2. • Pioneered by Colonel Harland Sanders; Kentucky Fried Chicken (KFC)
has grown to become one of the largest quick food service systems in the
world; touted as the “world’s most popular chicken franchise”
• Well known for their Original Recipe Fried Chicken from a recipe of 11
herbs and spices
• Company went through many acquisitions (Heublin Inc RJ Reynolds
PepsiCo Inc Tricon Global Restaurants, Inc YUM! Brands, Inc)
• Currently, KFC is under the restaurant company YUM! Brands, Inc (along
with Taco Bell and Pizza Hut) with nearly 5,200 restaurants in the United
States
3. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Customers
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
4. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Products & Services
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
5. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Markets
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
6. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Concern for Survival;
Growth and Profitability
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
7. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Technology
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
8. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Philosophy
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
9. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Self-concept
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
10. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Concern for Public Image
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
11. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Concern for Employees
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
12. Kentucky Fried Chicken is one of the world’s largest fast food systems serving the
world’s most popular chicken with its Original Recipe® fried chicken - made with
the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected
more than a half-century ago. The world’s best-fried chicken that tastes so good
still continuously searches for better ways to improve. Fast food doesn’t have to
mean unhealthy foods. Here at KFC, we are still in the forefront of healthy fast-
food menu choices.
Nation-Building
“Our passion, as a restaurant company, is to put a KFC on people's faces around
the world, satisfying customers every time they eat our food and doing it better
than any other restaurant company. KFC offer customers the food they crave,
comeback value, and customer-focused teams. The unique eating experience at
each of our restaurants make our customers smile and inspire their loyalty for
life. Toward that end, our 140,000 employees in the US are trained to be
customer maniacs. It is with passion that we strive to be known by our “Southern”
way of cooking chicken and share KFC’s unique flavor all around the nation.”
15. Threat of new entrants
LOW
Franchising, small-scale
entrepreneurs; high fixed cost;
intense competition
Bargaining Power of Buyers Rivalry Among Existing Bargaining Power of Suppliers
LOW Competitors LOW
HIGH
Low volume purchases, not Low switching costs
price sensitive Highly competitive industry
with many players; trend of quality
meals
Threat of Substitute Products
HIGH
Frozen food section, home cooked
meals, healthier alternatives
24. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E US food industry provides employment to the country 0.05 3 0.15
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
25. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E US food industry provides employment to the country 0.05 3 0.15
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
26. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E 0.05 3
US food industry provides employment to the country retail food and beverage industry, including
The U.S. 0.15
restaurants, is about a $1.5 trillion industry
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3
Restaurant industry sales = $632 B or 4% of GDP 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
27. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E US food industry provides employment to the country 0.05 3 0.15
4-C US consumers prefer to eat out
Restaurant industry is projected to employ 12.9 million
0.30 4 1.20
5-SC Increasing and aging US population workforce (NRA, 2012)
people or 10% of the US 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
28. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product
Food expenditures have increased steadily;
0.05 3 0.15
2-E 0.05
Total away-from-home expenditures amount to $594 billion in 2010
Continued growth of US food service industry 3 0.15
(considerable amt in eating and drinking places)
3-E US food industry provides employment to the country 0.05 3 0.15
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
29. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
US residents = 307,007 million and is projected to increase
to 392 million by 2050 but projected to decrease in the next 6
3-E US food industry provides employment to the country 0.05 3
decades by 50% (due to aging population) 0.15
Older individuals tend to eat out leas often
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
30. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E US food industry provides employment to the country 0.05 3 0.15
60% of traffic growth was accounted for breakfast
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
31. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
• A household’s structure can have
2-E Continued growth of US food service industry
implications on how it buys and
0.05 3 0.15
3-E US food industry provides employment to the country
prepares food 0.05 3 0.15
• Dining out = most convenient
4-C US consumersthose witheat out
choice for prefer to dual-income 0.30 4 1.20
