KFC History: From Roadside Restaurant to Global Franchise

VIVEK COLLEGE OF COMMERCE
CHAPTER -1 INTRODUCTION
Kentucky Fried Chicken (KFC) - one of the most known fast food chains in the world started in the early 1930's by Kernel Sanders in the Southern USA as a small franchise operation. Colonel Sanders has become a well-known personality throughout thousands of KFC restaurants Worldwide. Quality, service and cleanliness (QSC) represents the most critical success factors to KFC's global success. KFC (Kentucky Fried Chicken) is a fast food restaurant chain headquartered in Louisville, Kentucky, United States, which specializes in fried chicken. An "American icon", it is the world's largest fried chicken chain and the second largest restaurant chain overall after McDonald's, with over 17,000 outlets in 105 countries and territories as of December 2011. KFC was founded by Harland Sanders, who began selling fried chicken from his roadside restaurant in Corbin, Kentucky during the Great Depression. Sanders was an early pioneer of the restaurant franchising concept, with the first "Kentucky Fried Chicken" franchise opening in Utah in the early 1950s. Its rapid expansion saw it grow too large for Sanders to manage, and he eventually sold the company to a group of investors. Despite this, his image was still used as branding (as "Colonel Sanders"; Sanders had been made a Kentucky colonel after the success of his initial restaurant), and he worked as a goodwill ambassador for the company until shortly before his death. Throughout the 1970s and 1980s, KFC had mixed success at home as it went through a series of corporate owners who had little or no experience in the restaurant business, although it continued to expand in overseas markets. In the early 1970s, KFC was sold to the spirits firm Heublein, who were taken over by the R.J. Reynolds conglomerate, who sold the chain to PepsiCo. PepsiCo spun off its restaurants division (also including Pizza Hut and Taco Bell), as Tricon Global Restaurants, which later changed its name to Yum! Brands. The chain primarily sells fried chicken pieces and variations such as chicken burgers (chicken sandwiches [US]) and wraps, as well as side dishes such as French fries and
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coleslaw, desserts and soft drinks, often supplied by PepsiCo. Its most famous product is pressure fried chicken pieces, seasoned with Sanders' "Original Recipe" of 11 herbs and spices. The exact nature of these ingredients is unknown, and represents a notable trade secret. KFC is famous for the slogan "finger licking' good", which has since been replaced by "So good", and "Nobody does chicken like KFC". KFC's two major single markets are in its home country and China, which together contain around half of its outlets. KFC has been the target of an ongoing campaign by the animal rights organization PETA, although KFC executives have protested that the chain is unfairly singled out for criticism. The chain has also been accused by Greenpeace with contributing to the destruction of the world's rainforests with unsustainably sourced cardboard and paper packaging. Food, Fun & Festivity, this is what KFC is all about. Leading the market since its inception, KFC provides the ultimate chicken meals for the Chicken Loving Nation. Be it Colonel Sanders secret Original Recipe Chicken or the Hot & Spicy version, every bite brings a YUM on the face. At KFC we proudly say: KFC has more than 11,000 restaurants in more than 80 countries and territories around the World. In 1971, Heinlein, Inc. acquired KFC, soon after; conflicts erupted between the Colonel (which was working as a public relations and goodwill ambassador) and Heinlein management over quality control issues and restaurant KFC is part of Yum! Brands, Inc., however in the case of Pakistan KFC builds the relation of Quality Service and cleanliness for Customer. KFC was acquired by PepsiCo in 1986; it had grown to approximately 6,600 units in 55 countries and territories. Due to strategic reasons, in 1997 PepsiCo spun off its restaurant businesses (Pizza Hut, Taco Bell and KFC) Perfecting its secret recipe of 11 herbs and spices in 1939, KFC has come a long way, with over 10,000 outlets in the world; KFC has maintained its title, for the last 60 years, of being The Chicken Experts.
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KFC (Kentucky Fried Chicken) is a fast food restaurant chain headquartered in Louisville, Kentucky, United States, which specializes in fried chicken. An "American icon", it is the world's largest fried chicken chain and the second largest restaurant chain overall after McDonald's, with over 17,000 outlets in 105 countries and territories as of December 2011. KFC was founded by Harland Sanders, who began selling fried chicken from his roadside restaurant in Corbin, Kentucky during the Great Depression. Sanders was an early pioneer of the restaurant franchising concept, with the first "Kentucky Fried Chicken" franchise opening in Utah in the early 1950s. Its rapid expansion saw it grow too large for Sanders to manage, and he eventually sold the company to a group of investors. Despite this, his image was still used as branding (as "Colonel Sanders"; Sanders had been made a Kentucky colonel after the success of his initial restaurant), and he worked as a goodwill ambassador for the company until shortly before his death. Throughout the 1970s and 1980s, KFC had mixed success at home as it went through a series of corporate owners who had little or no experience in the restaurant business, although it continued to expand in overseas markets. In the early 1970s, KFC was sold to the spirits firm Heublein, who were taken over by the R.J. Reynolds conglomerate, who sold the chain to PepsiCo. PepsiCo spun off its restaurants division (also including Pizza Hut and Taco Bell), as Tricon Global Restaurants, which later changed its name to Yum! Brands. The chain primarily sells fried chicken pieces and variations such as chicken burgers (chicken sandwiches [US]) and wraps, as well as side dishes such as French fries and coleslaw, desserts and soft drinks, often supplied by PepsiCo. Its most famous product is pressure fried chicken pieces, seasoned with Sanders' "Original Recipe" of 11 herbs and spices. The exact nature of these ingredients is unknown, and represents a notable trade secret. KFC is famous for the slogan "finger lickin' good", which has since been replaced by "So good", and "Nobody does chicken like KFC". KFC's two major single markets are in its home country and China, which together contain around half of its outlets. KFC has been the target of an ongoing campaign by the animal rights organization PETA, although KFC executives have protested that the chain is unfairly singled out for criticism. The chain has also been accused by Greenpeace with contributing to the
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destruction of the world's rainforests with unsustainably sourced cardboard and paper packaging.
HISTORY
Born and raised in Henryville, Indiana, Harlan Sanders passed through several professions in his lifetime, with mixed success. Sanders first served his fried chicken in 1930 in the midst of the Great Depression at a gas station he owned in North Corbin, a small city on the edge of the Appalachian Mountains in south eastern Kentucky. The dining area was named Sanders Court & Caf and was successful enough for Sanders to be given the honorary title of Kentucky Colonel in 1936 by the Kentucky Governor Ruby Laffoon. The following year Sanders expanded his restaurant to 142 seats, and added a motel he purchased across the street. When Sanders prepared his chicken in his original restaurant in North Corbin, he prepared the chicken in an iron frying pan, which took about 30 minutes to do, too long for a restaurant operation. KFC was founded by Harland Sanders (Sanders) in the early 1930s, when he started cooking and serving food for hungry travellers who stopped by his service station in Corbin, Kentucky, US. He did not own a restaurant then, but served people on his own dining table in the living quarters of his service station. His chicken delicacies became popular and people started coming just for food. Kentucky Fried Chicken was born. Soon, Sanders moved across the street to a motel-cu restaurant, later named 'Sanders Court & Cafe, that seated around 142 people. Over the next nine years, he perfected his secret blend of 11 herbs and spices and the basic cooking technique of chicken. Sanders' fame grew and he was given the title Kentucky Colonel by the state Governor in 1935 for his contribution to the state's cuisine. Sanders' restaurant business witnessed an unexpected halt in the early 1950s, when a new interstate highway was planned bypassing the town of Corbin. His restaurant flourished mainly due to the patronage of highway travellers.
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The new development meant the end of this. Sanders sold his restaurant operations. After settling all his bills, he was reduced to living on a meager $105 social security cheque. But Sanders did not lose hope. Banking on the popularity of his product and confident of his unique recipe for fried chicken, Sanders started franchising his chicken business in 1952. He called it Kentucky Fried Chicken. He travelled the length and breadth of the country by car, visiting as many restaurants as possible and cooking batches of chicken. If the restaurant owners liked his chicken, he entered into a handshake agreement that stipulated payment of a nickel9 for each plate of chicken sold by the restaurant. By 1964, Sanders franchised more than 600 chicken outlets in the US and Canada. KFC IN INDIA: Foreign fast food companies were allowed to enter India during the early 1990s, thanks to the economic liberalization policy of the Government of India (Go). One of the first fast food multinationals to set foot in India was Kentucky Fried Chicken (KFC), owned by PepsiCo. KFC received permission to open 30 new outlets across the country. It chose Bangalore as its launch pad because the city had a substantial upper middle class population, with a trend of families eating out. Also, it was considered Indias fast growing metropolis in the 1990 . The Bangalore outlet was opened in June 1995. Apart from Bangalore, PepsiCo planned to open 60 KFC and Pizza Hut outlets in the country over the next seven years. However, KFC became embroiled in various controversies even before it started full-fledged business in India. Since its inception, KFC has evolved through several different organizational changes. These changes were brought about due to the changes of ownership that followed since Colonel Sanders first sold KFC in 1964. In 1964, KFC was sold to a small group of investors that eventually took it public. Heublein, Inc, purchased KFC in 1971 and was highly involved in the day to day operations. R.J. Reynolds then acquired Heublein in 1982. R.J. took a more laid back approach and allowed business as usual at KFC. Finally, in 1986, KFC was acquired by PepsiCo, which was trying to grow its quick serve restaurant segment. PepsiCo presently runs Taco Bell, Pizza Hut, and KFC. The PepsiCo management style and corporate culture was significantly different from that of KFC.
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PepsiCo has a consumer product orientation. PepsiCo found that the marketing of fast food was very similar to the marketing of its soft drinks and snack foods. PepsiCo reorganized itself in 1985. It divested non-compatible units and organized along three lines: soft drinks, snack foods and restaurants. PepsiCo Worldwide Restaurants was created to create synergism between its restaurant companies. By the end of 1994, KFC was operating 4,258 restaurants in 68 foreign countries. KFC is the largest chicken restaurant and the third largest quick service chain in the world. Due to market saturation in the United States, international expansion will be critical to increased profitability and growth.
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CHAPTER 2 COMPANY PROFILE

