Fast-food fried chicken chain closing 20% of its restaurants

When a restaurant closes, it's often replaced by another restaurant. That make sense because even if the original eatery sold off all of its equipment, the building it occupied was built to house a restaurant.

Most restaurant chains have a team that evaluates real estate. Sometimes, when another chain runs into trouble or goes bankrupt, those teams identify the opportunity to take over multiple locations.

In that case, the challenge is identifying why the previous occupant failed. If the answer isn't that the location does not draw enough customers, then it might make sense for a new eatery to move in.

It's rare, however, for a McDonald's to close and a Burger King to move in. 

That's sort of what's happening at a number of locations that are currently run by the PDQ (People Dedicated to Quality). The chain has sold 13 leases to Yum! Brands, which will close them and rebrand them to its KFC spinoff Saucy concept.

PDQ isn't closing all of its restaurants

PDQ has tried to win market share in the very crowded chicken tender space, by openly talking about its process. The chain wants to doing everything better than its rivals.

It shared its history and how it operates on its website. 

"At PDQ Chicken, we’re famous for our crispy, hand-breaded chicken tenders and a serious committment to to our local communities.

Founded in Tampa, Florida in 2011 by Outback Steakhouse co-founder Bob Basham and MVP Holdings CEO Nick Reader, PDQ has quickly grown into one of the most beloved fast-food chicken restaurants across Florida, North Carolina, New Jersey, and New York.

What sets PDQ apart? We blend the quality ingredients of a fine-casual restaurant with the speed, convenience and value of a fast-casual joint. PDQ's hand-breaded buttermilk chicken tenders and nuggets, sandwiches, and hand-spun milkshakes are only the beginning."

The chain also released a separate statement clarifying what's happening with the locations it's essentially selling to Yum! Brands  (YUM)  for use as Saucy locations.

"We have some important news to share. Some of our PDQ locations will soon be closing and reopening under the YUM! family of brands.

This isn’t a goodbye to every location, but it is a heartfelt thank you for the moments we've shared together. From family dinners to shakes with friends, your support has meant the world to us. You've been part of something truly special, and for that we are so grateful."

The company also warned people to use their gift cards before their local store closes. Those cards, however, will be accepted across the chain's remaining locations,

PDQ currently operates over 60 restaurants across three states.

Yum! Brands is expanding Saucy

Yum! Brands cited a 2024 Technomic Flavor Consumer Trend Report which said that 35% of Americans choose a restaurant based on its sauces, and one in four millennial and Gen Z consumers BYOS (that’s "bring your own sauces"). 

"Yum!’s newest test concept, Saucy by KFC, is all about the sauce. The restaurant menu, built on the flavor legacy developed by Colonel Harland Sanders with its Original Recipe chicken seasoned with 11 herbs and spices, also features 11 signature sauces because executives believe that flavorful condiments are its future," the company shared in a press release.

Related: Beloved sandwich chain closed restaurants, bakeries

The early numbers for Saucy have been promising.

"We continue to be encouraged that weekly sales have averaged materially higher than the pre-existing KFC since opening and that we're connecting with a younger demographic as 1/3 of Saucy consumers are under age 30. We have a lot of learning ahead of us, and we are eager to leverage the invaluable consumer insights relevant for our larger KFC U.S. system," outgoing Yum! Brands CEO David Gibbs said during the company's second-quarter earnings call.

Saucy is a new spin on KFC

Restaurant Business Online's Jonathan Maze summed up the problem Yum! Brands is solving in a recent article.

"Yum Brands' chicken concept is struggling in the U.S., so it is creating another one," reads his headline, followed by a subheading that gives more detail. "The Bottom Line: The company plans to open more locations of its chicken tenders concept Saucy, even as KFC’s struggles worsen."

Motif Brands Founder Reilly Newman also shared comments with the Food Institute on the new KFC brand.

“I find it quite creative to focus on the sauce, as this has become a major cornerstone for other brands. However, to invert the consumer flow from food with sauce to sauce with food is a very strategic undertaking,” Newman said. “It sidesteps the inevitable taste-test battle between chicken offerings while reframing the offering to focus on who has the better sauce,” he said. 

Timeline: Saucy by KFC

• March 28, 2024: KFC introduces Saucy Nuggets, offering five new dipping sauces nationwide, including flavors like Nashville Hot and Korean BBQ.
• December 20, 2024: KFC announces the opening of its first Saucy by KFC location in East Orlando, Florida, scheduled for December 23.
• December 23, 2024: The inaugural Saucy by KFC restaurant opens in Orlando, featuring a menu centered around 11 signature sauces and crispy chicken tenders.
• January 2025: KFC unveils a new store prototype for Saucy, targeting Gen Z consumers with a modern design and an emphasis on sauces and dips.
• April 2025: KFC announces plans to open 20 new Saucy locations across the U.S., aiming to revitalize the brand and capitalize on the concept's success.
• September 2025: Yum! Brands acquires 13 PDQ restaurant site leases in Florida, with plans to convert them into Saucy by KFC locations, expanding the brand's footprint.

Related: Restaurant chain closes 50% of locations in Chapter 11 bankruptcy