Fast food giant KFC has revealed it will begin to trial home delivery services in Australia from next month through a partnership with food delivery startup Foodora.
In a statement to SmartCompany, KFC Australia managing director Nikki Lawson said the company will start the trial at one NSW store in July, letting customers order food for delivery that will be served to their door via Foodora drivers.
“We are launching a one store test in partnership with Foodora to bring delivery to our Manly KFC restaurant in the next two to three weeks. A further eight restaurants in various states will be launched at a future date,” Lawson says.
“We believe delivery in Australia comes with big responsibilities. Once we are satisfied that we can meet our people, food quality, operational and financial obligations we will be delighted to rollout delivery nationally.”
Lawson told Fairfax the delivery model was the next “logical step” for convenience in the fast food space, and the company’s announcement comes more than two years after chicken-focused fast food retailer Red Rooster unveiled its home delivery options.
Red Rooster also unveiled its new “small footprint” model of stores in March, moving away from the drive-through and going for a “more accessible” model for inner city stores.
“You look at inner city or urban locations, the drive-through is not a viable real estate strategy. This enables us to make sure we can become more accessible in those built-up areas,” chief executive Chris Green told SmartCompany.
“The new concept is really only possible because of our delivery system. There are some Red Rooster stores where [delivery order volume] is 30%, and that’s obviously depending on what kind of area it is.”
For KFC’s new delivery plan, Lawson told Fairfax the company was approaching its delivery model “fairly carefully”, but will look to get more aggressive as it begins to realise the “viable business case”.
At home delivery “changing the nature” of fast food worldwide
In the eyes of Retail Oasis’ Pippa Kulmar, the business case for fast food delivery lies in reducing “friction” when ordering food, with delivery being the logical evolution from the drive-through model.
“Where everyone’s at in the space right now is working out how to reduce friction for customers securing and paying for the product. Drive-through did this to an extent, and now delivery can make it even easier,” Kulmar tells SmartCompany.
“Fast food delivery is really big in Asia, but the uptake has been slower in Australia due to our spread out cities and higher labour costs.”
Orders for delivery will be able to be placed through the KFC Express app, as well as the existing Foodora app. Kulmar has some questions about the partnership, as she believes it will require KFC to compete in the “intensely competitive” space on platforms like Foodora.
“Customers aren’t just choosing an order from KFC, they’re choosing an order from everyone on the platform. This means it will be really important for KFC to build a solid brand on the platform to secure sales,” she says.
“However, it will also get more eyeballs looking at their product through the platform.”
Similar to Red Rooster’s smaller format stores, Kulmar believes consumers could start to see small, kitchen-only fast food locations prioritised for pickup and delivery, saying the advent of delivery models are “changing the nature” of fast food stores worldwide.
“Stores could be just a kitchen and a place to pick up food from. Consumers don’t want the in-store experience anymore, they want the food at home experience,” she says.
“This is the natural progression from the drive-through model, and if the US is any gauge it’s going to be hugely successful.”
“Australia has just been slow to take off, so now it’s whoever rolls it out the quickest wins.”
Additionally, smaller format store models could give an edge to smaller players, believes IBISWorld senior industry analyst Nathan Cloutman. He tells SmartCompany smaller restaurants and cafes could take on bigger players through delivery-focused models.
“The traditional players are always going to be location-based, but we’re starting to see a lot more sales from smartphone apps and online. The change will come from smaller players like a lone pizza or kebab shop, starting to gear themselves more towards a delivery via UberEats or Foodora model,” he says.
“The whole online delivery service is giving smaller operators the edge in the market compared to bigger operators.”
SmartCompany contacted Foodora but did not receive a response prior to publication.