The fastest growing piece of the U.S. restaurant business is the fast-casual dining sector, perhaps best exemplified by Chipotle Mexican Grill Inc. (NYSE: CMG), Panera Bread Co. (NASDAQ: PNRA), and recently public Noodles & Co. (NASDAQ: NDLS). Now Yum! Brands Inc. (NYSE: YUM) is sending a contender into the ring — its venerable KFC stores.
The new stores hope to attract a younger, more upscale clientele, and the first test store will open August 5 in Louisville, Ky. To be called “KFC eleven,” the fast-casual eateries will feature more salads, flatbread sandwiches and boneless chicken. The restaurants will not only have a different menu, but the look will be trendier in an effort to attract the younger, freer-spending customers.
Fast-casual dining sales grew by more than 13% in 2012, nearly triple the rate of growth in the quick-service sector that includes KFC and McDonald’s Corp. (NYSE: MCD). Fast-casual dining offers menu choices that are generally believed to be healthier at a price that’s higher by a dollar or two than items from quick-service stores.
Yum! Brands needs some help to replace slowing growth in China, where the company’s stores were hard hit by problems with tainted chicken and another outbreak of bird flu earlier this year.
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