“Alexa, I’m hungry” – Why KFC India’s latest innovation highlights a sector on the move

By Nick Hall | 05 Feb 2019 View comments

Industry analysts are warning that the latest market innovation from KFC in India could be a sign of wider sector evolution, as fast-food chains scramble to meet consumer demand.

In January, the chicken chain unveiled a partnership with Amazon that gave customers across India the ability to order from their nearest KFC restaurant via voice command on the Amazon virtual assistant, Alexa.

Customers with an Alexa enabled speaker can now have the device read aloud menu items, list discounted products, and place an order, once the skill is downloaded and installed through the Alexa app.

While the technology implementation remains in its infancy, KFC India’s willingness to adopt new market ideas mirrors the approach utilised by a number of franchise fast food chains back home, such as Domino’s, which recently introduced an augmented reality app to complement its GPS driver tracker.

As the innovation locomotive gathers steam, it seems fast-food chains are becoming both the barometers and the test-fields for fresh-to-market initiatives, prompting industry onlookers to ask some important questions.

Namely, are fast-food chains more reliant on technology as a driver for growth than other industries? Or is it that the nation’s fast-food franchises are better equipped to deal with an evolving consumer demand?

Innovate to stay relevant

Bao Vuong, senior industry analyst at IBISWorld Australia said that technological innovation remained a critical component in brand relevance, suggesting the over-saturated market was a key motivator for early innovation adoption.

“Fast-food chains will try and stay ahead of the trends and ahead of their competitors and try to innovate to come up with different avenues to boost convenience for their consumers,” Vuong told Inside Franchise Business.

“By being one of the first fast-food chains to adapt a certain technological change, this gives the chain implementing that change a big leg up in the industry and boost in revenue if done right.”

Industry disruptors

Innovation in the sector hasn’t always been viewed as positive however, with the roll-out of industry disrupting delivery platforms such as Uber Eats and Deliveroo met with deep franchisee and operator concern.

Vuong reiterated that for fast food chains to remain profitable, they must adapt to the market conditions, reflected in a growing trend that seen brands work to implement delivery platforms into the marketing strategy, menu offering and franchisee retention scheme.

“At first, fast-food chains were a bit hesitant to get into the food delivery scene, but as demand surged, fast-food chains acted accordingly. This trend is expected to provide an edge for traditional fast food operators with extensive store networks and significant capital resources,” Vuong said.

The industry expert believes that while delivery platforms have the potential to impact franchisee profit, the diversification of revenue streams opens the possibility for greater network growth.

“Demand for ordering platforms have grown exponentially over the past five years and to be able to tap into that, however small is a boon to the industry,” Vuong said.

“Although still only a small part of many fast-food chains’ revenue, this share can be expected to grow over the next five years as demand for convenience continues to grow. This has provided an extra stream from where fast-food chains can generate revenue from, which is always a positive.”

Vuong warns the fast-food sector is an evolving beast, heavily reliant on consumer taste and preferences, as new consumer-centric innovations are brought to market, chains and franchisees must be willing to adapt.

“It can be very hard to keep up with constantly changing consumer preferences for fast-food chains. One of the most important factors for fast-food operators in this changing environment is the ability to easily alter menus where necessary to maintain market share,” Vuong said.