Why KFC's 'FCK' crisis and Taco Bell's pop-up hotel built the brands: Global Yum! CEO Greg Creed
"We're not a tech company. We're not Uber. We are three iconic brands that are 60 years old and we've delivered a shareholder return in the 90th percentile of the S&P 500 over the past three years because we believe in people, culture and brand building."
Greg Creed started out as a young Australian marketer at Unilever 42 years ago. He has a lot of empathy for today's emerging marketing talent trying to carve out a career and success for the brands and products they work on in a world of prolific choice and marketing noise.
The striking characteristic about Creed's worldview is that some of the basic tenants of marketing remain unchanged - yet he can distil the complexity down to roadmaps that are easy to grasp. Not always simple to execute but the operating frameworks are.
Creed is also a rare CEO of a multi-billion company that centres the entire organisation not around systems and efficiency for the sake of it - but about obsessively chasing growth through people, culture and long-term brand building.
As the CEO of the listed $35bn Yum Brands, he fronts analysts and investors every quarter, defying their accounting and efficiency bias with his people, culture and brand model. Yum just posted its 16th consecutive quarter of worldwide same store growth for what, by the year's end, will be 50,000 mostly franchised restaurants.
"People and brands are the two greatest assets a company has and they don't sit on the balance sheet. I'm not knocking the finance people ... but I do believe a company's true value is in people and brands, not in the buildings or processes."
Two of his key management mantras are SOBO and RED - the former stands for Sales Overnight, Brands Over time; the latter Relevant, Easy, Distinctive. Let's hear him out.
"The average young marketer is bombarded with so many alternatives, or silver bullets, that the ability to build brands is probably more difficult today than it was when I started," he says. "Having said that, people and brands are the two greatest assets a company has and they don't sit on the balance sheet. I'm not knocking the finance people or anyone else from any other function but I do believe a company's true value is in people and brands, not in the buildings or processes.
"We have a philosophy at Yum which we call SOBO - Sales Overnight, Brands Over Time. The outcome of that is what we call building RED brands. We say to our marketers, 'your job is to drive sales overnight and build brand over time. Your job is not just to drives sales; your job is not just to build the brand'."
Creed personally teaches these modules around the world - last month the global marketing teams at KFC, Taco Bell and Pizza Hut gathered individually for a week where the program is taught. Creed credits Yum's marketing strategy lab, Collider - run by Yum's chief marketing officer Ken Muench, which hires anthropologists, sociologists and DJs - for the program's rampaging success.
"They're the smartest 14 people on the planet," says Creed. "Ken is one of the greatest consumer insights people and brand builders that I've ever had the pleasure to work with. He, his team and I have come up with what we call RED. We believe that what it comes down to is that great brands are RED brands, not the colour, obviously. We've developed internally at Yum a whole program around how you build a RED brand. So, how do you make the brand more functionally relevant, culturally relevant, pop culturally relevant; how you make the brand easy to see, easy to use, easy to interact with; how from a distinctiveness point of view you are unique, you stand out. Instead of TED talks, we have RED talks.
"There's a lot of people, some of them in our category, who believe cost-cutting is the only way to improve shareholder value. At the end of the day you run out of things to cut. I wouldn't be a marketer at an organisation who believes its job is to cut costs."
Consider the problem, double growth
"When I visit a market where things aren't going 100 per cent well, the question I ask is, what problem have you got? Have you got a relevance problem, an ease problem, a distinctiveness problem? The best example of that is two years ago in the second quarter of 2017, KFC same-store sales growth was 3 per cent. Just two years later in the second quarter of 2019, our same store sales growth was 6 per cent. To double that from 3 per cent to 6 per cent globally is a monumental effort and I put a lot of that down to the fact that this idea of RED has really gained traction at Yum."
Own your FCK ups
One of the riskier and now renowned examples of Creed’s culture and brand thinking at work was KFC’s crisis last year when the UK operation ran out of chicken after switching suppliers. KFC quickly created a witty response after resolving the supply issue with a national ad campaign saying “FCK, we’re sorry”. It was risky, probably unlikely in Australia despite our reputation for irreverence, but hailed by UK industry and consumers alike for dissolving the tension.