MARKET SHARE
In 1986, after the KFC acquisition, PepsiCo now had three of the four largest and fastest growing segments within the U.S. quick service industry. In 1994, PepsiCo had some of their largest market shares in the U.S. Market. KFC has also met the changing demands of society. As the world has gone to a more healthy living, KFC has come out with many changes on its menu, including Honey BBQ Chicken, Popcorn Chicken, Rotisserie Chicken and has begun to promote its lunch and dinner buffets. Dinner is also very important to KFC. The buffets now offered at KFC during lunch and dinner is also very important. KFC is typically a fast-food service however with these buffets, this may persuade customers to dine-in instead of take out. KFC has also tried to meet the demands of consumers wanting fast-food in other "nontraditional" locations. They are currently testing airports, shopping malls, universities, and other high-traffic areas.
1.1 KFC as a Market Leader:

It has covered 80% of the market share in fast food industry KFC has recognition around the world and has been globally positioned for many years in Pakistan and to capture the market share in Pakistan adopts champs philosophy.
Strategic Planning is the process of developing and maintaining a strategic fit between the organizational goals, capabilities and its changing marketing opportunities and is done by KFC in a well-defined manner.
Strategic planning sets the stage for the rest of the planning in the firm. KFC is looking that how much its current strategies are beneficial for them. Although these are good and profitable but dynamic changes in environment are requiring identifying the attractive
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opportunities. That is the reason that they are expanding their market size by focusing on sub urban areas and targeting middle class people by providing them differentiated products at a fair price. They are opening their new mobile outlets in there potent tonal markets. KFC is also going to increase its sweet dishes to avail the opportunity available for them.
1.2 KFC in a Growing Market:

The market of KFC is increasing day by day. Being a food market it is always considered in a growing market because it increases continually with the population. Their growth is continuously increasing and if they want to be a leader, they has to develop a strategy which is predominantly a market expansion strategy and in this way they will not lose their leadership. It has greatly increased their market share in Pakistan by following different strategies that may be regarding their products, prices, placement or promotions. They have been following the strategies for market expansion by targeting the new users of the product, describing the new uses of the product and by showing them more usage of the product.
1.3 Describing the New Users:

In this method, the new uses of the product are being described. As the motto of KFC says we do chicken right, here they claims that they are the best in using the chicken correctly. In the early days the chicken was simply used in a simple way for cooking, but KFC has introduced it in a number of ways and described it to the people by launching it as a meal as well as in the snacks form. They prove them with the best cooked chicken with a great taste. Instead of the chicken pieces, they also serve chicken nuggets, burgers, hot shots, twisters etc. many new innovative products are being introduced by KFC that is greatly helpful in attracting the customers and increasing its market share.
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1.4 More Usage:

In the advertisement of KFC mostly seen on the bill boards, they have shown in the new scheme of zinger deal of Rs.290 + 10 and u get zinger + another chicken burger. And in Ramadan, they launches the deal of Rs. 500 and it says that all you can eat, it gives the unlimited zinger burgers and chicken pieces. In this way they have greatly increased their usage of their products.
1.5 New Users:

The people who do not eat KFC should be attracted, that may be by attracting the nonusers of the product, non-users of the brand or the non-believers. They are done in the following ways.
1.6 Non Users:

The people who do not eat the fast food, they should be attracted like KFC has been attracting their customers by providing deals with IPhone. If the person is an IPhone user and he is not a KFC customer, they simply receive a message on their hand set and they just have to show it on the KFC and counter and get a free meal. Its a strategy to attract the non-users. In a similar way, distributing deal coupon on specific purchases, in shopping malls may also be very effective.
1.7 Non Users of the Brand:

The non-users of KFC can be attracted by describing them the quality features of the product that they think of trying the product once. In this case promotional activities play an important role. If the promotions are done in an effective manner, people would definitely try the product and also lowering the prices may be very effective that people may switch from other brands to KFC.
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1.8 Non-Believers:
KFC is quite successful in attracting the non-users of the product and the brand as well, so it is not really necessary to hit the non-believers. This is because they are the most difficult people as it is very hard to break their social, religious and cultural believes.
FINANCIAL RATIO ANALYSIS AND CAPITAL OUTLOOK

Financial ratio analysis is the calculation and comparison of ratios, which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing.
PRESENT SITUATION
The organization is currently structured with two divisions under PepsiCo. David Novak is president of KFC. John Hill is Chief Financial Officer and Colin Moore is the head of Marketing. Peter Waller is head of franchising while Olden Lee is head of Human Resources. KFC is part of the two PepsiCo divisions, which are PepsiCo Worldwide Restaurants and PepsiCo Restaurants International. Both of these divisions of PepsiCo are based in Dallas.
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STRUCTURING
Another strategy of KFC is currently working with is to improve operating efficiencies. This in turn can directly impact the operating profit of the firm. In 1989, KFC centered on elimination of overhead costs and increased efficiency. This reorganization was in the U.S. operations and included a revision of KFCs crew training programs and operating standards. They emphasized customer service, cleaner restaurants, faster and friendlier service, and continued high-quality products. In 1992, KFC continued with another reorganization in its middle management ranks. They eliminated 250 of the 1500 management positions at corporate and gave the responsibilities to restaurant franchises and marketing managers.
OBJECTIVES
1. Product development 2. Increase variety on menu 3. Introduce desert menu 4. Introduce buffet to restaurants A .Introduction on the Neighborhood Program with following: Menu items target African Americans in major cities with the following items: Greens , Macaroni and cheese ,Peach cobbler ,Red beans & rice. B .Menu items targeting Hispanics in major cities with the following items: Fried plantains, Flan, TresLeches. C. Implementation on non-traditional units including the following: Shopping mall food courts, Universities, Hospitals , Airports ,Stadiums, Amusement Parks, Office Buildings , Mobile Units.
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D. Increase profitability of KFC through the following: 1. Reduced overhead costs 2. Increased efficiencies 3. Improved customer service 4. Cleaner restaurants 5. Faster and friendlier service 6. Continued high quality products 7. Resolve franchise problems in the United States. 8. Implied Objectives E. Expansion of international operations to provide the following: 1. Increased percentage of overall sales growth 2. Increased percentage of profit growth 3. Increased expansion of franchises into Mexico 4. Expansion of franchise operation beyond Central America 5. Continued promotion of healthier image through removal of the word "fried" from the name 6. Improve menu selection of rotisserie 7. Organizational Structure.
SALE AND RE-BRANDING

Kentucky Fried Chicken logo used between 19521978 By 1964, Kentucky Fried Chicken was sold in over 600 franchised outlets in both the United States and Canada. Sanders sold the entire KFC franchising operation in 1964 for $2 million ($14,987,124 in 2012 dollars), payable over time at a three per cent interest rate, to a group of investors headed by John Y. Brown, Jr and Jack C. Massey. The sale included a lifetime salary and the agreement that he would be the company's quality controller and trademark. According to Massey, when the offer was first touted to Sanders it was difficult to know how he felt about the deal: he would dismiss it one day
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and talk about it as if it were inevitable the next. Massey knew that Sanders believed in astrology and waited until Sanders had a particularly positive and dramatic horoscope before making a definitive offer. Massey went into Sanders' office and made him a written offer. Sanders looked at the figure, opened up his drawer, read his horoscope, and agreed to sell it. Sanders apparently became disenchanted with the deal, telling the Washington Post, "I don't like some of the things John Y. done to me. Let the record speak for itself. He over-persuaded me to get out". Massey and Brown changed the restaurant's format from the diner-style restaurant envisioned by Sanders to a standalone fast-food take-out model. Giving all their restaurants a distinct red-and-white striped color pattern, the group opened over 1,500 restaurants, including locations in all 50 U.S. states and several international locations. The concept caught on because it was the best chicken most people had ever tasted and took a dish that had been a Sunday dinner treat and made it an everyday staple. Massey and Sanders did not like each other, and the Colonel grew incensed when Massey decreed that company headquarters would be in Nashville, Tennessee, and not in Kentucky. He bellowed, "This arentno goddam Tennessee Fried Chicken, no matter what some slick, silk-suited sonofabitch says". Brown did not like the idea either, but Massey owned 60 per cent of the company, and Brown 40 per cent, and Massey wanted company headquarters to be near his home. Brown claims that he brought order and efficiency to a chaotic management structure, and treated the increasingly disgruntled Sanders with tact and patience. Sanders' nephew Lee Cummings left the company after the sale to found the Lee's Famous Recipe Chicken chain. In 1966, at Massey's insistence, the company went public. By this time Sanders regretted selling his company, and exchanged his $1.5 million worth of stock for the exclusive rights to the company's Canadian activities. Later that year Massey resigned from the company and Brown announced that headquarters would be moved to Louisville, Kentucky. According to Sally Denton, Massey left the venture with a "sour taste in his mouth", and refused to discuss the former partnership publicly. By 1967, KFC had become the U.S'.s sixth largest restaurant chain by volume. By 1968, Kentucky Fried Chicken was the largest fast-food business in America and in 1969 it was listed on the New York Stock Exchange. Massey resigned as chairman of the company in March 1970, and Brown took over his role. In August 1970 Colonel Sanders and his
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grandson Harland Adams resigned from the board of directors. In a New York Times article, Sanders stated, I realized that I was someplace I had no place being. ... Everything that a board of a big corporation does is over my head and I'm confused by the talk and high finance discussed at these meetings". The company, once too large for Sanders to handle, grew too much for John Y. Brown as well. In July 1971 Kentucky Fried Chicken was taken over by Connecticut-based Heublein, a specialty food and alcoholic beverage corporation, for $285 million ($1,635,529,992 in 2012 dollars).Heublein planned to increase Kentucky Fried Chicken's volume with its marketing know-how. Through the 1970s the company introduced some new products to compete with other fast-food markets. As management concentrated on overall store sales, they failed to notice that the basic chicken business was slacking off. Competitors' sales increased as Kentucky Fried Chicken's dropped. At this time a Texas firm, Church's Chicken, began making inroads into KFC's market share with "Crispy Chicken. In 1972 KFC introduced "Extra Crispy Chicken".In 1974 Sanders complained of the declining food quality: My God, that gravy is horrible. They get tap water, mix it with flour and starch and end up with pure wallpaper paste. Another thing. That new crispy recipe is nothing in the world but a damn fried dough ball stuck on some chicken" The outburst prompted a KFC franchisee in Bowling Green, Kentucky to unsuccessfully attempt to sue Sanders for libel.[31] In 1973 Heublein attempted to sue Sanders after he opened a restaurant in Shelbyville, Kentucky under the name of "Claudia Sanders, the Colonel's Lady Dinner House".In 1974 Sanders counter-sued HeubleinInc for $122 million ($574,931,174 in 2012 dollars) over the alleged misuse of his image in promoting products he had not helped develop, and for hindering his ability to franchise restaurants. A Heublein spokesman described it as a "nuisance suit. In 1975 Heublein settled out of court with Sanders for $1 million ($4,319,109 in 2012 dollars), continued his salary as goodwill ambassador and allowed his restaurant venture to go forward as "Claudia Sanders Dinner House".
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In 1976, Sanders complained that the company "doesn't know what it's doing" and that is was "downright embarrassing" to have his image affiliated with such an inferior product. Michael Miles was promoted by Heublein to run the chain in 1977 and is credited with turning around the ailing company by instituting a back-to-basics formula. One of Miles' most notable strategies was to lure Sanders back onside, and to listen to his recommendations for the business. Miles also embarked on an extensive store refurbishment program, as outlets had become dated and run-down. Sanders passed away in 1980, having continued to travel 200,000-250,000 miles a year, largely by car, promoting his product until shortly before his death. In 1982, Heublein was purchased by R.J. Reynolds, who had to contend with the introduction of Chicken Nuggets across the McDonald's chain in 1983. Reynolds sold their restaurant division in 1986 to PepsiCo for a book value of $850 million ($1,802,185,792 in 2012 dollars). Reynolds sold the chain to pay off debt related to its recent purchase of Nabisco and in order to concentrate on its tobacco and packaged food business. PepsiCo made the chain a part of its PepsiCo Worldwide Restaurants division alongside Pizza Hut and Taco Bell, and it was anticipated that they would bring their merchandising expertise to the firm. In 1991 the KFC name was officially adopted, although it was already widely known by that initials. The early 1990s saw a wave of new product launched throughout the chain, such as spicy "Hot Wings", skinless chicken and popcorn chicken, as well as the "Zinger", a spicy chicken fillet burger, for international markets. In 1993, rotisserie style chicken was introduced at certain US outlets. In 1994 Roger Enrico was appointed as the CEO of the ailing PepsiCo Worldwide Restaurants, and David C. Novak was appointed President of KFC and charged with turning around the company, which was struggling after competitors such as McDonald's had introduced value menu offerings. Novak oversaw 10 quarters of consecutive growth at the restaurants after introducing new products such as the chicken pot pie and marinated chicken. In 1997, PepsiCo spun off its restaurants division as a public company valued at $4.5 billion ($6,514,925,373 in 2012 dollars) in order to pay off short-term debt and because, as one PepsiCo executive admitted, "restaurants weren't our shtick". According to one
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analyst it was not clear whether the $4.5 billion was a fair return on PepsiCo's investment, given that much of PepsiCos debt had arisen from investment in its capitalintensive restaurants. The company was named Tricon Global Restaurants, and at the time had 30,000 outlets and $10 billion in sales ($14,477,611,940 in 2012 dollars), making it second in the world to only McDonald's. It was renamed Yum! Brands in 2002. The original KFC franchise restaurant in Salt Lake City was rebuilt in 2004 to incorporate a small museum. From 2002 to 2005 KFC experienced three years of weak sales, when underinvestment in product development left the brand looking "tired and poorly positioned", according to Restaurant Research, an independent consultancy. KFC responded by adding a cheap hot chicken burger to the menu, called a "Snacker", which is easier to eat than chicken on the bone. It also began a makeover of the brand image, bringing back the full "Kentucky Fried Chicken" name at some outlets, giving new prominence to touched-up portraits of Colonel Sanders, and promoting once more the cardboard buckets of chicken it had abandoned briefly in the 1990s.
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CHAPTER - 3 MARKETING STRATEGIES

