Introduction to KFC

Introduction to KFC

Kentucky Fried Chicken is one of the leading fast food Franchise concepts of today; present in a variety of countries around the world and has been proficient to launch a renowned International reputation in multiple continents. Starting in the United States in the 1930s, it has grown to become a true multi-domestic company. KFC has focused on foreign markets since the 1960s and has initiated a new challenge today in conquering Asia.

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KFC : How was it born

KFC, known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky . The Kentucky Fried Chicken® was founded by Colonel Harland Sanders (born on September 9, 1890) at the age of sixty-five KFC® is currently one of the largest businesses of the global food service industry and is widely known around the world as the face of Colonel Sanders. Every year, over a billion KFC® chicken dinners are served featuring the Colonel‟s “finger licking‟ good” special recipe. The Colonel had spread his industry to more than 80 countries and territories globally.

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Company history

KFC Corporation is the largest fast-food chicken operator, developer, and franchiser in the world. KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of roasted chicken products, side dishes and desserts. KFC, a wholly owned subsidiary of PepsiCo, Inc. until late 1997.Internationally, KFC has more than 3,700 units, of which two-thirds are also franchised. In addition to direct franchising and wholly owned operations, the company participates in joint ventures, and continues investigating alternative venues to gain market share in the increasingly competitive fast-food market. In late 1997 the company expected to become a wholly owned subsidiary of Tricon Global Restaurants, Inc., to be formed from the spinoff of PepsiCo's restaurant holdings.

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KFC in India KFC is the world‟s No.1 Chicken QSR( Quick Service Restaurant) and has industry leading stature across many countries . It has introduced many offerings for its growing customer base in India while staying rooted in the taste legacy of Colonel Harland Sander‟s secret recipe. Its signature dishes include the “crispy outside, juicy inside” Hot and Crispy Chicken, the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket and a host of beverages and desserts. For the vegetarians in India, KFC also has great tasting vegetarian offerings that include the Veg Zinger and Veggie Snacker . In India, KFC is growing rapidly and today has presence in 21 cities with close to 107 restaurants.

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KFC : Mission Statement, Vision and Strategy KFC‟s Mission Statement is: “To sell food in a fast, friendly environment that appeals to pride conscious, health minded consumers”

KFC‟s Vision And Strategy is : “Our passion, as a restaurant company, is to put a “Yum!” on people's faces around the world, satisfying customers every time they eat our food and doing it better than any other restaurant company. The unique eating experience at each of our restaurants make our customers smile and inspire their loyalty for life. Our associates around the world are trained to be customer maniacs.”

KFC‟s Objectives is to : 

Contribute to maintain and improve the profitability of restaurants

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Introduce more new recipes suited to local taste

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Introduce cheaper items in the menu

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Introduce healthier recipes

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Engage is CSR activities

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Work on the image of a healthy fast food chain through advertising

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Develop a strong culture of service and differentiate from competition

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Competitors In India , KFC faces tough completion from other QSRs and other local food joints. The chart shows the eatery holdings capturing the Indian market.

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Market segment

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KFC has divided the market of India into distinct segments on the following bases.  Demographical- In demographics their first segment is consisted of the income factor i.e. high income, average income and low income.  Behavior- In behavioral aspect they segmented the market on the basis of quality, taste and price. Geographical- On the basis of the geographical factor their market are in two main segments .i.e. Urban areas and Sub urban areas

Profile criteria: Gender: KFC is for each gender both male and female. Income: Everyone can use the KFC service upper and middle class . Age: age limitation for using this product above 15 Occupation: By profession also everyone can use this product means businessman student workers and other peoples. Education: there is no need of education to enjoy this product. Family life cycle: KFC is suitable in every stage of life like single married couple and also those who have children can use this product. Lifestyle: This product is used in every level of social class like upper, middle class. Attitude : When the customers once buy this product , they can use the product continuously. Purchasing decision: Often KFC changes the purchasing decision of customers because of its good attributes. Geographic region: Geographically KFC is used in every part of the country as well as all over the world.