5-SC and single-parent families
Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
32. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E US food industry provides employment to the country 0.05 3 0.15
Older people more likely to:
4-C US consumers prefer to eat out
•watch their diet 0.30 4 1.20
5-SC Increasing and aging US population
•choose healthier foods 0.05 3 0.15
•compromise out for breakfast
Popularity of eatingcompromise on
6-SC
convenience and taste
0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1
Fast food industry blamed for obesity-related heath problems
0.05
3-C • non-fried chicken chains 0.10
Increased competition fromNYC regulation requirin restaurants to remove most trans fats 2 0.20
•Health care act in 2010, restaurants post calorie counts for menu and
4-C Operating costs on the rise
buffet items
0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
33. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
• Growing rate of service industry
Continued growth of US foodAsian and Pacific Islander
2-E
population to expand over 12 million
0.05 3 0.15
3-E • Hispanic-origin population, largest growing
US food industry provides employment to the country 0.05 3 0.15
group, may increase to 31 million by 2015
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
• With the growing rate of these population, there is also a growing2
0.10 demand 0.20
3-C Increased competition from non-fried chicken chains
4-C Operating costs on for ethnic cuisine
the rise 0.05 1 0.05
• Asian fast food and full-service restaurants seeing strong growth
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
34. Rank Brand Outlets
Key External Factors Weight Rating
Weighted
Score
1 SUBWAY 21,635
EXTERNAL OPPORTUNITIES 13,867
2 McDonald’s
1- E 3 Starbucks 10,987
Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth ofHut food service7,564
4 Pizza US industry 0.05 3 0.15
5 Burger King 7,213
3-E US food industry provides employment to the country
6 Dunkin’ Donuts 5,863 0.05 3 0.15
4-C 7 Wendy’s
US consumers prefer to eat out 5,742 0.30 4 1.20
5-SC Increasing and aging US population 5,622
8 7-Eleven 0.05 3 0.15
6-SC Popularity of Taco Bell breakfast 5,588
9 eating out for 0.10 3 0.30
10 KFC 5,253 • Hamburgers continue to be very
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
popular (14% of all restaurant
to eat out
orders or 8.7 B servings)
EXTERNAL THREATS • Increased popularity of Subway
outlets (made with fresh and
specialty0.10
ingredients2 0.20
1-C Growing health concerns on fast food service restaurants
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
35. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E US food industry provides employment to the country 0.05 3 0.15
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC• Popularity of and labor costs have been rising pressure
Food prices eating out for breakfast 0.10 3 0.30
7-SC Demographicmargins in the American household causes a tendency
on operating changes 0.10 4 0.40
• to eat out price increase cost for restaurant
Commodity
increases
EXTERNAL THREATS to absorb the increase in
• Restaurants most likely
commodity prices
1-C Growing health concerns on fast food service restaurants
• Some counteracted these with higher pricing
0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive TOTAL 3.00
36. Weighted
Key External Factors Weight Rating
Score
EXTERNAL OPPORTUNITIES
1- E Increasing US gross domestic product 0.05 3 0.15
2-E Continued growth of US food service industry 0.05 3 0.15
3-E US food industry provides employment to the country 0.05 3 0.15
4-C US consumers prefer to eat out 0.30 4 1.20
5-SC Increasing and aging US population 0.05 3 0.15
6-SC Popularity of eating out for breakfast 0.10 3 0.30
7-SC Demographic changes in the American household causes a tendency 0.10 4 0.40
to eat out
EXTERNAL THREATS
1-C Growing health concerns on fast food service restaurants 0.10 2 0.20
2-SC Growing demand for ethnic cuisine 0.05 1 0.05
3-C Increased competition from non-fried chicken chains 0.10 2 0.20
4-C Operating costs on the rise 0.05 1 0.05
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive
TOTAL 3.00
37. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
38. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees • KFC’s early entry in 1954 allowed it to develop strong
brand name recognition and strong foothold in the
3-M KFC is the market leader in the fast food chicken category
industry
0.25 4 1.00
4-M Wide distribution capability • Pride of having KFC’s Original Recipe Fried 4
0.10 0.40
Chicken with
5-M Advertising 11 herbs and spices 0.05 3 0.15
• Colonel Sanders influence since the beginning
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
39. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
• 1986: management shift when PepsiCo acquired KFC from RJR
4-M Wide distribution capability Industries 0.10 4 0.40
5-M Advertising • Several restructurings led to layoffs throughout KFC
0.05 3
demoralization to old KFC employees and franchisees
0.15
6-MT Value given to franchise operators 0.05 3 0.15
• Spin off of PepsiCo to Tricon Global Restaurants (currently named
7-HR High employment rate YUM! Brands) was lead by David Novak 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R Limited menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
40. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
• KFC systemwide sales of $4.70 billion in 2010
5-M Advertising • 0.05 3
Chick-fil-A and Popeyes as close competitors 0.15
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R Limited menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
41. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
As of0.05 KFC3 0.15
7-HR High employment rate
• 2012, had 5,200
INTERNAL WEAKNESSES units in the US (17% of the
units are operated by YUM!