Marketing mix consists of 4Ps. It contains everything a firm can do to influence the demand for its product. The 4Ps are: PRODUCT, PRICE, PLACE & PROMOTION These marketing mixes are described in detail as under.
1. PRODUCT: 1.1 Product planning:

Their product is classified as consumer product as it has no intermediates. It also offers specialty goods. The stock turnover of KFC is relatively high. The prices and quality of the product is always compared. Their product includes Goods (Burgers, Chicky Meals etc) and Services (cleanliness, quick service, parties, and meetings).
1.2 Product Strategy:

It was launched here as an innovative product. KFC has got one product line but later they introduced products in the same line to protect their market share. New product ideas are generated from: a. Customer services (comments cards). b. Gallops survey (mystery shoppers). They have a Quality Assurance department that decides the new product innovation. Q.A. department prepares screening of new ideas and products feasibility report. This department does the technical evaluation (whether it is practical to produce the new product or not). The products are tested externally by offering trials to customers by
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giving them free samples. KFC uses telemarketing, print media, billboards and most recently televised marketing for promotion. KFC adds a new product in its present assortment based on their competitors, products adequate demand, the satisfaction of key financial criteria and its compatibility with environmental standards.
1.3 Product Line:

KFC product line includes all chicken based products. Burgers: The burger category includes the Zinger Burger, Colonels Chicken Burger, Colonels Fillet Burger, SUB60 and 80, and Zinger Jr. They have also introduces a Fish zinger burger. Chicken Pieces: The chicken involved the product line with different number of chicken pieces like 1 piece, 2 pieces, 5 pieces and 10 pieces chicken. Combos: The combo includes the different meal as Chicken Meals, Sandwich Meals and Family Meals. Desserts & Beverages: The desserts and beverages offered by KFC are Fruit Salad, Regular & Large Drink, Regular & Large Mineral Water, Tea, Scoop of Walls Ice cream and Coffee. Snacks & Side Orders: The snacks and side orders served by the KFC are Arabian Rice, 5 & 10 Pieces Hot wings, Dinner Roll, Regular & Large Fries, Hot Shots, and Corn on the Cob, Hot & Crispy Soup and the Cole Slaw.
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1.4 Product Mix strategies:

The product mix strategies are in relation to: Competitors: KFC has a head-on competition with McDonalds so wherever they place their products; KFC goes there as well. Locally in Pakistan KFC face a close competition with the local brands like AFC (Al-Baik Fried Chicken), Fried Chicks, Dixy Chicks etc which are producing more or less the same product as KFC. Attributes: The brand KFC is so strong that it is the attribute itself. Quality: KFC products are based on high quality and prices. Product Mix Expansion and Contraction: KFC keeps on modifying their product through line extension and other methodologies. Line Extension is being done through introducing new meals offers. The alteration of existing products is also done and this function is performed by the Quality Assurance department. The department decides which product should be sold and when (seasonal products as rice and soups offered in winters). Functional modification is also done by the Q.A. department to introduce new recipes. Other than expansion contraction is also being dealt with as when the new deals or offers are not sold as expected, Q.A. department contracts the previous offers and introduces new offers. Change in Product Positioning:
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KFC products were first offered to upper socio-economic group. Later, introducing discounted and lower price deals, they are now dealing in masses. So, KFC has traded down. In doing so KFC has used the same brand name and same high quality product.
1.5 Product Branding, Packaging and Labeling:

Brand Name: KFC Color: Red, white Symbol: Colonel Harland Sanders picture and KFC written with it. Master Brand: The brand itself is so dominant, that it immediately comes in mind. KFC Brand: KFC's brand identity is the logo featuring Colonel Harland Sanders, one of the bestrecognized icons in the world. It is trade marked registered brand and is distinctive, adaptable to addition to product line. It suggests something about product. It is legally protected and registered.
1.6 Brand Equity and Strategy:

The brand equity is very high as the value added by brand to the product effects the product selling. And the Brand strategy followed is that the KFC is marketing the entire output under products own brand. Pepsi and Nescafe are the complementary brands associated with KFC.
1.7 Packaging Strategy:

KFC makes its own disposable packaging. If they need promotion Pepsi contributes in improving the packaging quality. KFC does family packaging. They use paper material for packaging to avoid health hazards and environmental pollution. Labeling:
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KFC does brand labeling. Some of its products also have informational labels such as Halal, Veggie Burgers and Chicky Meals.
2. PRICE
In introduction stage KFC entered the market using market-skimming strategy. Their products were high price and targeted only upper class. Gradually they trickle down focusing on the middle class to penetrate the market. Also KFC follows one price strategy. Price is determined according to the rates of the raw materials and policies of the Govt. The political and legal forces often affect the policies of KFC and eventually results in change of prices that is due to imposing of taxes.
3. PLACE
Distribution Channel: KFC has only one channel of distribution i.e. direct where the goods are transferred to the consumer directly. KFC has no middlemen. Distribution of Consumer Goods and Services: KFC does distribution of consumer goods directly to the consumer. It also does distribution of services to the consumer like parking, sitting, home delivery, etc. KFC does intensive distribution on its outlets. (All and everything on every outlet). KFC gets Wheels! KFC launched its first mobile unit, which took the streets of Karachi by storm. The mobile unit has been designed to cater to the needs of those who are on the go, and have little time to stop by at a restaurant. It also provides a unique convenience of enjoying the delicious KFC offering anytime, anywhere, thus making fast food truly fast and convenient. It intends to further develop its mobile network nationwide through more such units.
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4. PROMOTION
The logo features Colonel Harland Sanders that is one of the best logo in the world has created its name as a standard in the market. Today the Colonels Spirit and heritage are reflected in KFCs brand identity. KFC by its advertisements derives the desire in the customer to come and enjoy healthy food in their favorite restaurant. They spend 2% of its profits on advertisement. They use print media and most recently doing televised marketing to promote it products. Their advertising media involve: Newspapers, Pamphlets, Billboards and Television. KFC does both the primary demand advertising (Become a Chicken Fanatic) and the selective demand advertising (e.g. Zinger Meal). In its advertising it give informative messages like Keep the city Clean. KFC does institutional advertising to stimulate demand. When KFC offers new products then it does product advertising. KFCs ads act as counteracts which means to drive the customer to KFC i.e. it uses pull advertising strategy. They also provide wit the key chains, watches, bags, tee-shirts etc. to its customers with the purchase of different meals as a part of their promotional activities. They also provide with certain midnight packages, birthday packages and lot more. KFC has put big hoardings on the busy areas of Pakistan and have an effective advertisement campaign on the media in order to motivate its customers. The colors used in advertising are Red, White and blue which itself is recognition for the brand. KFC have joint sale promotions with different companies like HP, Philips, Value Meals, Pepsi-Cola. And most recently with ARY Gold digital and World Call Internet services. Also KFC Proud Partners are Del Monte, Culligan, Shan and Peek Freans (EBM). PSO had made a scheme in which PSO had given the coupons of KFC having 10% off. (1 coupon was given after each purchase of 10 liters of petrol)
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KFC in its advertisements says; Nobody does chicken like KFC We do chicken right Hence, focuses on product advertising. KFC does mass selling in order to reach its target market (as it has trickle down). KFC in its ads try to convert people to people who eat boring bland fast food over to KFC. The message conveyed in the ads is recognition for the brand. KFC does competitive advertisement with its head on competition with McDonalds. Regarding this KFC uses Pricing below competition strategy. KFC sponsors many NGOs and other social welfare organizations. They also offer different deals according to the season and occasions.
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CHAPTER - 4 FRANCHISING STRATEGIES