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Product segment KFC specially deals in chicken products; it has the special raspy for chicken products that is why, KFC known as a chicken specialist all over the globe. KFC target the Asia and east side due to the demand of their chicken products Current Products • Kentucky fried chicken • Zinger burger • Krushers • GameBox • Twister • Boxmaster • Chicken Bucket • Hot wings • Fries • Corn on the cob • Zing Kong • Snacker(chicken & veggie) • Veggie Feast • Soft Drink • Coleslaw • Chicken Thali • Veg Finger • Snack Box • Sundae • Soft Twirl

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Mergers and Acquisitions PepsiCo, Inc. Management Acquired KFC for $841 million in 1986 KFC with   

New franchise contract Reduced staff Replaced KFC managers with their own

Refranchising Strategy    

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Relatively slow growth rate 1992-1997 Due to selling companyowned restaurants back to franchisees Company-owned Easier to control Higher levels of investment with low returns 1993 PepsiCo concerned with Coca Cola‟s returns

Pest Analysis Political : The operations of KFC are affected by the government policies on the regulations of fast food operation because of health concern and also control the license given for open the fast food restaurant and other business regulation such as franchise business. Good relationship with government in giving mutual benefits such as employment and tax is a must for the company to succeed in any foreign market.

Economic: Though for last 1 year there was economic slowdown all across the globe but the sales of KFC and other fast food chains did not slow down to that extent that of other sectors in. There is a continuous growth in per capita income; which will lead to higher buying power in the Hands of the Indian consumers.

Socio cultural: India is the second most populous nation in the world with an approximate population of over 1.1billion people. There has also been a continuous increase in the consumption of fast food in India. Thus this shows a positive trend for fast food industries in India.

Technological: The Indian fast food Industry is heating up with a lot of foreign players entering the Indian market. KFC should be looking to competitors innovation and improve itself in term of integrating technology in managing its operation. For example in inventory system, supply chain management system to manage its supply, easy payment and ordering systems for its customers and wireless internet technology.

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Value-Chain Analysis All the functions of KFC such as production, marketing, R&D, service, have a role in lowering the cost structure and increasing the perceived value of the products through differentiation. KFC specialized in chicken and they say, “No body‟s cooking like KFC today and we are the chicken experts” “There is no competitor for spicy chicken which is made by KFC” PHILOSOPHY OF KFC The CHAMPS Program Champs stands for their commitment to provide the best food and best experience for the best value. CHAMPS set the six universal areas of customer expectation common to all cultures and all restaurants concepts. These are: Cleanliness Hospitality Accuracy Maintenance of Facilities Product Quality Speed of Service

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Competitive Advantage KFC beats its competitors through the revising marketing strategy at every movement but the main competitor of KFC is Mc Donald

KFC Spicy Products Indian people like spicy products

McDonalds Burger and French Fries -------------

Arabian Rice and Zinger Burger

Big Mac

Free Delivery

Charges for home delivery

Chicken is eaten by every community

Beef is banned in some community

KFC uses Top to Bottom and Bottom to Top Approach

McDonalds Uses Top To Bottom Approach.

KFC is Co branding with Walls

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No such Case.

Michael Porters 5 Force Analysis

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SWOT analysis A SWOT analysis may be incorporated into the strategic planning model. It groups key pieces of information into two main categories: • Internal factors – The strengths and weaknesses internal to the organization. • External factors – The opportunities and threats presented by the external environment to the organization.

Internal Factors

STRENGTHS: Strong Brand Name, Goodwill And Reputation: The brand is

recognized and trusted in India for its quality products, price, and customer service.

Employee Loyalty: Employee Loyalty is one of the major strengths of KFC. The turnover rate in

the company is amongst the lowest in the Industry.

Customer Loyalty: KFC customer base is loyal to the KFC brand because of take out segment of

the Industry Ranks highest among all chicken restaurant chains for its Convenience and menu variety.