1-O Slow US growth 0.05 2 0.10
Brands)
2-M Customer satisfaction rating is low • Ranked 9 out of 2 largest0.20
0.10 10
fast food chains in the US
3-F Stagnant net profit margin 0.05 1 0.05
4-R Limited menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
42. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
• Before: “finger-lickin’ good” and Colonel Sanders
7-HR High employment rate
as its trademark. 0.05 3 0.15
• Now: “healthier” “Kentucky Grilled Chicken”
INTERNAL WEAKNESSESfat chickens
products, 0 grams trans
1-O • Brandgrowth revamp: younger consumers
Slow US image 0.05 2 0.10
(animated character, bolder colors, updated
2-M Customer satisfaction rating is low
graphics) 0.10 2 0.20
3-F • 52 week/ profit margin
Stagnant net year TV ad schedule 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
43. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL •WEAKNESSES only about 5% ownership of KFC
YUM! Brands retain
1-O • Franchise operators can run their branches almost independently
Slow US growth
• Less friction between mother company and franchise operators. 0.05 2 0.10
2-M Customer satisfaction rating is low on sals of $7.4 billion from a loss of 0.10 million in
• Net income of $617 miion $111 2 0.20
3-F net income in 1997
Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
44. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 140,000 people working at over 5,000 KFC
0.10 2 0.20
restaurants across the country with an average of
3-F Stagnant net profit margin
28 employees per 0.05 restaurant 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
45. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees • KFC’s growth was driven by international operations
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
• 95% of new restauratns were from international franchise
4-M Wide distribution capability (China)
0.10 4 0.40
• 2004, KFC could not open any more restaurants until its
5-M Advertising
domestic same-store sales figures improved 3
0.05 0.15
6-MT Value given to franchise operators • KFC US growth is just 1% per year 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
46. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
• American Customer Satisfaction Index in
5-M Advertising KFC scored 75 out of 100
2011, 0.05 3 0.15
• given to franchise operators
6-MT Value Another survey from Customer Reports
puts KFC near the bottom of the rankings
0.05 3 0.15
7-HR High employment rate
• Dissatisfaction from consumers 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
47. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category
0.25 4 1.00
4-M 10% NET PROFIT MARGIN0.10
Wide distribution capability 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2
KFC net profit margin has been stagnant at 0.10
10% for the past 3 years
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
48. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
No menu items in US branches of KFC
3-F Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
49. Key Internal Factors
Restaurant Lunch/dinner Lunch/dinner Side Coffee Weighted
Breakfast Weight Rating
Snack All
Score
main dishes sides beverages items items beverages items
INTERNAL STRENGTHS 16
Subway 3 10 0 0 0 29
1-C Starbucks
Strong trademark brand 0 0 6 7 0.05
13 4 10 0.20 36
2-MT Change in management improved relationship between management0 0.10
Taco Bell 7 0 0 0 0
3 0 0.30
7
Pizza Hut
and franchisees 6 0 0 0 0 6
3-M KFC is the market leader in 0 fast food chicken category
Dunkin’ the 0 12 13 0.251 4 20 1.00 46
Donuts
4-M Wide distribution capability 0.10 4 0.40
5-M KFC
Advertising 8 0 0 0 0 0 8
Sonic 4 2 40 0
0.056
3 0
0.15
52
6-MT Value given to franchise operators 0.05 3 0.15
Domino’s 10 0 0 0 0 0 10
7-HR High employment rate
Twelve 51 5 68 20 0.05
20 3 30 0.15
194
restaurants
INTERNAL WEAKNESSES
1-O Slow US growth • 0.05 2 0.10
Only 8 lunch/dinner main dishes that are
2-M Customer satisfaction rating is low considered healthy
•
0.10 2 0.20
Three out of the four restaurants with fewer
3-F Stagnant net profit margin 0.05 1 0.05
healty items are all YUM! Brands companies
4-R No menu items for breakfast • Introduction of KFC Grilled Chicken
0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information