International franchising is both an offensive and defensive strategy used by large and small companies to diversify into foreign markets - making the firm increasingly less dependent on home country revenues and demand. More than 400 U.S. companies are engaged in international franchise efforts. Most use the master franchise model. The franchise article below details how an international franchising strategy allows impressive results some franchise industry players have parlayed international franchising to the point where they garner more than 80% of profits from international revenues and operations. International franchising is not just restricted to the big players any more. Also included is a striking example of a small, relatively unknown franchise chain that has done quite well in just a three-year period of starting an international franchising strategy. Any franchise strategy involves a willingness to take a chance. The trick is not taking foolish chances. As one famous person observed: International franchising is a strategic way to reduce dependence on domestic demand and build new, future franchise profit centers. Economic factors affecting franchising have driven more than 400 U.S. franchise companies into international markets. The players include more than just fast-food. Here are just a few examples. 7-Eleven has more than 25,000 international locations, McDonalds over 11,000, KFC more than 6,000. Curves, a fitness for women exercise studio, are an example of a non-food franchise that has followed suit with more than 2,000 international locations. Some effort is required to tweak the business model for the target foreign countries, research local franchise laws and regulations, protect
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intellectual property rights and develop a master franchise paradigm. But the upside of these efforts is so vast it more than justifies the investment of time and money. It's critical to realize international franchise expansion takes more than just a master franchise agreement. Having connections within target country, including people, who know other, high-caliber people, is critical. An international franchise partner can build your brand. But an inappropriate partner can just as easily wreck the brand, usually in a very short time. That's why our firm has taken time and care in developing international relationships.
Even though the FDD is a U.S. legal requirement, investors in international franchise transactions insist on one, even though their country may not "technically" require an FDD. So, a company's FDD must be reviewed with an international focus and include a master franchise agreement.
Expansion into foreign markets via international franchising can happen quickly. Burger King opened 12 locations in China since 2005, but launched hundreds more by 2008 under a new franchising plan that includes quickly exporting new concepts to foreign markets. In tune with its HAVE IT YOUR WAY brand promise, Burger King opened its first WHOPPER Bar in Spring 2009 at Universal City Walk in Orlando, Florida. The Bar allows guests to customize their WHOPPER with innovative toppings and unique sauces. Just months later, the first WHOPPER Bar restaurant opened in Singapore in October, 2009.
The Market in China McDonald's operates about 900 sites in China, while Yum! Brands have more than 2,000 KFC's there - probably because The Colonel looks like a twin brother of Ho Chi Minh. In Vietnam, locals don't even call the chicken chain KFC, but refer to it as Ho Chi Minh.
Faced with falling domestic U.S. sales, Yum! Brands are mounting an aggressive expansion drive in China to make the country its biggest source of profit within a
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decade. Yams KFC was the first foreign fast food company to move into China, opening the first KFC outlet there in 1987. Now, Yum is Chinas biggest restaurant chain, with some $2 billion in annual sales and over 2,500 KFC and Pizza Hut stores. China will deliver about a third of Yams operating profit in 2009. In all, 60% of Yum profits now come from international markets. McDonalds which operates about 900 outlets, is Yams nearest rival in Chinas $28 billion fast food market.
Yum! Brands are now counting on two things: international expansion - and its Taco Bell brand - to ante up 90 percent of all profits by 2012. Yum sees more opportunities to open more stores in India and hopes to position KFC and Taco Bell as youthful, hip brands in a nation of young consumers. It plans about 1,000 stores for India by 2015, up from 230 in 2009. Sales growth in China, Yams most crucial market, has slowed from a breakneck speed, with same-store sales there down 3 percent in its last quarter, 2009. While economic growth is coming back, consumers have not raised discretionary spending. Taco Bell, the brand contributing the bulk of Yams U.S. profits, is being unleashed as a major player in international development, joining Pizza Hut and KFC - the triad of Yum global brands. At the end of 2008, only 250 of 5,600 Taco Bells were outside the United States. Under Yams direction, this percentage will change dramatically over the next few years with efforts already underway in India.
Taco Bell Enters India Taco Bell stormed the vegetarian nation of India in April, 2010, opening its first outlet in Bangalore. Each day, some 2,000 Indians visit the new restaurant, strategically located inside a shopping mall. Indians haven't shown this much enthusiasm for American fast food since McDonald's came to New Delhi and Mumbai more than a decade ago. The next two Indian Taco Bell outlets are slated to open later in 2010, also in Bangalore. The Taco Bell plan is to grow to 100 outlets in India by 2015. Following the lead of McDonald's, beef is off the menu in this Hindudominated, cow-worshipping country. Taco Bell offers chicken instead and took two
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years perfecting its three Vs. for India -- value, vegetarian and variety.
Since January 2008, Subway has opened 1,432 locations in foreign markets, 202 more than in the U.S. In the past five years the chain has nearly doubled its international presence to 8,817 outlets.
International Franchising Advantages in a Tough Economy A big advantage in looking overseas during tough economic times is the foreign master franchise owners. They are able to bankroll the entire investment themselves. That's a big difference from selling franchises in the U.S., where most prospective franchise owners need bank loans from lenders with overly tight lending standards. Master franchise owners in foreign countries pay significant, up-front fees of $100,000 to $1 million or more to acquire a territory or country where they operate as a mini-franchise company, selling franchises, training owners, overseeing those units and collecting royalties. The master franchise owner, a native of the country, is more knowledgeable about local laws, customs and consumer needs. They are able to thus avoid the pitfalls and problems that international franchising might bring without their assistance.
The Russians are coming, the Russians are coming . . . to McDonalds The announcement by McDonalds in 2007 to sell off 21% of its 7,000 company-owned McDonalds restaurants in the U.S. as turnkey franchises follows a strategic plan to reduce its restaurant ownership so McDonalds can funnel more resources into fast-growing international markets, like China, Russia and India. McDonalds CFO said on a perrestaurant basis, Russia is the company's most profitable market. In a country where more than two thirds of the population have not yet made a habit of eating out, McDonalds sees big opportunities. It plans at least 40 new outlets in 2010, compared to 33 in 2009 and 21 in 2008. Although Russian consumer spending is down due to the economic crisis, McDonald's continues to shine. With a 70 percent share of Russia's quick-service restaurant market and relatively low prices, the Mighty Mac has proved more resilient.
The King Finally Spies Russia . . . but 20-years after McDonalds

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Burger King, finally warming up to post-Cold War market realities, announced in midNovember, 2009 it was under negotiations with different parties to open the first Burger King in Russia. In January, 2010 the first Russian Burger King opened in Moscow. This puts Burger King twenty years behind The Mighty Mac in Russia. McDonalds opened its its first McDonalds restaurant there in 1990. As of 2009, McDonalds has about 300 restaurants operating in Russia and saw Russian sales rise 20 percent in 2008. Why is the King two decades behind McDonalds getting into Russia? Good question and just another reason the Mighty Mac is on top of Burger Mountain. Subway also beat Burger King to the punch in international franchising. The sandwich chain with 78 outlets in Russia as of 2009, has plans to expand its Russian network to 1,000 outlets by 2015.
Wendy's/Arby's also Spies Russia . . . but also 20-years late In August, 2010 Wendys/Arbys Group announced plans to open 180 dual-branded restaurants in Russia over the next 10 years. Dual-branding means customers can order burgers, roast beef sandwiches and other food items from both Wendy's and Arby's menus. This move represents the latest American fast food chain looking for growth in the emerging Russian market. But compared to head-start rivals like McDonalds and KFC, Wendys/Arbys is a very late player in the international game. Only about 300 of its 10,000 restaurants are located outside North America.
Adapting To Local Customs: a Strategic Challenge Adapting to local customs is always a problem for any international franchise effort. For example, Colonel Sanders secret recipe of herbs and spices isnt a draw factor for many Chinese customers. For health reasons, they shy away from fried chicken and prefer to eat the fish, porridge and egg tarts featured on the KFC menus. David Novak, chief executive officer of Yum! Brands, has forecast 20,000 restaurants in China. Were in the first inning of a nine-inning ball game in China, he told investors in February, 2008. Yum will test 24-hour KFCs and expand home delivery services to target the huge nocturnal citizens of Chinas crowded cities.
McDonalds uses a think global, act local international strategy for each target country. In
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Japan, to make its name easier to say, McDonalds was changed to Maku-Donaldo. Adding a twist to its products to fit local dining culture, in Hong Kong McDonalds launched rice burgers. While popular there, the rice burgers do not have the same appeal among Mainland Chinese, demonstrating just how truly local tastes in a region are. In Saudia Arabia, McDonalds does not display Ronald McDonald, respecting the Islamic prohibition against idols. In India, the chain serves Veggie McNuggets; also, the Big Mac was renamed Maharaja Mac and is made from lamb instead of beef.
Seeing The Writing On The Wall Large franchise icons saw the writing on the international franchise wall long ago and moved aggressively to create foreign revenue streams and eliminate dependence on U.S. sales. Coca-Cola now gets 70% of its sales and 80% of profits from international markets. McDonalds and KFC are moving in similar directions. Dairy Queen celebrated opening its 200th store in China in 2009 and is planning 500 more within five years. The ice cream chain, with more than 5,600 locations worldwide, entered China in 1991, and projects that by 2010 China will be its largest market outside of North America.
Even Small Chains Can Benefit Even smaller franchise chains can benefit from international franchise expansion. Howards Storage World, a company that specializes in storage solutions to organize every room in a home, began franchising in 1998. In 2004, when it had grown to be a franchise chain of 35 outlets, it went international and sold its first master franchise in Singapore. In 2005 - 2007, Howards sold master franchises in New Zealand, Spain, the Middle East, Ireland and the Philippines. By the end of 2007, Howards International had 14 stores under its wing, accounting for 20% of sales. Every brand, like every person, is from somewhere. And the appetite for American franchises is a worldwide cultural phenomenon. As one business person in Singapore observed "Bring just about any U.S. franchise here and it will do well. We Singaporeans are fascinated with American concepts."
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KFC has new strategy to expand its market share

