How KFC lost fast food’s chicken crown—and how it plans to win it back

It has also become one of KFC’s biggest obstacles.

Fried chicken is booming in the fast-food industry, delivering growth when inflation-fatigued consumers are dialing back visits. But customers are skipping drumsticks, breasts and thighs, reaching instead for sandwiches and tenders that have made Chick-fil-A, Dave’s Hot Chicken and Raising Cane’s some of the industry’s fastest-growing brands.

One challenge for chicken on the bone: These days, consumers eat 26% of their fast-food orders in their cars, according to market-research firm Circana. Ben McElroy, a 36-year-old father of two in Maryland, said he has cut back on KFC given his family’s preference for boneless nuggets and sandwiches.

Pieces of fried chicken from one of KFC’s buckets, McElroy said, “would be such a greasy mess."

Yum Brands, KFC’s parent company, has shaken up the chicken chain’s executive ranks in the U.S. It is revamping its menu, including its own versions of the chicken sandwiches that have become fast-food table staples. KFC is taking shots at rivals in its marketing, and in restaurants it is making light of the situation, putting up signs featuring a glowering Colonel Sanders.

“The Colonel ain’t smiling," read one sign.

KFC has experienced six straight quarters of U.S. same-store sales declines. After decades as the U.S. fast-food chicken champion, KFC now ranks fourth by sales and is set to be eclipsed by newer competitor Wingstop next year, according to market-research firm Technomic.

Raising Cane’s U.S. sales, meanwhile, grew 32% last year compared with 2023 levels, while Dave’s Hot Chicken’s increased 57%, Technomic said.

A KFC spokesman said the chain is in the early stages of a fast-food comeback story. “We’re optimistic about the trajectory," he said.

The Colonel’s battles

KFC’s corporate history traces the chain’s roots to the 1930s, when businessman Harland Sanders started serving his chicken at his Sanders Court & Café in Corbin, Ky. He honed his mix of 11 herbs and spices, and used a commercial pressure cooker to improve on traditional frying. Eventually Sanders donned his trademark white suit and started going by “Colonel," an honorary distinction granted by Kentucky’s governor.

Enterprising and competitive—Sanders in the 1930s once shot a rival business owner in a dispute—he decided to license his recipe to other restaurants. The first Kentucky Fried Chicken opened near Salt Lake City in 1952.

The buckets’ introduction a few years later proved a hit with busy families, and by the 1960s KFC was one of the largest fast-food restaurants in the U.S. It promoted themed buckets during the holidays and sold tens of millions of them annually.

A formidable rival emerged in Atlanta: Chick-fil-A, whose crispy chicken sandwiches helped the chain eclipse KFC in U.S. sales in 2012, according to Technomic. Chick-fil-A’s success fueled a new generation of chicken chains, including Raising Cane’s and Dave’s Hot Chicken, specializing in boneless strips and sandwiches, and winning over younger consumers.

Other fast-food powers, including McDonald’s and Taco Bell, have expanded their chicken options too, from sandwiches to tenders and nuggets.

U.S. fast-food restaurants’ menu listings for bone-in, fried chicken meals—KFC’s longtime core offering—have dropped 72% in the past four years, according to market-research firm Datassential. Menu listings for boneless wings, tenders and other portions have grown 29%.

KFC has continued to find success overseas, particularly in China, adding tens of thousands of locations around the world in recent decades. Around 90% of Yum’s KFC locations are now overseas, with its U.S. restaurant numbers dropping 33% from 2005 totals.

In the U.S., KFC’s sales peaked that year and have declined since, according to Technomic.

‘HERE, DAMN’

KFC’s U.S. franchisees for years have called on Yum to reinvigorate the brand. In April, the company installed KFC’s former global chief marketing officer, Catherine Tan-Gillespie, as its U.S. head. Tan-Gillespie outlined a comeback plan, which included offering a free bucket of chicken to customers who gave KFC a shot again.

“The Colonel would not be happy about our market share, and we’re serious about reminding America exactly who we are," Tan-Gillespie said in July.

KFC this month brought back its Original Honey BBQ sandwich, introduced in the late 1990s, at a discounted $3.99 price. The announcement swiped at Chick-fil-A while championing its own sandwich: “bigger than Chick-fil-A’s AND available on Sundays."

Chick-fil-A declined to comment.

The brand also brought back potato wedges in August after a roughly five-year absence, racking up around 80 million views with a social-media post stating, “HERE, DAMN."

KFC elsewhere is testing a new restaurant concept called Saucy by KFC, with a menu focused on tenders, drinks and 11 different sauces. Last month, parent company Yum acquired 13 restaurant locations that it plans to convert into additional Saucy units.

KFC’s monthly visits dropped by about 8% in the spring compared with last year but recently have improved, according to Placer.ai, which uses mobile-device data to analyze foot traffic. Consumers’ visits to rivals, such as Chick-fil-A, Raising Cane’s and Bojangles, have stayed strong.

Jonathan Blake, a 65-year-old retired director of an IT consulting firm from the Albany, N.Y., area, said KFC would coax him back if it added new products, like additional spicy options.

“I’d be there the next day," he said.

Write to Heather Haddon at heather.haddon@wsj.com and Christopher Kuo at chris.kuo@wsj.com