TOTAL 3.00
50. Weighted
Key Internal Factors Weight Rating
Score
INTERNAL STRENGTHS
1-C Strong trademark brand 0.05 4 0.20
2-MT Change in management improved relationship between management 0.10 3 0.30
and franchisees
3-M KFC is the market leader in the fast food chicken category 0.25 4 1.00
4-M Wide distribution capability 0.10 4 0.40
5-M Advertising 0.05 3 0.15
6-MT Value given to franchise operators 0.05 3 0.15
7-HR High employment rate 0.05 3 0.15
INTERNAL WEAKNESSES
1-O Slow US growth 0.05 2 0.10
2-M Customer satisfaction rating is low 0.10 2 0.20
3-F Stagnant net profit margin 0.05 1 0.05
4-R No menu items for breakfast 0.05 2 0.10
5-R Limited healthy menu options 0.10 2 0.20
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I= Information TOTAL 3.00
51. Strategy Option TOWS SPACE IEM GSM Total
Integration Strategy
1 Forward Integration 1 1 1 3
2 Backward Integration 1 1 1 3
3 Horizontal Integration 1 1 1 3
Intensive Strategy
4 Market Penetration 1 1 1 1 4
5 Market Development 1 1 1 3
6 Product Development 1 1 1 1 4
Diversification Strategies
7 Related Diversification 1 1
8 Unrelated Diversification 0
Defensive Strategies
9 Retrenchment 0
10 Divestiture 0
11 Liquidation 0
Wt Market Penetration Product Development
Key Factors Total Attractiveness Score Total Attractiveness Score
Total Attractiveness
Score
1 4.40 4.55
(Attractiveness Score: 1 = not acceptable; 2 = possibly acceptable; 3 = probably acceptable;
4 = most acceptable; 0 = not relevant)
52. • Carries more risk
• Develop a new product
targeted to its existing
customers
• Less risky; leverages on existing
resources and capabilities
• Increase market share
• Volume discounts, bonus cards,
customer relationship
management
53. Why Product Development?
• KFC needs to increase sales by improving or modifying
its menu items (tried and tested)
• It will entail large research and development
expenditures
• KFC had successful products in the past and consumer
may be attracted to try new products based on their past
positive experience.
• KFC holds the leading market share and is in a very
competitive fast food industry
54. • Long term Company Objective:
- Increase net profit margin by 5% annually from 2012 to 2016
<< R&D annual objective
<< Production annual objective
<< Marketing annual objective
<< Financial annual objective
<< Personnel annual objective
55. Completion Team
Activities Date Expected Output Responsible
New range of menu
Develop five new breakfast items that Market
Q1 that includes
1 are low in salt, low in fat, and low in Research and
2014 healthy breakfast
calories Development
items
Finance and
Reposition franchise outlets with low Q2 Lower operating
2 Accounting
profit and nonperforming 2013 expense
Team
Interviews, surveys,
Organize market research on consumers’ Q1 Market
3 small group
current needs and wants 2013 Research Team
discussions
A statewide
marketing effort of Marketing and
Increase promos and advertisements to Q2
4 promotions and Advertising
states with lowest market share 2014
advertisements on Team
the new menu items
Develop training programs to support
Team building Human
teamwork and work efficiency of the Q1
5 activities and HR Resource
employees in all divisions of the 2013
training programs Management
company
56. Goals Measures Current Targets
Customer Service
Market Share Global Market 50% market
35.2% market share
Research share
Brand Image
Customer surveys 75 out of 100 90 out of 100
Financial Performance
Grow by 10%
Net Sales 2014 Net Sales $1,768,000,000 year-on-year
from 2013-2015
Grow by 10% by
Net Income Income Statement $ 185,000,000
2014
% of sales from
Grow sales from
launched products/
Profitable new products 10% 10% to 15% per
gross profit from new year
products
Innovation and Learning
Awareness levels
New menu breakfast items Consumer surveys None available
of 80%
Buyer power refers to the ability of customers of the industry to influence the price and terms of purchase. Supplier power refers to the ability of providers of inputs to determine the price and terms of supply. Suppliers can exert power over firms an industry by raising prices or reducing the quality of purchased goods and services, so reducing profitability.
