The restaurant space has gotten increasingly competitive in recent years as many chains have expanded their footprint.
Plus, restaurant chains are fighting for business at a time when consumers are spending less on dining out.
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Inflation has forced many people to curb their restaurant spending. And while you’d think fast-casual chains would be immune to that disruption, a good number have closed locations or even filed for bankruptcy due to slowing sales.
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In 2024, fast-casual Tex-Mex chain Tijuana Flats filed for Chapter 11. Denny’s, a fast-casual chain known for its breakfast menu, hasn’t been forced into bankruptcy – at least not yet. But it’s closing many locations in the coming months to cope with declining revenue.
Fast-food restaurants are also feeling the pain. Even though they tend to be even more economical than their fast-casual counterparts, consumers are still shying away due to budget constraints.
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KFC is struggling to win customers back
Although it’s a popular name among fast-food restaurants, KFC seems to have lost its spark with consumers. Its sales have declined in recent months. Part of it may be due to the fact that the fried chicken the chain is known for isn’t exactly an easy meal to eat on the run.
It’s one thing to scarf down a burger while driving or riding the bus. It’s harder to eat chicken and mashed potatoes on the go.
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And while consumers might not find the chain’s menu innovative enough, it could also boil down to too much competition.
Between Chick-fil-A, Wingstop, and Popeyes, KFC is far from the only chicken game in town. That, too, is no doubt hurting its bottom line.
KFC has competition from a surprising source
It’s bad enough that KFC has to compete with a host of chicken powerhouses. But now, popular ice cream and fast-food chain Dairy Queen is giving KFC a run for its money.
Dairy Queen is known for its iconic Blizzard treats. And while some Dairy Queen locations only serve ice cream, the majority have a larger menu that includes everything from burgers to chili cheese dogs to fries.
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Dairy Queen has chicken sandwiches on its menu, as well as a classic chicken basket. But now, Dairy Queen is kicking its chicken game up a notch with two new offerings.
The first is a spicy Buffalo Sauced & Tossed Chicken Strip Basket. The second is a sweet Honey BBQ Sauced & Tossed Chicken Strip Basket.
Each basket comes with four chicken strips, fries, Texas toast, and a choice of dipping sauce.
These two menu additions are sure to delight chicken fans and make Dairy Queen an even more worthwhile food destination. But while this is good news for Dairy Queen customers, it could spell trouble for KFC.
KFC, meanwhile, is trying to win customers over with its new Saucy restaurant concept. The idea behind Saucy, as the name suggests, is to focus on the dipping-sauce element.
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The concept has the potential to be a strong differentiator for KFC. But at a time when the chain is trying to drive sales, the last thing it needs is added competition.
Consumers don’t necessarily flock to Dairy Queen for the chicken alone. For many, it’s the sweet treats that draw them in.
But all told, Dairy Queen just gave customers another reason not to visit KFC. And the chain could be in for a world of trouble if its Saucy concept doesn’t draw people in.
