The Real Reason Australians Are Choosing KFC Over Restaurants

What is compelling Australians to abandon fine dining and turn to economical fast-food alternatives like KFC?

When traditional restaurants across Australia and New Zealand are scaling back operations, closing early, and struggling to attract customers, KFC Australia’s largest franchise, Collins Foods, posted a whopping profit increase of 6.6%, with their shares going up by 8%.

The real reason is not simple. The answer involves a combination of economic pressures, changing consumer preferences and the overall direction of the hospitality industry in the country over the past few years.

How is the cost-of-living crisis affecting dining choices in Australia?

Post-covid19 economic conditions gave birth to a cost-of-living crisis in Australia, with interest rates and mortgage payments skyrocketing multiple times in the last few years. People have started saving to pay for the essentials, hence significantly cutting down discretionary spending. Outdoor dining is the first victim when it comes to cutting discretionary spending. Therefore, fine-dining restaurants are out of the game for budget-conscious consumers. Instead, they need to look towards budget-friendly options like KFC.

The stark difference between the decline of traditional restaurants and the rise of restaurants like KFC is a case study of how the economy is shaping consumer preferences.

It is interesting to note that the fast-food industry is also not immune to inflation. Major fast food chains have drastically increased their Menu Prices in Australia over the past few years. Despite the price hike, fried chicken is the top choice of diners. Traditional restaurants have higher overhead costs compared to fast-food chains like KFC and McDonald’s due to staff service, premium ingredients and dining ambience, etc. This difference results in rising overall prices of menu items in traditional restaurants.

How is KFC strategically expanding in the Australian market?

Australia is considered a less saturated market with a huge untapped potential for fast-food chains like KFC. Major fast food chains opened more than 300 new stores in Australia last year. Most of the stores were opened in outer suburban areas, which are considered the heartland of their customer base. Such areas have less competition due to a lack of diverse restaurant choices and a higher presence of younger families that are more like to eat at fast-food restaurants.

This strategic approach is not just limited to expanding geographic presence. The products have been optimised to attract new customers. In a bid to target more diners, such fast-food chains have expanded their menus to accommodate breakfast and snacks, increased the number of drive-thru services, 24-hour operations and partnered with delivery platforms.

How are eating habits changing in Australia?

Research into Australia’s fast-food consumption patterns reveals that 32% of Australians prefer buying meal deals at what seems to be a discounted price rather than buying the items separately. That is why value bundling and meal deals have become a vital part of restaurants’ marketing strategy.

CEO of the Australian Retailers Association (ARA) has also pointed to changing patterns in customer behaviour over the past few years, especially after COVID-19. Though she was specifically pointing to the fashion industry, the broader pattern is also visible in the dining industry. Consumers are finding ways to eat outside while reducing the financial impact. Impressive growth by KFC during this period is evidence of the deep understanding of market dynamics and customer loyalty.

What makes KFC a comfort food choice?

Behind KFC’s rise in Australia, there is psychology at play, too. In times of uncertainty and financial crises, people often turn to food choices that evoke a sense of nostalgia and satisfaction. KFC becomes a popular choice due to its brand recognition, consistent taste profile, and emotional association. Predictability is an important factor to consider in times when uncertainty is ruling everywhere. Predictable and consistent dining experience at KFC makes it a winner.

Not only that, but comfortable dining at economical rates makes it ideal for customers to choose fast-food options when eating out. Fine dining restaurants may offer premium service and ambience, but they can’t match the financial affordability offered by chains like KFC. So it’s all about maintaining a delicate balance between a good experience and financial affordability that is the secret sauce of KFC’s success in Australia.

So, in conclusion, it is safe to say that KFC’s recent rise in Australia can be attributed to many factors, including the cost-of-living crisis, strategic positioning, and psychological attachment. KFC deserves the credit for smartly outplaying its competitors in a rising market like Australia.