One of the major foreign fast-food chains in Taiwan -- Kentucky Fried Chicken (KFC) Taiwan said yesterday, the company is planning to enlarge its market share by using the franchise business model. "Franchising is the most efficient strategy for market expansion," Peter Bassi, president of Tricon Global Restaurant Inc., said yesterday. Tricon Global Restaurant is the parent group of KFC, Pizza Hut and Taco Bell in Taiwan. According to Bassi, two-third of the 10,800 KFC outlets around the world are franchised. KFC operates 124 stores in Taiwan, which are all run directly. "It's a win-win business model, as franchisees can take advantage of brand reputation and know-how for a quick start-up, while the parent company can save on operating costs," he said. Rather than opening a brand new store, the KFC franchisee gets to take over an existing KFC restaurant. "Investors don't have to start from scratch and the learning curve will be shortened," said Tony Tang (), director of TriconInc Taiwan. To become an owner of a KFC outlet in Taiwan, the applicant has to pay an ownership fee and take a 20-week training course. "Taking the US$3,600 franchise fee, operating costs and equipment purchases into consideration, our lowest offer is about NT$10 million," Tang said. A chain-store industry pundit says the franchise concept is a viable business model. "Store operators usually work harder because they are owners and not employees," said Yuan Shih-min (), secretary general of the Taiwan Chain Store and Franchise Association (). "According to one of our studies, when direct-owned operators make their business a franchise, sales often initially grow by about 15 percent per month." But adopting the franchise business model should be done with caution.
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"Without efficient and strict supervision, the parent company's brand image might be damaged," he said. "The main priority in operating a successful franchise is quality control." Customer service, store display, packaging and food flavor should be consistent, he said. "If customers can't detect any variances in service between direct-owned and franchise outlets, your business will definitely be successful," Yuan said. McDonald's Taiwan began offering franchise opportunities years ago. It now has 12 franchises and 345 outlets in Taiwan.
LIST OF COUNTRIES HAVING KFC FRANCHISES

The First KFC franchise, located in Salt Lake City The Sanders Court & Caf generally served travelers, often those headed to Florida, so when the route planned in the 1950s for what would become Interstate 75 bypassed Corbin, he sold his properties and traveled the U.S. to sell his chicken to restaurant owners. The first to take him up on the offer was his friend Pete Harman in South Salt Lake, Utah, the operator of one of the city's largest restaurants; together, they opened the first "Kentucky Fried Chicken" outlet in 1952. The restaurant's sales in the first year more than tripled, with 75 per cent of the increase from fried chicken sales. For Harman, the addition of fried chicken was a way of differentiating his restaurant from his competitors; in Utah, a product hailing from Kentucky was unique, which made it seem special. A sign painter hired by Harman coined the name "Kentucky Fried Chicken. Harman produced the company's first training manual and product guide. He also trademarked the phrase that would become the company's slogan, "It's finger licking' good. It was Harman who in 1957 first bundled 14 pieces of chicken, five rolls and a pint of gravy in a paper bucket to offer families "a complete meal" for $3.50 ($29 in 2012 dollars. He says he took on the project as a favor to Sanders, who had called on behalf of a Denver franchisee who didn't know what to do with the 500 buckets he had bought from a traveling salesman. At the time Harman sold his first bucket meals, the chain was little more than a network of independent restaurants that paid pennies per order for Sanders' "secret blend of herbs and spices" and the right to feature his recipe chicken on their menus and use his name
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and likeness for promotional purposes. The popularity of the bucket meals ultimately made it feasible to open free-standing KFC restaurants, according to Harman, "by giving you enough volume to justify a manager and pay the overhead. Freestanding stores led to a faster growth rate for the chain because those specialized operations proved easier to sell to would-be franchisees. An early franchisee from 1962 was Dave Thomas, who created the rotating bucket sign that came to be used at most KFC locations in the US. Thomas encouraged Sanders to appear in the KFC television commercials, helped him to simplify the chain's menu of over 100 items to just fried chicken and salads, and was an early advocate of the take-out concept that Pete Harman had pioneered. Thomas sold his shares in 1968, becoming a millionaire in the process, and went on to found the Wendy's restaurant chain.
Countries with KFC restaurants

KFC is headquartered in Louisville, Kentucky, United States in a building on 1441 Gardiner Lane known colloquially as "The White House" due to its resemblance to The White House in Washington D.C.. The company moved into the $3.7 million building in July 1970 (equal to $22,142,931 today). The building is described as "an antebellum-style mansion ... complete with six three-story-high columns and a flagpole". KFC is incorporated in the US state of Delaware. KFC is a subsidiary of Yum! Brands, one of the largest restaurant companies in the world. In 2011 it earned an estimated $9.2 billion in sales revenue. As of 2011, there were over 17,000 KFC outlets in 105 countries and territories around the world: almost half of the total are in the United States and China, and China accounts for 49 per cent of the company's revenue. KFC was described in 2012 by Bloomberg BusinessWeek a "muscular player" is developing regions, specifically Africa, China and India, while noting its falling market share in the United States to rivals including Chickfil-A and Popeyes. In the United States, the company was seen to be further divesting control of company-owned restaurants to franchised operations, with the intention of reducing overall company ownership to 5 percent of sites from the 35 percent of the previous decade.
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1. KFC IN UNITED STATES:

A co-branded Taco Bell/KFC in Morrisville, North Carolina In the United States, KFC's largest chicken supplier is Tyson Foods, who dominate the industry, with other major suppliers including Pilgrim's Pride and Perdue. In the USA, many KFC locations are co-located with the other Yum! Brands restaurants, Taco Bell and Pizza Hut. Many of these locations behave like a single restaurant, offering a single menu with food items from both restaurants. The first such combination, a KFCTaco Bell, opened in Clayton, North Carolina in 1995. Some locations were also opened as combinations of KFC, Taco Bell and Pizza Hut; this experiment has been described as a "failure" and was satirized in the film Young Adult (2011) as a "Kentacohut". Since its founding, Sanders and KFC used cottonseed or corn oil for frying, but in the 1980s the company began to switch to cheaper oils such as palm or soybean. In the 2000s it became apparent that these oils contain relatively high levels of Trans fat, which increases the risk of heart disease. In October 2006, KFC said it would begin frying its chicken in trans-fat-free oil in the United States. This would also apply to their potato wedges and other fried foods, however, the biscuits, macaroni and cheese, and mashed potatoes would still contain trans-fat. Trans fat-free soybean oil was introduced in all American KFC restaurants in the U.S. by April 30, 2007. Low US sales in 2008 were blamed by David Novak on a lack of new ideas and menu items. Kentucky Grilled Chicken was launched in Spring 2009, although this did not stem the sales decline for long. In 2010 Novak announced a turnaround plan that included improving restaurant operations, introducing value items and providing healthier menu options. In 2011 Bloomberg referred to KFC USA as "an also-ran to McDonald's Corp". Some analysts have speculated that KFC will spin off its failing US operations.
2. KFC IN UNITED KINGDOM AND IRELAND:

England had the first overseas franchise for Kentucky Fried Chicken in 1964. England also had the first overseas branch, which opened in Preston in the North West in May
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1965, and was the first American fast food restaurant chain in the country, pre-dating the arrival of McDonald's, Burger King and Pizza Hut by a decade. In the early days most business was done after 8pm, when the primary customers were young men arriving from the pub. System sales were over $1 billion in the UK and Ireland in 2009, having more than doubled in the past 5 years, serving over 100 million meals per year. That year, KFC UK was awarded second place in Britain's Top Employers and was in the top 50 of Britain's Great Places to Work. In 2011, chains across the UK and Ireland ceased to use palm oil and switched to rapeseed oil to reduce saturated fats across its range by 25 per cent and cut food miles by sourcing from Kent instead of Asia. There are 840 KFC restaurants in the UK and Ireland, making it one of the largest international KFC operations. The KFC business employs over 8,000 people in the UK with the restaurant ownership split 40 per cent equity and 60 per cent franchised. In the UK, KFC sells 60,000 metric tons of chicken annually, 60 percent of which is produced in the UK and delivered fresh to outlets, a minimum of three times a week. The remaining 40 per cent is sourced from Europe, Thailand and Brazil. All of their Original Recipe chicken is sourced within the UK. The majority of KFC products, including their bread, beans, sauces and salads when seasonally available, are sourced from the UK. KFC claim that their Original Recipe chicken is the same chicken as can be bought in the supermarket. The most popular menu item in Britain is the mini fillet burger with annual sales of more than 19 million, followed by snack box popcorn chicken (14 million) and the boneless meal for one (12 million sales plus).
3. KFC IN AUSTRALIA:
The first Australian KFC was built in Guildford on the western suburbs of Sydney in 1968, and by 2010 there were 600 outlets. In 2010, an advertisement was broadcast in Australia whilst a Test cricket series was being played between the Australia and the West Indies, showing an Australian cricket fan feeling awkward when surrounded by West Indies fans, and sharing a bucket of KFC to befriend them. The advertisement was criticized in some quarters of the US after it was posted on YouTube, as it was misinterpreted to reference a racial stereotype of African Americans enjoying fried chicken. KFC Australia acknowledged that it was "misinterpreted by a segment of people
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in the US", and as a result withdrew the advertisement from further broadcast. Australian commentators had noted that the racial stereotype did not exist in Australia and the cricket fans in the advertisement were not African American, but West Indian. In May 2012, KFC Australia switched from palm to canola oil, which is sourced from Australian farmers.
4. KFC IN INDIA:
The first Indian KFC was opened in the city of Bangalore in June 1995. This resulted in protests from the left wing, anti-globalization and environmental campaigners and local farmers, who believed that KFC was bypassing local producers for specific suppliers. Many Indians protested the onslaught of consumerism, the loss of India's self-sufficiency, and the disruption of India traditions. The protests came to a head in August 1995, when the Bangalore outlet was ransacked at least twice. The Bangalore outlet demanded, and received, a police van permanently parked outside it for a year. M. D. Nanjundaswamy claimed that KFC would adversely affect the health of the impoverished, by diverting grain from poor people to make the more profitable animal feed. Former environment minister Maneka Gandhi joined the protestors. KFC was also accused of using illegally high amounts of monosodium glutamate (MSG) and frying its food in pork fat. A store in Delhi was closed by the authorities, purportedly for health reasons, but more likely to avoid a repetition of the Bangalore incident. KFC responded by keeping a low profile during its initial years in the country, and introduced vegetarian dishes tailored for the Indian market.
How KFC &M.C. Donalds plan to target each other in India