Located At Strategic Locations: Located at the most strategic joints all over the country in major

metros with the most posh surroundings 14 | P a g e

Effective Store Management /Cleanliness: The KFC restaurants are the ideal examples of neat

and clean atmosphere with regular and efficient employees

Competitive Marketing Strategy: Large scale promotion activities and localizing some of its

products grabbed a lion‟s share of the value share of the market

Strong Distribution Network: Focused on building outlets in nontraditional places like universities,

shopping malls, airports, movie halls.

WEAKNESSES:

Lack Of Innovation And Less Investment In R’n’d: KFC has not

yet invested much on R&D, and innovating new products for Indian Markets which may lead to failure of their products as they are not in line with the Indian mind set

Fewer Options Available For Vegetarians And Non Chicken Lovers: The menu is primarily

focused on a few types of chicken and thus has fewer choices available for other segments of fast food lovers and thus may fail to attract a wide range of customers.

Culture Incompatibility: KFC still finds it difficult to enter many markets mainly because of the

culture incompatibility with the local market.

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Recent Drop In Sales: The brand suffered recent drop in sales in the current year after the

recessionary phase and small competitors taking away shares of their market

External factors

OPPORTUNITIES:

New Markets: With more than 70% of the markets in India being unexplored and unorganized,

KFC has a good scope of expanding its operations in the country.

Cross Culture: People are opening up to fast

foods more regularly in their daily lives as the Indian mindset is fast changing.

Large Youth Population: As the young generation are more open to fast foods and demand it

more, this is good news for the company

Boom In Organized Retail And Consumerism: with urbanization the Aspiration level of the people

especially the youth has gone to a level at which American eateries are the “in” thing and the Fast food chains are cashing on it by attracting more of the market to their joints.

New Variety: Company can also come up with new variety in the menu like Pizzas, garlic breads

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THREATS:

Competition: Competitor companies like McDonalds, Subways, and other fast food chains more

familiar with the Indian ethos are fast catching up with the market.

Threat From Ngo’s And Political Organizations: Anti-KFC campaigns, such as the one from

PETA are affecting KFC‟s brand image in a negative way and result in direct dollar losses, as less people are consuming KFC chicken.

Saturated U.S Market: As the US markets

are already saturated ,company necessarily needs to look at offshore foreign markets to generate sales and keep up the profits.

Bulk Of The Population Is Vegetarian: India

is still mostly a vegetarian dominated cultured society. This may reduce the market share of the company.

Economic Crisis: With the Government facing a high fiscal deficit tax and duty hike will result

expenditures cutting on luxury food items. This is a serious threat facing KFC.

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Recommendation

Short term 

Introduce more new recipes suited to local taste



Introduce cheaper items in the menu



Work on the image of a healthy fast food chain through advertising

Long Term 

Change the image of KFC from fried to „healthy‟

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Engage is CSR activities related to animals & environment

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Develop a strong culture of good service

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Conclusion

With a rapidly growing economy and a developing middle and upper-class population well into the hundreds of millions, international companies such as KFC expanding into India was always inevitable. KFC maintain a Global Standardized Strategy however choose to adapt this strategy to suit international markets that require a higher level of local responsiveness and not so much focus on cost reductions. It now operates numerous stores in all the Indian cities and can see opportunity for continuous growth throughout the country as the economy develops.

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Bibliography  www.wikipedia.org  www.kfc.com  www.yum.com  www.datamonitor.com  www.ebscohost.com 26  Krug, Jeffrey, Kentucky Fried Chicken and the Global Fast-Food Industry in 1998. Marketing Management Case Analysis 2005.  www.answers.com/topic/kfc-corporation  www.mfa.org.my/?franchise_article:the-secret-of-kentucky-fried-chicken-kfc-success  ww.yumfranchises.com/about_yum.asp  www.scribd.com/doc/2021691/Kfc-Swot-Analysis  www.csgstrategies.com/search-pest-analysis-of-kfc.asp

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