Israel seems to repel American fast food chains. Starbucks. Subway. Dunkin Donuts.
They've all had to call it quits there. KFC has actually tried and failed three
times to appeals the Israeli market. But unlike its rivals, KFC is refusing to
admit defeat. In fact, the American fried chicken chain is trying again for a
fourth time. The Calculus reported the KFC plans to open 100 locations within
five years of reentering the market. That's especially ambitious considering
that at its peak it had just 10 restaurants in the country after
spending 20 years trying to build a following.
KFC started as one branch in Tel Aviv in the 1980s. It didn't last but was revived
in 1993. Ownership then changed hands again in 2003 but by 2012, Euromonitor
says KFC had closed up shop for good in Israel. KFC's failure isn't all that
shocking because of one simple foot very big problem, its menu. Israel is a
notoriously difficult market to crack because roughly 60% of the Jewish
population keeps kosher, meaning they follow a set of religious laws that
restrict them from eating certain foods. One of the major rules: don't mix meat
and dairy products and that happens to be the very definition of classic
Kentucky Fried Chicken. There have been all sorts of reasons that have been
offered through the centuries that's why that the case and I think most people
generally agree that that milk is that the substance of life but all mammals
suckle when they're born. Whereas need of course represents death
and so perhaps the prohibition of eating milk and meat together have to do with
valuing valuing life and not mixing tangible symbols with life and death.
To be fair, KFC did try to pivot to accommodate Israeli taste buds. Israel's
Ynetnews reported that food scientists in Dallas spent two years
perfecting a formula to make its fried chicken kosher. Normally when you make
fried chicken, the process looks something like this. You dunk the chicken,
scatter and bread it, seesaw it, rack it, and then fry it for 10 minutes.
The kosher KFC looks more like this. Here's the stuff that changes. Instead of
coating the chicken with milk powder, you use a milk flavored soy powder is a
substitute, which supposedly has the exact same flavor as the original recipe.
In 2009, KFC rolled out this kosher friendly fried chicken to try to tap into a wider clientele but the customer base just wasn't there.
So when they become kosher in 2009, they changed it to a non-dairy, or we call it a milk alternative, soy milk and
that changed the flavoring of the coating. So again, that didn't seem to help them in the market because KFC's about their taste.
Patrons complain the soil turn it just didn't taste as good and that the batter didn't stick properly to the chicken.
In every household, in Israel chicken is eaten at home. Its like a staple food. So you need to really give them
a good reason to eat chicken, you know, in a fast food restaurant or a fast food chain.
The year before KFC launched its kosher menu, it's Israeli locations were pulling in 4.6 million dollars but
by 2012, it was generating just a million dollars according to Euromonitor estimates.
The problem was not that people don't like KFC. They like KFC a lot. The problem was that, with KFC, you see,
there are some restrictions in the product. The product from KFC is very complicated, their products, and
they couldn't get the product right here. So, the company, they weren't willing to compromise.
These religious dietary laws also get into the ethics of how you have to treat animals when
they're live and how they're slaughtered. The animal should be should be
relatively cared for. You know, some of the modern cattle practices, for example,
raise questions for the modern thinker and to whether or not that practice
can lead to a kosher slaughter. But ultimately where the, where the tradition
lies on the at the moment that the slaughter the animals should be very
quick. Plus methods to ensure that the poultry is raised and killed in
accordance with kosher standards can get expensive. Because the process by which
it's slaughtered and then brought to the market, has more steps involved in it then than what we
find in the non-kosher food industry. But other foreign chains have managed to
master the kosher formula. Yum! Brands owns both KFC and Pizza Hut and unlike
its sister company, Israelis love Pizza Hut. It ranks third out of all fast food
options in Israel and you'd think that a kosher version of the Big Mac would be a
hard sell but McDonald's has actually ranked number one in Israel and that
includes its local rivals. Branches given kosher certificates have slashed dairy
from the menu and used custom blue and white signage. So, KFC clearly seems to be
struggling to strike the right formula for the kosher market but when it comes
to Halal, or Islamic dietary laws, KFC has been met with way more success. It has
nearly a thousand Halal certified outlets across the Middle East and it's
also caught on in the Palestinian territories. KFC has nine locations in
the West Bank and according to the New York Times back in 2013, there was
apparently an underground network that smuggled buckets of 12-piece chicken
into Gaza from Egypt for a marked up price of $27. There are
certain parallels to the religious rules that govern kosher and halal dietary
practices, with one very big exception: meat and dairy.
Halal, in general, you don't have the issue of mixing meats with dairy.
So you don't need to change the powder milk of the coating and hince its just about the way the product is slaughtered.
The dairy factor doesn't play a role and hince it doesnt change the flavor
Euromonitor tells us things may be different for KFC this time. There's currently a seismic shift
underway in Israel from fine dining to fast-food. There are also more
international consumers to capture. Since 2000, not only have more than 30,000
Americans moved to Israel but the country has also received an influx of
Europeans, many of whom are more accustomed to Western cuisine. CNBC
reached out to KFC to find out what they're planning to do differently this
time around but they're keeping their plan under wraps. For now, they just say
they're very optimistic about the Israeli market and strongly believe in
KFC success there. Analysts tell us that if KFC makes a few tweaks to its menu,
that could also make a big difference. So maybe fourth time will be the charm for KFC and Israel