Jalandhar is chicken country, as one would expect every nook and cranny in Punjab to be. It also happens to be a harbinger of India's fast-food future, thanks to a head-to-head fight between two iconic American companies in this bustling city. KFC and McDonald's, whose famous signages the Golden Arches and Colonel Sanders dot the highways and high streets of the world, are now squaring off in Butter
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Chicken Country. KFC has opened an outlet half a kilometer from McDonald's second restaurant in the town. In restaurateur talk, that is sniffing distance.
5. KFC IN CHINA:
In China, where KFC first opened in 1987, it is the largest Western restaurant chain, with over 4,000 branches, and China is one of the only countries in the world where McDonald's is not the dominant fast food chain. KFC believes it has been successful in China because it has adapted its menu to suit local tastes, offering such items as fish, porridge and egg tarts. From 2006, as well as KFC, Yum! also operate the East Dawning chain which incorporates Chinese cuisine alongside the traditional KFC menu items. In 2008, Yum's chief executive, David Novak, said that he envisions eventually operating more than 20,000 restaurants in China. "We're in the first inning of a nine-inning ball game in China". Homogenization has made it easy for fast-food joints to circle the globe, spitting out carbon copies of themselves, their burgers, and their fries along the way. But in the most populous country in the world, a fast-food giant stepped off the conveyor belt and found unprecedented success by being different, not by being the same. In the Harvard Business School case "Yum! China," professor David E. Bell and Agribusiness Program director and senior researcher Mary Shelman examine how Yum! Brands, the parent company of KFC and Pizza Hut, outperformed McDonald's and became the largest restaurant company in mainland China. The case describes how Yum! China succeeded and expanded by staying local on many levels. It keeps close ties to the Chinese government, hires local management, sources food from within the country, and changes the menu to suit Chinese tastes and style of eating. A matter of scale One key issue the case examines is "how to implement the rollout of a fast-food chain involving so many stores across such a vastand regionally different
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country," says Bell, who teaches the case in the School's annual Agribusiness Seminar. Both KFC and Pizza Hut restaurants in China differ markedly in many ways from their Western counterparts. And while Pizza Hut has done very well for itself with nearly 500 restaurants in 120 cities (as of December 2010), KFC's performance has been finger-licking' incredible. Since the first piece of fried chicken (available in dark meat only, to the disappointment of many an American tourist) was served at a Beijing KFC in 1987, the number of KFCs in China has grown to over 3,000, in 650 cities, with one new restaurant opened a day. "If I could have written any case in the world, this would have been the one I would have picked," says Shelman, a Kentucky native with more than a passing interest in Colonel Sanders. "Not only is this the story of a successful entry into China by a Western company, this case provides a glimpse of how quickly Chinese diets are changing as incomes improve. Because China is so big this has a huge impact on the rest of the global food system. What happens in China, what Chinese people eat, impacts what you and I pay for food." What happened in China with Yum! Brands, and with KFC in particular, had a lot to do with China division chairman and CEO Sam Su. "He really flexed the model," says Shelman. This was in part due to KFC being owned by PepsiCo when it first came to China. PepsiCo was not a fast-food company, so Su was given more managerial freedom.Along with being lucky, Su is smart, driven, and visionarya classic entrepreneur. But he's also humble. "There's no room for ego," Su explained in the case. "China doesn't have the same culture of individualism that is present in the United States." Su's strategy was that KFC "would not be seen as a foreign presence but as part of the local community Our opportunity was to take the best ideas from the US fastfood model and adapt them to serve the needs of the Chinese consumer." Initially this involved hiring the right people. For Su this meant Chinese managers who read and spoke the language, who understood the restaurant business and the
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Chinese consumer, but who also had experience in the Western way of doing business. "It was a foot in both worlds," Shelman says. "They knew firsthand the Western model but they also understood the challenges of operating in this Chinese, very traditional, very evolving market." The people Su brought on board were also close in a way Shelman found surprising when she spent time with them when researching the case. "There was huge camaraderie evident in the way that the top management team interacted with each other they bantered back and forth and poked fun at each other," Shelman says. "They'd be walking down the hall jostling, pushing, and laughing. This is a group that has worked together a long timeunusual in a country where experienced management talent is at a premium. It turns out that unusual employee interactions, at least in comparison with Western business decorum, are the norm at Yum! Brands, something Shelman experienced when she accompanied then-COO Mark Chu to one of KFC's Shanghai locations. "You walk into a restaurant and not only do [the employees] recognize him, but they love him as well." And so the employer-employee relationship has more a feel of family. "In the United States, if you don't show up at work, what happens? You get fired," says Shelman. "In China, where many of the company's 250,000 employees are college students working their first job, it's like, 'Oh we understand that sometimes you feel like skipping class. If you decide to skip workplease call in and let us know, so we can make sure your job is covered.'" Trained labor, it turns out, is a very valuable asset even in a land of 1.3 billion-plus people. "Chu's acceptance and appreciation for these young employees is exceptional for Western companies to see," says Shelman. Younger employees, for example, are
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encouraged to socialize over company-provided video games on their breaks. This practice serves several purposes: It eases the minds of parents anxious about sending their children out into the world, provides crucial social skills for young adults who grew up in single-child households, creates lifelong Yum! Brands customers, and develops a culture of customer service in a country where there was none. The restaurant management program is similarly focused. "You're a college graduate," says Shelman. "You're recruited for that position. You're very carefully developed to be able to do all these different jobs in the restaurant. And it's perceived as something that you would do your entire life." Along with training and retaining quality employees, another key factor in KFC's success was Su's early decision to downsize his own career. Originally hired to cover the northern Asia-Pacific region, he departed from the usual managerial growth path of taking on larger geographic assignments and instead argued that he should focus exclusively on China. Early on, he decided that Yum! should develop a national footprintsupported by a company-owned distribution system since thirdparty suppliers didn't existinstead of growing in geographic chunks through franchising.Su sourced products from within China whenever possible. This was no easy feat early on as the supply chain for chicken, for example, included multiple vendors providing a handful of birds each. Food safety is a big concern for Chinese consumers, and it was Su's decision to build the supply chain from the ground to help ensure quality. "We work with our suppliers to build their capabilities. We stress the importance of knowledge transfer, and even arrange for them to go overseas to learn," Su said in the case. The Chinese way "One of the lessons I take away from this case is that to do China, you have to do China," says Shelman. "It's a large, complex, and dynamic market that deserves single-minded attention." That attitude extends from the boardroom of Yum! Brands to the menus in KFC restaurants. A small number of items would be familiar to
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Western visitorsmashed potatoes, corn on the cob, fried bone-in chickenbut most would not. The Chinese KFC menu may include fried dough sticks, egg tarts (which Shelman raves are "to die for"), shrimp burgers, and soymilk drinks, as well as foods tailored to the tastes of specific regions within China. The large selection of menu items is meant to appeal to the Chinese style of eating, in which groups of people share several dishes. But it's also part of the "New Fast Food" initiative Su developed in 2005 in response to concerns about the role of fastfood restaurants in the obesity epidemicconcerns that he shares and takes responsibility for. "We have been too greedy, too shortsighted," Su said, referring to the traditional high- volume, low-choice fast-food model. Su believes that offering a wider variety of foods will help patrons make healthier choices. The KFCs in China have also limited the amount of money saved on combo meals, and have completely eliminated supersized items. Exercise is actively promoted inside the chain; as of 2010 the youth programs and competition it sponsored had over 260,000 participants in 438 cities. KFC succeeded in China both because it was not McDonald's and because in many ways it decided it wouldn't be KFC eitherwhich brings up another key question. "With the benefit of 20/20 hindsighthow do you avoid the mistakes of the American fast -food model?" asks Bell. "Put another way, if McDonald's and KFC were to start over in the United States knowing what they know now, how would their model differ?"
6. KFC IN PAKISTAN:
Presently KFC is branched out in thirteen cities of Pakistan (Karachi, Lahore, Rawalpindi, Faisalabad, Multan, Peshawar, Sialkot, Hyderabad, Islamabad, Gujranwala, Jhelum,Sukkur and Murree) with 45 outlets nation-wide. Opening the first KFC outlet in Gulshan-e-Iqbal, Karachi in 1997, and KFC wore the title of being the market leader in its industry. Serving delicious and hygienic food in a relaxing environment made KFC
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everyones favorite. Since then, KFC has been constantly introducing new products and opening new restaurants for its customers. In Pakistan totally Chicken buy from Pakistani Poultry Forms, and also this Chicken is 100% Halal. A Vietnam KFC shrimp burger in 2007
7. KFC IN SM CITY BALIUAG, PHILIPPINES :

In Quebec, KFC styles itself PFK (Poulet Frit la Kentucky) in a strategy to avoid prosecution under Bill 101. In June 2008, KFC Canada agreed to PETA's demands for better welfare standards, including favoring suppliers who use controlled-atmosphere killing (CAK) of chickens, and other welfare standards as well as introducing a vegan burger at 65% of its outlets. PETA has called off its campaign against KFC Canada, but continues to demonstrate against KFC elsewhere in the world. The highest volume unit KFC in the world is in Paris' Les Halles area. Volumes in France are higher as France's fast-food customers tend to prefer full meals with desserts, which brings the average sale to between 6 and 8 (about $8 to $10.50). The 100th French outlet opened in 2010. KFC Holdings is the franchisee of over 640 KFC restaurants in Malaysia, Singapore, Brunei, Cambodia and India and is publicly quoted on the Bursa Malaysia. In Indonesia, where it first opened in 1979, it is the largest Western restaurant chain, with over 420 branches, and Indonesia is one of the only countries in the world where McDonald's is not the dominant chain.
ADVANTAGES
1. Focus investment on strongest growing segment in Australia. 2. Less political and financial risks in other foreign markets. 3. Still maintain a minimal presence in Mexico for further growth in the future when stability is greater. 4. Eliminate risk in foreign marketsMexico. 5. Reduced currency rate exposure in Mexico.
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6. Protects brand integrity. 7. Increased cash flow/capital for other investments. 8. Would not have to oversee Mexico and would save operational and administrative expenses. 9. Reduced riskpolitical and economic. 10. New legislation promoting franchises and protecting patents and technology in Mexico. 11. Increased cash flow from sale of units. 12. Less day to day involvement by KFC. 13. Less Administrative Costs for KFC. 14. Steady royalties even after the sale of the units.
DISADVANTAGES
1. Forgoing potential profits from the 2nd largest international market (Mexico is second behind Australia) Ill will from franchises and Mexico consumers. 2. Eliminate brand visibility in Mexico. 3. Leave Mexico as is and grow other foreign markets. 4. Still maintain a minimal presence in Mexico for further growth in the future when stability is greater. 5. Still have not mitigated risk in Mexico. 6. Forgoing potential growth at profitable market. 7. Still have brand exposure. 8. Still have to service Mexico units with no increased economy of scale.. 9. Foregoing potential greater profits. 10. Losing control of day to day operation of the franchises. 11. Expansion through franchise endangers brand equity. 12. Completely divest KFC of Mexican operations. 13. This alternative includes canceling all franchises and selling off all company units in Mexico.
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CHAPTER 5 CASE STUDY

