Hochman will support Artie Starrs, who was promoted from the U.S. president position to CEO in August, and still helm his KFC duties.
Chris Turner, Yum!’s CFO, said Hochman “really architected the turnaround” at KFC by “going back to the things that we know matter in our industry, having brand communications that resonate with consumers.”
Hochman clocked 19 years at Procter & Gamble before joining KFC in 2014. He was CMO leading up to his president promotion in 2017, succeeding Jason Marker. Hochman helped direct the “Re- Colonelization” campaign central to KFC’s comeback. “Kevin's turnaround experience in both CPG [at P&G] and KFC US and his proven ability to improve distinctiveness of brands and accelerate innovation make him ideally suited for this opportunity,” Gibbs said.
Additionally, Pizza Hut tapped George Felix as U.S. chief marketing officer. David Graves is also taking over as chief brand officer. Before, George was director of marketing for KFC Global, while Graves served as director of marketing strategy and innovation at KFC. Pizza Hut's U.S. CMO role was vacant since Zipporah Allen shifted to Taco Bell last year; the chief brand officer post since Marianne Radley departed in late 2019.
“It's obviously too soon to start to talk about the specific tactics that he's going to deploy. But I can say, quite a lot of franchisees reach out to me and say they are excited to have Kevin joining,” Turner said.
Pizza Hut experienced an uptick in bad debt expense in Q4. Bad debt expense related to royalties and digital fees was $8 million for the global division, up $4 million year-over-year. For the full year, it was $22 million, an increase of $12 million.
Turner said this was related “to just a handful of franchisee situations.” This is something Yum! brought up last report as it mentioned there being some overleveraged operators in the system. Some who “simply aren’t the right operating partner for us to grow this brand,” former CEO Greg Creed, who retired at year’s end, previously said.
Turner noted Thursday there was potential for sales softness in the near-term primarily related to its “largest franchisee.” When asked to elaborate by analyst David Tarantino, Turner said Yum! typically does not go into detail on specific franchisee situations. He said the majority of the brand’s operators “are really good partners.”
“They are well capitalized, committed and capable, and continue to drive the business in the right direction,” Turner said. “We do have a handful of situations where we are working with the franchisees to get them into a better place. Obviously, each of those processes take time and do create some choppiness. As a result, as an example, we do have one market in the U.S. where we have a franchisee whose assets simply weren't up to our standard.”
Yum! worked with them, it said, to exit the party from the system, and is making progress on getting a new franchise operator in place.
This provides a bit of glimpse into the lofty test ahead for Yum! and Pizza Hut as its tries to modernize one of the country’s largest legacy brands.