizza Hut, KFC, Taco Bell and The Habit Burger Grill. Yum! segments its technology capabilities into three areas, Mr. Turner said.
“First, we have a set of capabilities that drive easy experiences for our customers,” he said. “Second, we have capabilities that drive easy operations for our team members and our franchisees, and third, we have capabilities that allow us to drive easy insights from our data. That allows our marketing teams, our development teams, other teams to make better and faster decisions.”
Yum! in 2021 acquired two technology companies: Dragontail Systems Ltd. and Kvantum, Inc.
Dragontail, a provider of technology systems for the food industry, focuses on optimizing and managing the food preparation process from order through delivery.
“Dragontail grew up in the Pizza Hut system,” Mr. Turner said. “We acquired it, brought it in-house. We're now deploying it across our other brands with big success.
“What it does, in a multichannel fulfillment environment, it directs our kitchen for when to cook the food so that the food is coming off the line at the right time. When a delivery driver is available, our customers are getting fresher, hotter product. Customer experience goes up. Plus, we’re seeing productivity improvements in our driver force.”
Sixty percent of Pizza Hut’s transactions are digital, said Aaron M. Powell, global chief executive officer at Pizza Hut.
“Colombia was one of the first countries we had that went all in with Dragontail,” he said. “Simple fact about pizza: the hotter, the better. Hot pizza is great. Within Colombia after Dragontail, the time from average time the pizza goes in the oven until when the consumer eats it went down by 8 minutes — hotter, fresher pizza.”
Kvantum develops and deploys algorithms and artificial intelligence (AI) models to help brands understand consumer behavior and make informed media and calendar decisions.
“Kvantum’s calling card is marketing optimization,” Mr. Turner said. “In each of our 150-plus countries around the globe, the transition from traditional marketing to digital marketing is happening at different paces. Quantum helps us get that right in each market. You see an example here in Pizza Hut UK, more than a 40% increase in return on ad spend.”
He added Yum! is using TikTok for its conversational commerce capabilities, including the ability to order in chat or in social media channels.
“We're using TikTok’s e-commerce capabilities to rapidly scale up our digital business,” Mr. Turner said. “We’ve implemented it in a number of smaller markets. You see two examples here: KFC in Mexico and Pizza Hut in Costa Rica, where TikTok’s e-commerce engine has driven significant conversion lift.”
Technology and digital sales have picked up at Taco Bell.
“We had virtually zero sales in 2018 in Taco Bell that were digital,” Mr. Turner said. “This year, we will be north of $3 billion in digital sales: 23% mix. So a lot of progress. Of course, that 23% is way behind our 40% overall mix. So there’s still a lot of opportunity.”
Mark King, chief executive officer of Taco Bell, added, “Digital has really opened up on a huge opportunity for us, not just in transactions, not just on increased check, but really on connecting on a personal level to our consumers because we believe that this personal connection, which is connecting to the heart of a consumer, not just the head of a consumer but the heart, is what will maintain that consumer over an extended period of time.”
KFC has taken steps to simplify operations in the back of the restaurant, said Sabir Sami, CEO of KFC.“These include things like Bluetooth temperature sensors that are placed both in our chicken walk-in coolers as well as in hot holding cabinets to make sure that the chicken we serve is within brand standards on temperature and also serves more (field) safety standards as well,” he said. “Secondly, we’re also using oil-temperature sensors. So these are sensors that are especially designed to check the quality of the oil to make sure that the oil is within standards.”