Kentucky Fried Chicken Top companies worldwide have their own avatars and logos to represent their brand. One that is regarded as the most successful is Harland Sanders, the worlds most famous Colonel, now with over 14,000 chain stores cooking delicious fast food in over 100 countries. His white suit and the same white goatee have made many loyal KFC diners feel right at home. Perhaps only after 65 years after the creation of the KFC brand, can we truly understand the success beyond the struggles of Kentucky Fried Chicken. The Life of Colonel Sanders Harland David Colonel Sanders was born on September 9, 1890 in Central Indiana, USA. He lived on an ordinary farm and had an ordinary and simple childhood. His quiet life ended when he was 6 years old, after his fathers sudden death. In order to make a living, his mother had to work at a local canning factory. As the eldest son in the family, Sanders naturally assumed the task of looking after his two younger siblings. His first cooking class came from having to prepare meals for them. It was said that Sanders learned how to do more than 20 dishes in one year, and was known as the Little Chef. At 10 years old he found a casual part-time job at a local farm; but, in order to help support his family, he soon dropped out of school and worked there full-time. Two years later his mother remarried, but Sanders and his stepfather were always at odds. Sanders left home and eventually joined the U.S. Army when he was fifteen. He was then sent off to serve in Cuba. After the war, he soon ended up married and ultimately held various jobs. He sold insurance in Alabama, worked in a small motorboat crossing company in Ohio, and he was also in a gas lamp factory. Sanders found it difficult to find a satisfactory job, and decided on having his own new venture. It was around this time as well when his wife and children had left him. He was already 40 years of age at this time, but the door of fate was soon to be open.
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Prototype of the Kentucky Fried Chicken Sanders opened a service station on the busy 25th Road in Kentucky. At the face of the Great Depression in 1930, Sanders wanted to increase revenue by feeding travelers. He began to take the first steps in testing the fast food industry. He started small, with only a table and six chairs. His small business with shabby furnishings located next to a small gas station, turned out to be the starting point of the huge KFC fast-food empire. Sanders began to develop his own secret recipe on a variety of family food, including the budding form of what became known as Kentucky Fried Chicken. His convenient form of fast food was so successful that soon after Sanders had to choose a new site for his establishment. It was then that he moved to motel restaurant with 142 seats available. Because of lack of experience in hotel management, he went back to school and studied at Cornell University for two months. Kentucky Colonel A few years later, Sanders began to focus on improving his restaurants most popular chicken recipe. Soon, a formula containing 11 kinds of spices was born. The chicken kept juicy on the inside and with a layer of crispy-skinned surface is the predecessor of Kentuckys best-selling secret original recipe with 40 spices. Colonel Sanders also discovered a technique to shorten the traditional method of cooking fried chicken which takes 45 minutes of pan frying, while guests wait anxiously. Sanders used the pressure cooker which lets him not only cook his fried chicken in 15 minutes, but also makes it taste more delicious. Sanders was awarded the honorary title of Kentucky Colonel. He seized this opportunity to develop his brand distinctive of the southern United States. He eventually remarried and created his trademark look and authentic Southern family cuisine that has made him the Dear Colonel Sanders of today. Colonel Sanders at 65 During the 1950s, the U.S. federal government announced the 75 interstate highway construction plans that will reduce traffic to Sanders restaurant and destroy all previous
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efforts of the Colonel. The new highway took away almost all of the cars that made the 25th Road so busy. Sanders sold his beloved motel, and found himself bankrupt at 65 years of age. Sanders began his second venture and decided to franchise.
The First Fast Food Franchise Industry Sanders was heard to have said that he was rejected 1009 times before the 1010th All right answer. The delicious fried chicken soon put Sanders back on his feet. More than 400 Kentucky Fried Chicken chains have opened in the entire North American continent. Four years later, Sanders sold the chain to an investment group with a high industry price of $2 million. Later, Sanders publicly acknowledged his regret over this decision, but his figure has remained active in the buildup of this vibrant company until he died of leukemia at 90 years old. His first fast food franchise form has forever changed the catering industry. Illustrating the Brand Identity KFC belongs to the Yum Group. Yum is the worlds largest restaurant group, and has more than 33,000 stores and 840,000 employees in over 100 countries and regions around the world. They own well-known restaurant brands such as Pizza Hut, Taco Bell, and the East Dawning (Chinese food). They ranked first in the field of cooking chicken, pizza, Mexican food and seafood dining. Kentucky Fried Chicken and Pepsi have formed a strategic alliance with the restaurants exclusive sales of PepsiCo carbonated soft drinks (but with exceptions in some countries such as Japan and South Korea, that sell Coca-Cola products). In November 2006, Yum Groups KFC was to become the worlds first brand that can be seen from outer space. A huge mountain of the Colonel Sanders logo was unveiled in Area 51 in Nevada Desert, United States. Nearly 50 designers, engineers, scientists (including astrophysicists), architects and other professionals teamed up for three months
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to create and construct the worlds largest logo. It is a 65,000 square feet of colored tile visual of the KFC emblem. The new KFC logo retained Colonel Sanders trademark bow tie; but, his classic white double-breasted suit was replaced by a red apron. This red apron represents the brands home style cooking tradition. It tells customers that the KFC 50 years ago where Colonel Sanders worked hard in providing fresh, delicious, high-quality food is still present todays modern world. The updated logo will be applied to restaurant design, advertising, food packaging, staff uniforms, the public share products and all other visual elements. Su, president of Yum Brands China Division said, Colonel Sanders is one of the most familiar images of the world; placed upon him is the new face of today, indicating a new future of Kentucky. Kentucky is fast, delicious, and has high standards of quality. Kentucky provides a balanced diet and healthy living, based on the world, on innovation and unlimited fast food. Training of Tremendous Teamwork KFC respects team spirit and the enthusiasm of every employee. They are involved and committed to provide the staff with comprehensive training, welfare, protection and development plan, to enhance each employees potential to the fullest. This is precisely the reason why more and more good, young partners are attracted to Kentucky. As one of the worlds largest and most successful restaurant chains, Kentucky F ried Chickens secret of success is: Always have the courage to challenge young people to open the door and focus on staff training, in order to encourage the staff and the company to be vibrant and grow together. KFC attributes its success to the concerted efforts of nearly nine hundred thousand employees worldwide. Around the world, KFC will always place the needs of customers first to ensure a variety of high quality food and beverages, where they can feel the most cordial and first class service and dining environment.
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Strategic Development in the Western Culture In such a competitive fast-food service industry, how does Kentucky Fried Chicken always maintain a strong momentum of development? We believe that to enter the market, there are different stages of development and strategies that are consistent with the organizational culture and strategic logic. One of which is the new fast-food service system that introduces a of Western-style dining concept. 1. A unified logo, uniforms, a consistent distribution mode of the new chain business model, and ultimately relying on the companys quality products, fast and friendly service, and clean dining environment to establish its position in the market. 2. Localizing employees and continuing to invest in manpower training on various aspects of each level. From waiters and restaurant managers, to the management of corporate functions, all should be in accordance with the nature of their work requirements. Arrangements are made for technical and rigorous training programs and professional fast-food management standards for management employees at the Kentucky Fried Chicken Restaurant Management Professional Training Base Education Development Center. 3. Being in the fast food industry places emphasis on being speed-oriented. The spirit of this enterprise highlights on teamwork in order to achieve high efficiency; thus, ensuring a fast and reliable output during peak service period. The secret to form a highly efficient and flexible team is an advanced management incentive mechanism created to motivate team spirit and excellent management. 4. Quality service is when guests receive more than they originally hoped or expected to get. Kentuckys aim is to put their customers first; to make every dining customer, whether adult or child, feel at home. 60 years ago, KFCs Colonel Sanders, founded what is now known as: the family dinner alternative that is to provide complete meals for family time when unwilling or unable to prepare home cooked food. He also called it: Sunday dinne r seven days a week. Today, the spirit and heritage of the Colonel has become a symbol of the
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Kentucky brand. The image of Colonel Sanders as the Kentucky Fried Chicken logo has become one of the best and most recognizable brands in the world. The KFC secret recipe It is an open secret that the KFC is made of a mix of 11 herbs & spices. Using modern spectrometer, we can blast the Colonel spice with X-ray photoelectron or burn them with a specially designed gas and study the result. With a database of results made with similar technique using all spices & herbs known to mankind, it would take just weeks before we could identified the exact names and percentage of those 11 spices. However, DOES IT MATTER?? Does it really matter to know the exact names and compositions of those spices? An average businessman would think the secret recipe is so valuable and willing to pay millions for a copy of it. A genius businessman would not pay even a penny!! It is the franchise system, not the spice recipe. Have you been to a night market ("pasarmalam") and tried the fried chickens sold by the hawkers? Have you ever been to a small restaurant or a food stall and found out that the fried chicken was so crispy and delicious? Then you were wondering why this small time businessman did not make a fortune out of his "secret recipe"! The next time you visited the restaurant again, did you notice that:* sometimes there was nobody to take orders. * sometimes it was closed without properly giving a notice in advance . * sometimes the table was in a mess and nobody to clean even after 5 minutes you were seated. * Sometimes the sink was dirty and choke full with food residual. * Sometimes the fried chicken was overcooked, and at other times it was undercooked. * Sometimes the fried chicken was too hot and at other times it was not so spicy.
What is the point? The "secret recipe" represents only a small percentage of the success of the KFC franchise. If I were to give a percent, it may not represent more than 20% of the total success.
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CONCLUSION
THE SUCCESS IS DUE TO THE FRANCHISE SYSTEM!! In a franchise system, everything is documented and there are strict rules for running the business. For example:-
* The chicken must be cooked in a pressure cooker and left for 15 minutes * The size of each of the chicken parts must at least 8 cm wide and weight 300 grams * The chicken must be marinated overnight * The age of the chicken when they were slaughtered must be between 60-70 days * The minimum size of the restaurant must be 24x60 feet * The color of the logo, the chair and the table must be yellow and the floor is dark grey. * The toilet must be cleaned every 3 hours. * The sink must be cleaned every 30 minutes * The windows must be cleaned every morning * Food left unsold after 15 minutes must be discarded. * The worker must wear company-shirt and trousers. No jeans, corduroy or leather. * 5% of gross earning must be used for local advertisement * 1% of gross earning must be used for national level advertisement * 3% must be used for R&D to develop new recipes & local brand. * The food must also be offered in discounted packages (e.g. 2 chicken, 1 fries, 1 glass of Pepsi) * the food can be ordered separately / "all carte" but no discount applies. * The restaurant must have air-conditioned. * Etc...etc..
This long list of standard operating procedures is actually the key to the success of the franchise. The long list is actually an accumulated wisdom and know-how the franchise system has developed after a few decades of operation. Finally we found the Holy Grail!!
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THE "SECRET RECIPE" of KFC SUCCESS IS ACTUALLY THE WHOLE FRANCHISE SYSTEM!! KFC is a very strong chain of fast food restaurants with more than 10,000 restaurants all over the world. KFC is providing employment to 1200 Pakistanis an around 6000 Pakistanis dependent on KFC. They are paying Rs. 10 million to government of Pakistan as direct taxes. 95% of its food and packaging material used in KFC produced in Pakistan locally which sums up to the purchase of 35 million per month. Each new outlet developed by KFC in Pakistan spends 40 million rupees, thats a massive amount for this industry. From all of the above detailed discussion about KFC in Pakistan, it is really clear that KFC and Pakistan are growing together. KFC is doing well in Pakistan and keeps following its marketing strategies as a market leader and segmenting the market into different variables and increasing their market share. KFC is leading in Fried Chicken. It gives quality, variety and fresh meals as of its competitors RECOMMENDATION Based on our analysis of the salient problem and the strategic alternatives, we recommend that KFC re-franchise all of the 129 company units in Mexico. This most effectively mitigates the risk of doing business in Mexico by making a franchisee responsible for the profit and loss of each unit. KFC will still receive royalties based on the sales of each unit. However, franchises will protect the company from currency devaluation. KFC is able to reduce this risk while still maintaining a presence in one of the largest growing markets. Expansion is not recommended at this time due to the volatility of the economic and political situation in Mexico. KFC is a market leader in providing Fried chicken. As KFC, so it is competing with the prominent market signs like pizza hut, McDonalds. N its product category, it is doing really well but they need improvements in their hot menu. They should also make their menu dynamic, by introducing new meals after certain period of time. New items should be introduced by varying the taste. They should also try the local desi taste addressing the desi food lovers, thus it will help to increase their market share.
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The prices of KFC are reasonable as compared with other fast food restaurants. But as price is always a primary concern for the customer, therefore, they should adopt certain strategy to attract the customers. And it can only be done by lowering the prices. It could be by introducing some discount packages for families, employees, students or regular customers. The membership card can be used to provide certain extra value to the customer. AS far as placement of the products is concerned, it is an important factor, for a company to increase its market share, by targeting the right customer. KFC needs to have more outlets, at commercial areas. It will help to target the actual as well as the potential customers. Mobile outlets may be an effective addition as well. KFC has large customer equity, but being a market symbol, a company should strive for having more actual customers. KFC should work for having more solid marketing departments. They should organize and run the proper advertisement campaign. It would definitely be an incremental factor for their sales. They can also use the brand promotions. They can set up the promotional campaigns. All they need is an effective marketing department to facilitate the promotional activities.
IMPLEMENTATION PLAN
1. THE RE-FRANCISING PROGRAM This program will involve the selling of all company owned KFC units, in the country of Mexico, to individual franchisees. This should mitigate risk while still maintaining a steady cash flow from the region. The sale of the 129 company units will take place during a three year time period. A. TASK ONE: A price must be set for the sale of all Mexican KFC units, which will be an average of $500,000. The Franchise Operating Manager will assist in accessing these prices. Future revenue from royalties of these new franchises will be set at 6%. KFC must determine a
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set of criteria on which to identify future potential buyers. Prior restaurant business experience in Mexico At least $500,000.00 in liquid assets Net worth of at least $1,000,000.00 A completed application Potential buyers must be determined using the predetermined criteria The entire plan must be presented to the board for final approval . The selected buyers must be contacted. B. TASK TWO: Negotiate the packages of restaurants and agree on price and time for acquisition. This price will be set and will include building and equipment only. The individual price is $500,000 per unit. Conclude the sale of units based on a regional basis. Use a three-year time line to meet the dead line. July 96 through January 97 will focus on the sale of the first nine units in the Mexico City region. January 97 through December 97 will focus on the sale of 40 units. January 98 through December 98 will focus on an additional 40 units sale. January 99 through December 99 will focus on the sale of the final 40 units. C. TASK THREE: Notify all general managers of intended sale by letter. Schedule regional general managers meeting in each of the three major cities. Send Peter Walker (VP franchising) and Laurence Zwain (C.O.O. PepsiCo Restaurants Worldwide) or representatives to a regional meeting in each of the three major regions, which were previously identified. 2. THE SEVERANCE PROGRAM This is a program designed to aid general managers that will be displaced due to the sale of the franchise units. It is likely that the new franchisees will bring in their own people and many general managers will be replaced. It is important to avoid any bad will from former KFC corporate managers and the severance package should help to defray some of the negative feelings of present general managers. Every General Manager will qualify when their respective unit is sold.
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A. TASK: Determine an average compensation package of the general managers in the 129 stores. General Managers will receive one months severance, average of $5,000 with pay and benefits per month at the end of their employment. Prepare formal package for distribution at the regional meetings. Olden Lee, from the Human Resource Department, will be assigned the responsibility of providing a bilingual Human Resource specialist to deal with questions from General Managers. The bilingual human relation's specialist will notify the payroll department of the last effective pay date for each of the units as they are sold off, and of the General Managers who will receive the severance package. Only General Managers who are on the payroll at date of sale will be eligible for severance. 3. THE EVALUATION AND CONTROL PROGRAM This program will be used for evaluation of the two previous programs. It is important to determine the effectiveness of the programs. In addition, this program will include a plan to ensure continued brand integrity for Kentucky Fried Chicken.
A. TASK: Assign new responsibility to the regional Franchise Operating Manager for Mexico. Hire two new people to work under the F.O.M. in quality and control audits. PepsiCo already has a quality control program in place, and this program will only add to the staff of that existing program. This implementation plan will be deemed a success if 90% of new franchises are still viable after two years.
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INCOME GENERATED Sales price per unit: This price will be based on the price, which includes the building and equipment packages. Land price will not be included because it is leased and the new owners will assume this payment. ROYALTIES This will give a summary of expected royalties that will be received from the sale of the units to franchises. The royalties will be reported as they are expected to be generated, during the sale of the respective units, which corresponds to the time line. Royalties after the re-franchising is complete will not be included in the budget due to the completion of the proposed program. It is only necessary to look at the specific time frame during the implementation of the program. The expected royalty fee is 6%. This long list of standard operating procedures is actually the key to the success of the franchise. The long list is actually an accumulated wisdom and know-how the franchise system has developed after a few decades of operation. Finally we found the Holy Grail!! THE "SECRET RECIPE" of KFC SUCCESS IS ACTUALLY THE WHOLE FRANCHISE SYSTEM!!
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BIBLIOGRAPHY
REFRENCE BOOKS :
Garcia, Augie. Discussions, March 12, 1999 Gibson, Charles H. Financial Statement Analysis, 7th edition. 1998. Tricon 1997 Annual Report. Tricon Global Restaurants, Inc. Dun and Brand streets Industry Averages. 1993, 1994, 1995 editions.
WEBSITES :
http://www.kfc.com/
http://hbswk.hbs.edu http://www.scribd.com http://articles.economictimes.indiatimes.com http://www.ibscdc.org
http://www.slideshare.net/blakefelson/kfc-in-china http://wwwfrank-clifford.com/researches-files/kfc.pdf http://www.scribd.com/doc/95882977/international-marketing-kfc http://www.oocities.org/timesuare/1848/kfc.html http://www.asiagreed.com/utilities/franchising-china.pdf http://slideshare.net/skdrugs/kfc-case-study-presentation http://advantagemagazine.co.zo/kfc
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KFC History: From Roadside Restaurant to Global Franchise

