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The fried-chicken wars: Inside KFC’s weird new fight to dethrone Chick-fil-A

Darrell Hammond plays Colonel Sanders in KFC's new ad blitz. (Courtesy of KFC)

These are dark days for KFC's once-dominant chicken empire. After five years of crumbling sales, the extra crispy mega-chain, which in 2012 lost its throne as America's top chicken seller to Chick-fil-A, now makes less money than eateries half its size, like Applebee's and Panera Bread.

Now, 75 years after "Colonel" Harland Sanders first served his original recipe at a six-seat dining table in rural Kentucky, the chain is betting $185 million on a massive, bizarre turnaround campaign in hopes of winning a seat again at the fast-food table.

The chain is blasting out TV ads, offering new Southern-style grub and remodeling some of its 4,300 stores with humanized touches, like boards they say will name the regional farm where their chickens came from.

Perhaps KFC's biggest gamble: Reviving the long-dead visage of Colonel Sanders himself, "the brand’s greatest asset," with a handful of increasingly odd "web, broadcast, social media and in-store experiences."

"Young people all have this idea that everyone can be a star on social media. Well, the Colonel was the consummate American showman," said Kevin Hochman, KFC's chief marketing officer. "People see him as an old person, because we haven't talked about him in a while. But he was the person with bling before bling was even a word."

In the United States, KFC has joined other once-infallible fast-food kings, like McDonald's, in seeing a drop-off in business from buyers increasingly lured to fast-casual, advertised-fresh outposts like Chipotle Mexican Grill. In China, the chain (and others) has seen sales disappear amid worries over the Avian flu.

It has struggled against small-but-growing rivals like Popeyes Louisiana Kitchen and Bojangles’ Famous Chicken ‘n Biscuits, which debuted on the stock market this month, and faces new competition from upstarts like classy burger joint Shake Shack, whose shares climbed last week after it filed a trademark application for "Chicken Shack."

But KFC's biggest loss so far has been in its Cersei-Margaery-style battle with Chick-fil-A, its younger Southern rival. After eclipsing KFC in 2012, the cult favorite known for its boneless chicken sandwiches ran with the prize, making $1 billion more in the U.S. than KFC did last year.

But KFC has big backing from its owner, Yum! Brands, the $40 billion fast-food colossus behind Taco Bell and Pizza Hut. And executives say it has the name, history and nostalgia they're hoping will win Americans back.

Over the next few years, KFC will redo its packaging, uniforms and dining decor in red-and-white stripes, which executives call a throw-back to the classic look of carnival tents. The chain will also expand its menu, offering Southern-ish fare like barbecue baked beans with slow-pulled chicken alongside a river of ranch-like Finger Lickin’ Good™ Sauce.

In a world of health-food hype, the chain is doubling down on its fried-chicken bucket, which Hochman called a "shareable innovative package" that still gets about three-quarters of its sales from parents with kids at the table.

"Many families see our bucket meals as home-meal replacements," Hochman said. "They may want to cut corners, but they want to know the people who are making their meals aren't cutting corners."

Unlike its fast-food competitors — Wendy's with its veggie burgers, McDonald's with its kale — none of KFC's rebranding promises touch on a shift toward healthier cuisine. Instead, the chain will continue to trumpet its heaping helpings of extra-crispy yardbird, buttery biscuits and gravy-flooded mashed-potato bowls. (One new package design includes the quote, "There are few problems a bucket of fried chicken can't solve.")

The chain also will try and get people to think less about trouble spots in its history of poultry farming — including a scandal last year involving a tainted meat supply — and think more about its chicken "traceability." Promotional spots will say KFC's chickens come in raw from regional farms and are hand-breaded and fried before leaving the kitchen.

"The new healthy is really about real food: I know where the chickens are from, how they're prepared, that it's done the proper way," Hochman said. "We're very on trend with that."

Amid all these changes, KFC has yet to announce any shift on one of the biggest issues in modern farming: The use of chicken raised by antibiotics. McDonald's said in March it would phase out the chicken due to worries over deadly, treatment-resistant "superbugs." Last week, Wal-Mart became the first major retailer to ask its farmers and meat producers to limit their antibiotic use.

To market these changes, KFC tapped Saturday Night Live alum Darrell Hammond to resurrect a live-action version of Colonel Sanders, who has not been seen on TV in 20 years, in ads that launched Monday.

Last week, @KFC tweeted a "State of Kentucky Fried Chicken Address," in which Hammond's Colonel wheezes and drawls his way through all the changes he's missed before declaring, "I'm back, America." (Of cargo pants, he declares, "You seen these pants? That's too many pockets.")

In real life, the Indiana-born Sanders worked a parade of odd jobs before franchising KFC, which he sold to a group of investors in 1964 for $2 million. (Sanders died in 1980, and the chain made $4.2 billion last year in the U.S. alone.)

KFC hopes to play that story for laughs, launching a Web site, the Hall of Colonels, that plays out Sanders' history. One still highlights a gas-station gunfight that has spread (spuriously) across the web.

The chain also unveiled an offbeat, 8-bit-style web game, ColonelQuest, that plays like a dark acid trip of Sanders' life. In one level full of bouncing babies, the player, as Sanders' "amateur obstetrician," is told to "catch as many babies as you can so the Colonel won't get sued for malpractice!"

It's not the only way KFC is trying to hook young eaters: An ad campaign in Germany includes a tray liner that can be used as a Bluetooth keyboard for a smartphone. Those stores are part of KFC's growing global enterprise: The chain now has 7,300 international outposts, 3,000 more than it has back home.

But KFC draws the line at comparing its rebranding to that of McDonald's, the fellow global fast-food titan now going through its own turnaround. In the company's view, Sanders is far removed from the legacy of Ronald McDonald.

"This is much more than a mascot," Hochman said. "He was literally the greatest chicken salesman in the world."