The United States has the largest economy in the world with a Gross Domestic Product worth 14,256 billion dollars (2008 estimate) or 22.99% of the world economy
The U.S. retail food and beverage industry, including restaurants, is about a $1.5 trillion industry (Plunkett Research Ltd 2012). Restaurant-industry sales are projected to total $632 billion in 2012 and equal 4 percent of the U.S. gross domestic product. Fast food chains dominate the American fast food market in terms of sales, transactions and number of outlets. sales at limited-service establishments in the United States rose 1.5% in 2009 to $160.0 billion
National Restaurant Association estimated that, for 2012, its industry would employ 12.9 million people or nearly 10 percent of the U.S. workforce at 970,000 locations. One-half of all adults have worked in the restaurant industry at some point in their lives, and one-third got their first job experience in a restaurant.
Food expenditures in the United States have increased steadily since 1990 along with growth in the country’s population; Over the same period, consumers have shown a growing preference for eating out, effectively closing the gap between spending on food consumed in the home versus food consumed away from home. Americans now spend nearly half of their food dollars on meals and snacks at foodservice facilities, such as restaurants, hotels, and schools. Total away-from-home expenditures, defined to include all food dispensed for immediate consumption outside of the consumer's home, amounted to $594 billion in 2010. A considerable amount of which is being spent on eating and drinking places, this includes full-service and fast-service (otherwise called, fast food chains or quick service) restaurants.
The improvement in sales among dinner houses and family restaurant chains during the last decade may be attributed to demographic trends in the country. Given the latest available statistics from the US Census Bureau (2009), the United States is at 307,007 million residents and is even projected to increase to 392 million by 2050. It is the third most populous country, with 79% of its population living in urban areas. the rate of population growth is projected to decrease during the next six decades by about 50 percent. The decrease in the rate of growth is predominantly due to the aging of the population. (born during the Baby Boom after World War II). this trend will also affect foodservice industry, particularly the limited service market segment. Those over the age of 65, tend to eat out less often, which poses a challenge for the restaurant industry to entice this generation of retirees to eat out more often. Older individuals tend to spend more time eating their meal, prefer full service restaurants, and are more likely to choose high end, upscale restaurants compared to limited service restaurants or fast food chains.
The NPD Group has determined that breakfast accounted for 60% of traffic growth over the 2005 to 2009 period while lunch was flat and dinner traffic declined about 2% per year
The structure of the American household is changing. The average age is higher, people are better educated, and there are fewer members per households. A household's structure can have significant implications for how it buys and prepares food. Demographic changes are behind the increasing frequency of nontraditional households. There are more &quot;empty nest&quot; adults living together after their children have grown up, as well as more unmarried people who are perhaps waiting longer to get married or who have been widowed. These people are more likely to further boost the dining-out trend because of the decline in free time. In many families, both parents hold full-time jobs, which leaves less time to prepare meals at home. With the rise of dual-income and single-parent families, and with numerous moderately priced restaurants to choose from, dining out is often the most convenient choice
The aging of the Baby Boom generation is having an impact; as older people are more likely to watch their diet, choose healthier foods and compromise on convenience and taste in favor of better nutrition. Growing health concerns are significantly impacting all sectors of the food industry, as obesity levels continue to rise to alarming proportions in the U.S. In response to this, the fast-food industry has been hit with lawsuits over the past several years, alleging that specific corporations are responsible for obesity-related health problems faced by consumers In December 2006, the New York City Board of Health passed a regulation requiring restaurants in the city to remove most trans fats by July 2008. A massive health care act passed in 2010 demanded that all restaurant chains with 20 or more restaurants post calorie counts for menu and buffet items.