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KFC History: From Roadside Restaurant to Global Franchise

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VIVEK COLLEGE OF COMMERCE

VIVEK COLLEGE OF COMMERCE

VIVEK COLLEGE OF COMMERCE

VIVEK COLLEGE OF COMMERCE

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CHAPTER 2 COMPANY PROFILE

1.1 KFC as a Market Leader:

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1.2 KFC in a Growing Market:

1.3 Describing the New Users:

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1.4 More Usage:

1.5 New Users:

1.6 Non Users:

1.7 Non Users of the Brand:

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FINANCIAL RATIO ANALYSIS AND CAPITAL OUTLOOK

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SALE AND RE-BRANDING

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CHAPTER - 3 MARKETING STRATEGIES

1. PRODUCT: 1.1 Product planning:

1.2 Product Strategy:

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1.3 Product Line:

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1.4 Product Mix strategies:

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1.5 Product Branding, Packaging and Labeling:

1.6 Brand Equity and Strategy:

1.7 Packaging Strategy:

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CHAPTER - 4 FRANCHISING STRATEGIES

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The King Finally Spies Russia . . . but 20-years after McDonalds

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KFC has new strategy to expand its market share

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LIST OF COUNTRIES HAVING KFC FRANCHISES

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Countries with KFC restaurants

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1. KFC IN UNITED STATES:

2. KFC IN UNITED KINGDOM AND IRELAND:

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How KFC &M.C. Donalds plan to target each other in India

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