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Col. Sanders fading out as KFC goes upmarket?

A bucket of Kentucky Fried Chicken is seen at a KFC restaurant in New York on Thursday, Oct. 26, 2006. On Monday, Oct. 30, at a news conference in New...
A bucket of Kentucky Fried Chicken bears the image of founder Col. Harlan Sanders, at a KFC restaurant in New York on Oct. 26, 2006. KFC is moving upmarket and the colonel's image does not feature at the new test location.MARK LENNIHAN / AP

Is this the end for the colonel?

Fast-food chain KFC is not only tossing out the chicken bones, but also the quaint image of founder Col. Harland Sanders as it tests a more upmarket restaurant.

The fried chicken chain says it's opening a location called "KFC eleven" next month near its headquarters in Louisville, Ky., that will serve flatbread sandwiches, rice bowls, salads and only boneless pieces of its Original Recipe chicken.

The name of the test restaurant is a reference to the 11 herbs and spices Sanders used in the "secret" Original Recipe.

But the big news is that the restaurant's exterior won't feature Sanders, the avuncular, silver-goateed southern gentleman in a white suit and string tie, whose likeness has long been front-and-center at traditional KFC locations.

Sanders, who died in 1980, started selling his Kentucky Fried Chicken at a gas station he ran in 1930 in Corbin, Ky. In 1964 he sold the corporation for $2 million. KFC, which now has some 15,000 outlets in 105 countries, is owned by Yum Brands Inc., which also owns Taco Bell and Pizza Hut.

KFC eleven's opening is a reflection of the challenges facing traditional fast-food chains such as McDonald's, Burger King and Wendy's. The problem is that people in their 20s and 30s are increasingly heading to chains such as Chipotle Mexican Grill and Panera Bread, where they feel they get better food for slightly higher prices.

(See also: "Seeking the business crowd, Dunkin' Donuts rolls out new look")

In a note to investors about KFC's test, Janney analyst Mark Kalinowski said that such "fast-casual" chains remain the fastest-growing segment in the restaurant industry. He noted that other chains, included Applebee's and Red Lobster, have recently started testing similar formats as well.

John Cywinski, president of KFC, said in an interview that people often equate KFC with "buckets of fried chicken on the bone," primarily as a dinner or weekend option. He said the company hoped to use the new test location to learn how it can update its offerings and draw in a broader customer base, particularly women.

KFC eleven will serve updated side dishes such as coleslaw and mashed potatoes, along with Original Recipe chicken. But the chicken will be the boneless variety the chain rolled out in April as an easier-to-eat alternative to its traditional breast, thigh and drumstick pieces.

At the time, the chain said the rollout was intended to address people in their 20s and 30s who grew up on chicken nuggets and tenders, and generally tend to prefer chicken without bones even as adults.

Although the decision to serve only boneless chicken at KFC eleven was driven by primarily by that trend, Cywinski said another factor was logistics: cooking boneless and on-the-bone chicken in the new space would be too complicated, given all the other menu items.

(See also: "Restaurants rethink menus to woo baby boomers")

As KFC continues testing the restaurant format with additional locations and redesigns, Cywinski said it will likely try offering chicken with bones as well at some point.

The first KFC eleven that opens Aug. 5 will be a stand-alone restaurant, with a second location opening in a strip mall in coming months.

Within the next year, Cywinski said the chain plans to open another iteration of the restaurant.

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