“It’s not particularly good when you’re a chicken company and you don’t have any chicken,” says Creed. “That headline was both unexpected and unmistakable because it used the three KFC letters and I also think it made the brand famous despite the fact it was in a crisis.”
"Technology will play an even greater role in the future … The further you move away from cash, the more money you spend on each order. So credit cards spend more than cash; mobile ordering spends more than credit cards and delivery spends more than all of them together. There's a benefit for customers and a benefit for us and our shareholders."
100x RoI on the Taco Bell hotel
Another example is Taco Bell’s unconventional strategy to be a 'lifestyle brand'. Earlier this year Taco Bell launched a pop-up hotel in Palm Springs in the US , which sold out in two minutes.
“I probably had more customer complaints about not being able to get a room at the hotel than I’ve had on any issue in the 25 years I’ve been at Yum,” Creed says. “It’s that sort of stuff that makes the brand famous. The payback on the investment is 100 times, not 100 per cent, 100 times the original investment.”
Chips with everything
And in case the young digital hipsters think Creed is still an old school, fast food brand guy, cop this: Yum is opening new stores at a rapid rate, putting technology at the centre of the strategy. Much like those retailers using their retail locations as distribution points for online ordering and home delivery, Yum is doing the same with its outlets for in-store, drive through and home delivery.
"Technology will play an even greater role in the future," says Creed. "Technology that's aimed at both the team member and the customer. So things like kiosks - why are they important? Because kiosks make it easier for the customer to place an order and they have greater confidence around that order being accurate. Why do we love it? Because the further you move away from cash, the more money you spend on each order. So credit cards spend more than cash; mobile ordering spends more than credit cards and delivery spends more than all of them together. There's a benefit for customers and a benefit for us and our shareholders."
"If you're a CMO and you're at a company that doesn't believe in brand-building or people, you may not want to stay there. At Yum, I believe our marketers believe they can become brand presidents and divisional CEOs and the CEO of the company. Culture and talent attracts great people."
Cost cutting doesn't cut it
Creed steps down later this year from his CEO duties but he will remain on Yum's board and stay in the US. His words of advice for marketers is this:
"If you're a CMO and you're at a company that doesn't believe in brand-building or people, you may not want to stay there. At Yum, I believe our marketers believe they can become brand presidents and divisional CEOs and the CEO of the company. Culture and talent attracts great people. It's hard for me to say what's happening in other companies but there's a lot of people, some of them in our category, who believe cost-cutting is the only way to improve shareholder value. At the end of the day you run out of things to cut. It's important that marketers have a voice, even if it's a voice that maybe doesn't want to be heard. I just think I wouldn't be a marketer at an organisation who believes its job is to cut costs.
"I think our total shareholder return in the last three years is in the 90-something percentile of the S&P 500. We're not a tech company. We're not Uber. We're not any of these people. We are three iconic brands that are 60 years old and we've delivered a shareholder return in the 90th percentile over the past three years because we believe in people, culture and brand building."
Hot takeout for Australia
As a final shout out, Creed points to his Australian team at KFC, led by CEO Nikki Lawson as a global benchmark for the brand.
“KFC Australia is one of our premier gold standard RED brands,” he says. “The team there led by Nikki Lawson has done an amazing job over the years. I think we’ve put together 28 quarters of consecutive same-store sales growth.”
And for any marketer looking for a pro-marketing company to work for, keep your eye on Yum and its expansion plans for Taco Bell.
"Taco Bell always zigs when everyone else is zagging," Creed says. "I think this year we'll exceed $11bn. You'll see a rapid growth and development of the Taco Bell brand in Australia and it will bring a lot of that category-of-one lifestyle marketing to the brand in Australia as well."
Greg Creed is a keynote speaker at the AANA's annual Reset conference in Sydney, Tuesday September 17.