The race and Hispanic-origin distribution of the U.S. population is projected to become more diverse. The fastest growing race groups will continue to be the Asian and Pacific Islander population. By the turn of the century, the Asian and Pacific Islander population would expand to over 12 million, double its current size by 2010, triple by 2020, and increase to more than 5 times its current size, to 41 million by 2050. On the other hand, the Hispanic-origin population is also considered to be the largest growing group. By 2000, the Hispanic-origin population may increase to 31 million, double its 1990 size by 2015, and quadruple its 1990 size by the middle of the next century. With the growing rate of the Asian and Pacific Islander population in the US, there is also a growing demand for ethnic cuisine, with Asian (particularly Chinese and Japanese) fast food and full-service restaurants seeing strong growth.
Hamburgers continue to be extremely popular in the U.S. and they account for 14% of all restaurant orders or 8.7 billion servings from fast food to fine dining restaurants in 2007. Trends within the quick/fast-casual sector include custom-made sandwiches are increasingly popular and made with fresh and specialty ingredients, which meet demand for convenient and fresh food, hence the increased popularity of Subway outlets
Food prices and labor costs, in addition to rent and utility costs, have been rising throughout 2007, which has put pressure on the industry’s operating margins. Commodity prices affect the supply costs. When commodity prices increase, cost for the restaurant increases as well. The popularity of chicken items for both casual dining and quick-service firms, and the inability of many firms to increase prices significantly, mean that many restaurant chains are likely to absorb much of the increase in chicken prices. Labor costs are climbing for the restaurant industry, following the passage of new legislation raising the federal minimum wage. These higher commodity and labor costs can eat up the company’s profitability. To counteract this, some firms have overcome these challenges with higher pricing.
KFC’s early entry into the fast-food industry in 1954 allowed KFC to develop strong brand name recognition and a strong foothold in the industry. KFC also prides itself for its secret recipe for Original Fried Chicken with its blend of 11 herbs and spices. The recipe is locked away in a safe in Louisville, Kentucky. Today, the recipe uses modern technology security precautions to protect the recipe. Of course, the effect of the enigmatic Colonel Sanders as the face of KFC up to today also influences the company’s strong trademark. Through the years, his face has been part of the company’s logo and even without the name “KFC” people already associate the taste of KFC’s chicken to Colonel Sanders.
In 1986, there was a management shift when PepsiCo acquired KFC from RJR Industries. Sweeping changes into the culture was initiated by the new management, which brought demoralization to old KFC employees and even franchisees. Several restructurings led to layoffs throughout KFC, replacement of KFC managers with PepsiCo managers . PepsiCo ’ s stronger emphasis on performance rather than loyalty was opposite to what was expressed by Col. Sanders to KFC employees over the years and this brought about conflict in the company. When David Novak, current CEO for YUM! Brands, came in, he moved quickly to create a new culture within the company. One of his primary objectives was to reverse the long-standing friction between management and franchisees
KFC continues to be the market leader in the chicken category (Table 13), with US system wide sales totaling an estimated $4.90 billion then $4.70 billion in 2009 and 2010 respectively. It also leads this category with the highest number of units with 5,200 units and its competitors are far behind with less than 2,000 units each. This brings us to distribution capacity…
As of 2012, KFC had 5,200 units in the U.S. and approximately 17 percent of the U.S. units are operated by the YUM Brands, its mother company. It ranked ninth in the list of 10 largest fast food chains in the United States based on US locations.
