KFC and Taco Bell Target Gen Z Harder

Yum Brands Focuses on Gen Z with New Beverage and Sauce Concepts

Yum Brands, the parent company of Taco Bell, KFC, and Pizza Hut, recently released its Q2 earnings report, which fell slightly short of analyst expectations. However, the company is shifting its focus to attract a younger demographic, particularly Gen Z customers, through innovative product launches and strategic expansions.

CEO David Gibbs, who will step down in October, emphasized during the earnings call that the company is implementing the right innovation strategy to capture the attention of younger consumers. He highlighted the importance of trendy drink and sauce concepts that resonate with this age group.

Expanding Beverage Offerings

One of the key initiatives is the expansion of Taco Bell's Live Más Café model, which centers around customizable drinks. This concept has been gaining traction, with plans to expand it further this year. Additionally, KFC is rolling out its Saucy concept, which includes chicken strips and a variety of dipping sauces, as well as its Kwench line of drinks. These specialty offerings are designed to appeal to Gen Z and have already contributed to increased sales.

Taco Bell has also announced plans to launch twice as many new menu items in 2025 compared to 2024. The focus on limited-time offerings aims to generate excitement among consumers. The December launch of the Live Más Café has been particularly successful, with data showing a significant increase in transactions and more beverage users visiting the café.

Customizable Drinks and Consumer Insights

The Live Más Café was inspired by Gen Z's preference for curated, customizable drinks. It offers over 30 signature beverages, including Churro Chillers, specialty coffees, Refrescas, and Dirty Mountain Dew Baja Blast Dream sodas. According to data from Placer.ai, a location intelligence and foot traffic data firm, Taco Bell drove Yum Brands' US foot traffic in Q2. New, value-driven menu items contributed to a 2.6% increase in visits year over year, with average visits per location growing by 1.5%.

Yum Brands has also announced plans to expand the Live Más Café model within existing Taco Bell restaurants to 30 locations across Southern California and Texas by the end of the year.

KFC's International Success and Future Plans

While the US market saw some soft numbers, KFC's international business in South Africa, Spain, Canada, and Japan helped strengthen sales in Q2. Business Insider previously reported that KFC's "Kentucky Fried Comeback" campaign in the US market saw a record-breaking surge in KFC Rewards sign-ups and digital traffic, indicating early success.

In an effort to attract younger customers in the US, KFC is also focusing on its Saucy restaurant concept, which features customizable chicken tenders and a variety of dipping sauces. Gibbs announced plans to open several additional test units near the existing Saucy location in Orlando by the end of the year.

"We continue to be encouraged that weekly sales have averaged materially higher than the pre-existing KFC since opening and that we're connecting with a younger demographic as 1/3 of Saucy consumers are under age 30," Gibbs said during the call. "We have a lot of learning ahead of us, and we are eager to leverage the invaluable consumer insights relevant for our larger KFC US system."

Future Expansion and Innovation

KFC's Kwench line of drinks, including refreshers, shakes, and iced coffees, is currently being tested at select locations, primarily in Australia and the UK. While Gibbs did not specify when these new drink offerings might be introduced in the US market, he expressed excitement about their potential impact on the business.

As Yum Brands continues to invest in innovative concepts aimed at younger consumers, the company is positioning itself to remain competitive in the fast-food industry. With a focus on customization, limited-time offerings, and expanding its presence in key markets, Yum Brands is taking bold steps to secure its future in a rapidly evolving landscape.