Chicken dinners really are winners in fast-food battle

Times

4 days ago

W ould you queue for four hours to eat some fried chicken? Hundreds of people did in December when Dave's Hot Chicken opened its first UK restaurant in Soho. The queues have died down now, but the willingness of people (to be honest, those in the line were mainly young men) to pursue the latest thing in warm oily hen has driven a surge of investment in fried chicken outlets in the past two years. KFC, owned by New York-listed Yum Brands, is still the big daddy with about a thousand UK outlets, three quarters of which are franchised. It wants to be bigger still. Two months ago it said it would invest about £1.5 billion over the next five years to open another 500 shops.
KFC's main competition used to be a swarm of small independents but now there is a long list of medium-sized chains. Dave's is relatively new here, but among the bigger players are Popeye's, Wingstop, Slim Chickens, Morley's, Dixy Chicken and Southern Fried Chicken, to name just a few. There is a whole subset with punning titles, of which the best has to be Mother Clucker.
Lots of things are driving this fowl hegemony. There is a big market to take a bite of; KFC reckons the UK fast-food chicken sector is worth £3.1 billion a year. Private equity houses have in the past made a killing (and, when they got it wrong or overexpanded, a giant loss) from the rapid exploitation of successful fast-food formulas. They are always looking for the next big thing.
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There are also some very astute franchise investors, who specialise in putting their capital to work under someone else's brand. The UK franchisee for Dave's Hot Chicken is Azzuri Group, which also operates three Italian-themed chains, Ask, Zizzi and Coco di Mama, and, as sounds natural in these days of pan-national food offerings, Boojum, a Mexican chain in Ireland. Less well known are the scores of small entrepreneurs who plough their money into food franchises in their local areas — the McDonald's millionaires, as they are known.
This poultry proliferation is not just anecdotal. Maria Vanifatova, who runs the food service industry consultancy Meaningful Vision, keeps track of openings and footfall. She says the number of chicken restaurants has grown by about one third since 2021 (from 1,485 to 1,904) while the wider fast-food industry is up about 20 per cent (from 16,307 outlets to 19,303). While the fastest growth has been in London, it is far from a capital-centric phenomenon. Between 2033 and 2024, chicken outlets grew by 12 per cent in the northwest, 11 per cent in the Midlands and 10 per cent in the southeast (excluding Greater London).
What is of more interest to potential investors is that people's appetite for chicken seems to be growing, while other food types are flat at best. Seton Leung, head of UK Food Service at the market research company Circana, says that the number of chicken servings in fast-food restaurants grew 6 per cent in the year to April compared with the previous 12 months. The fast-food and drink market as a whole was down 0.3 per cent — figures borne out by the results this week from Greggs, the bakery chain, which was dogged by tough trading in the first half of the year.
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Circana also talks to customers about why they choose different kinds of food, and Leung says chicken is more often viewed as a treat than other kinds of food. Diners also talk about wanting something 'light' and 'going somewhere the kids like'. Leung points out that there are no religious problems with chicken, and it is adaptable to all kinds of national cuisines.
So chicken is the flavour of the month, but potential investors have something new to consider, something that seems to have become an important determinant of the success of all new fast-food chains. I went to an industry conference in June and nearly all the speakers who ran restaurants stressed the vital importance of getting their social media right. Quality, location, price, efficient management — all those things had to be addressed but killer socials could make all the difference.
Will Stratton-Morris, who recently stepped down as chief executive of Caffè Nero in the UK, gave the example of the chain's decision to offer a matcha drink for the first time. They had expected perhaps a few thousand sales in the first months. After it was picked up by some widely followed social media accounts, they were at 140,000 and counting.
Good social media does not just mean a positive review. Jim Bitticks, the president of Dave's Hot Chicken, was one of the speakers, and said the right ASMR content on social media was vital. ASMR, in case you have missed this, stands for autonomous sensory meridian response, and is used to describe sounds that will elicit certain types of emotional or physical response.
For Dave's, Bitticks said, this meant the crunch of someone biting into a piece of chicken, and the oohs, aahs and mmms they make as they eat it. If you take a look at Dave's TikTok account, you will get the idea — it is full of close-ups of customers crunching, mmming and sighing. Disgusting, perhaps, but it seems to work. Dave's was set up in 2017 by three friends who put their savings together to set up a stand in a car park in Los Angeles. In February Roark Capital, the private equity company that owns Subway, bought the company for $1 billion. There have been some other big private equity deals recently. The three entrepreneurs who bought the UK franchise for Wingstop sold out just before Christmas for more than £400 million.
The influx of institutional money could indicate the top of the fried-chicken boom; other fast-food themes have grown rapidly on the back of big investment and then struggled to make money because of over-expansion. Most of the people I spoke to at the conference said they thought there was room for growth in chicken, although much of it would come at the expense of others: a hard time looms, perhaps, for purveyors of burgers, fish and chips, and sandwiches. Their best defence might be to take on the chicken kings at their own game, and recruit an online army of slurpers, smackers and grunters.
Dominic O'Connell is business presenter for Times Radio