In the past, KFC has been all about their fried chicken roots with campaign slogans like finger-lickin’ good and always having Colonel Sanders as their trademark. Lately the company has tried to create a new culture by pushing their new “Kentucky Grilled Chicken” products and the fact that their chicken now has 0 grams of trans fat. In addition, they have tried to revamp their brand image to target younger consumers by replacing the traditional Colonel Sanders with an animated character and the chain’s locations now have bolder colors and updated graphics. They also have an “in your face” approach in TV ads with a market leading 52 week a year TV advertising schedule.
YUM Brand’s philosophy is to reduce company ownership in highly penetrated or under-performing markets, and increase exposure in emerging and under-penetrated markets. For KFC, YUM Brands retain only about 5% ownership of KFC, which lets franchise operators run their branches almost independently. This shows great trust of the mother company to their franchise operators and less friction in terms of management. In return, they collect royalties and still make consistent profit return. . Franchises would have greater independence, resources, and technical support. The firm ’ s new emphasis on franchise support had an immediate effect on morale. Seven years after the divestiture, the company recorded a net income of $617 million on sales of $7.4 billion from a loss of $111 million in net income in 1997 (year of the divestiture)
KFC workforce in the US is composed of more than 140,000 people, working at over 5,000 KFC restaurants across the country
KFC’s growth, when it started to expand internally, was driven by international operations. About 95% of all new KFCs restaurants in 1994 were from international franchise mainly in China. Yum opened a record-breaking 656 new restaurants in China in 2011, helping usher in 19 percent same-store sales growth. However, inasmuch as this growth is a good development for KFC as a whole, its domestic growth has been troublesome for a few years now. In 2004, parent Yum! told KFC that it could not open any more multibrand restaurants (of which there were almost 1,000) until its domestic same-store sales figures improved. KFC’s leadership in the US market was so extensive that it had fewer opportunities to expand its US restaurant base, which was growing at about 1% per year. However, since the United States still represents over 59% of Yum's revenues, improvement on US market segment still has to be a priority.
According to American Customer Satisfaction Index in 2011, KFC scored 75 out of 100. Another survey from Customer Reports, which ranked Chick-fil-A as the nation’s top chicken chain for both food and service, put KFC near the bottom of the rankings revealing dissatisfaction from consumers. This is certainly one success factor that KFC should give priority for improvement.
The bottom line for any organization is its ability to generate profits. The net profit margin, indicates how much net income a company makes with total sales achieved. The lower the ratio, the less effective a company is at cost control. For KFC, its net profit margin has been stagnant at 10% for the past 3 years which is the same as that of the restaurant industry 10%
In a menu analysis of twelve restaurants out of top 50 restaurants, it shows that KFC belongs to one of the four restaurants that had ten or fewer items on their healthy menus (Table 16). It is also significant to mention that the three out of the four restaurants with fewer healthy menu options are from the YUM Brands (Pizza Hut, Taco Bell, KFC, and Domino’s). Fast food restaurants are generally seen as “unhealthy”, which forced some fast food chains to add healthy options on their menu. KFC only had 8 lunch/dinner main dishes, which is a disadvantage to the restaurant especially with the current trend of consumers having healthier lifestyle.
Market Penetration strategy is less risky since it leverages on the company’s existing resources and capabilities. In a growing industry, simply maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. However, market penetration has limits, and once the market approaches saturation, another strategy must be pursued if the firm is to continue to grow A product development strategy may be appropriate if the company’s strengths are related to its specific customers rather that to the specific product itself. In this situation, it can leverage its strengths by developing a new product targeted to its existing customers. New product development carries more risk than simply attempting to increase market share.
Market Penetration strategy is less risky since it leverages on the company’s existing resources and capabilities. In a growing industry, simply maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. However, market penetration has limits, and once the market approaches saturation, another strategy must be pursued if the firm is to continue to grow A product development strategy may be appropriate if the company’s strengths are related to its specific customers rather that to the specific product itself. In this situation, it can leverage its strengths by developing a new product targeted to its existing customers. New product development carries more risk than simply attempting to increase market share.