TY-BMS SEM 5.............! YUM! BRANDS INC. Document Transcript
The hospitality landscape is diverse and rapidly changing. Through lodging,
gaming, entertainment and other channels, hospitality companies around the
world seek to provide discerning guests with memorable experiences, which
then lead to referrals and
repeat visits. In today‟s uncertain economy,
business and leisure travelers alike want to maximize the value they receive
for their money. At the
same time, hospitality providers are looking for
efficiencies and effectiveness that lead to faster cash flow, optimized
working capital, and increased revenue per available room. Genpact, through
its smarter processes, smarter analytics and
smarter technology, delivers
enhanced business value to its clients, enabling them to serve guests in the
best possible manner.
HOSPITALITY INDUSTRY IN INIDA
India is known as the land of snake charmers to some, as land of religious diversity
to some others and as land of Bollywood to entertainment lovers. Whether it‟s the
food, the diversity in cultures, handicrafts or business opportunities, everybody
seems to have some or the other reason to travel to India. And the fact that the
World Travel and Tourism Council considers India to be one of the top most
tourist spot with the highest ten year growth potential (2009-18), we have a reason
to believe that India is only going to see more visitors.
It is said that the Indian tourism brings a substantial share to the country‟s foreign
exchange earnings and if you closely examine it, most of that comes from the
hospitality business in India. The revenue from the hospitality sector in India
broadly comes from two sources:
1. Hotels: Which include lodging, attending business conferences and meetings
2. Restaurants: Which includes all sort of eateries whether fine dining
restaurants, quick service restaurants, takeaways or other forms of eating joints.
Hotels and Restaurants after all are the prerequisites for any visitor, local or
foreign. And focusing on the last bit, it‟s hard to not miss out on the fact that not
only the foreign visitors, but Indian visitors travelling across states and cities bring
in a huge chunk of revenue for the country‟s Hotel and Restaurant Industry.
Therefore it can be said that the Tourism and the Hotel and Restaurant Sectors go
hand in hand. Or rather, it can be said that the latter forms a prominent and an
important part of the former.
The market comprising of the foreign tourists is huge and is only growing year
after year. The Foreign Tourist Arrivals standing at a figure of 4.15 Lakh in
September 2012, registered a growth of a little over 3 percent compared to the
corresponding month in the previous year. To prove the huge amount of foreign
exchange that is added to the country‟s reserves is the fact that the Foreign
Exchange Earnings during September 2012 were almost Rs. 6,650 Crores!
The rise in incomes coupled with fascination to travel to a new country is a
considerable reason to believe the growth of foreign visitors to India. Similar
reasons can be attributed to upsurge in the domestic visitors too.
India is believed to be a country with the fastest growing middle class, and
applying the general principles of economics with respect to availability of leisure
time and disposable income, travelling is now a necessity for many. Visiting the
dear ones, exploring your own country, taking a break from work, searching for
business opportunities, there are reasons galore for Indian citizens to look to
Hotels and Restaurants Industry: A source for bread for many
It is clear that the Tourism and the hospitality industry are highly inter-related but
not only that, the hospitality or the Hotels and Restaurants sector is substantially
linked with other industries in the economy like agriculture, transportation and
construction which can be easily reasoned.
To add to that the sector creates the maximum number of jobs than any other
industry in the economy. After all it has place for all kinds of people, no matter
how unskilled or specialized, which can be easily sampled in any hotel or a
Typically a hospitality unit such as a Hotel or a Restaurant consists of various
departments which work in close tandem to provide the combine service a
customer enjoys. There is facility maintenance and direct operations which
includes bartenders, kitchen workers, servers, housekeepers, porters, etc. Apart
from that there is the obvious and more prominent Human Resources department,
people taking care of the marketing and the management.
CHALLENGES AND GROWTH IN HOSPITALITY
Mobility has become part and parcel of the high paced lives people lead today,
especially so in the metros. Competition you call it or the most modern
manifestation of the famous Charles Darwin‟s theory of Survival of the Fittest,
everybody is working very hard to the extent of being available 24x7. And this
makes it ever important for people to indulge in activities that rejuvenate their
sense, good food being one of them.
West has this popular culture of food trucks which are nothing but mobile catering
vans which move around in localities (very much like the ice cream carts here)
selling anything from fast food to gourmet food served by amateur chefs. Such
vans are very popular among people for various reasons: one, because of the
convenience of locality; second, because of their lower prices in comparison to
proper restaurants and third, the quickness of their service.
India has a similar concept bur more or less with the vans stationery at a place and
that too is more common in industrial areas. For someone who likes to cook and
feed people as a hobby, this is the best work idea where you not only get to fulfill
your interest but get to earn as well.
One thing to consider here is that the initial investment in a van which can
accommodate your cooking appliances depending on your preferences and the type
of food you wish to sell. How you can differentiate your food van from others is by
giving your van a proper look, having uniforms for all the staff that you plan to
have, giving attention to the appearance of food you serve, emphasizing on
hygiene and using social media to connect to the people. You can also give a new
dimension to your business by accepting contracts for catering and getting booked
for private events
Among other formalities before starting a business, you will have to consider the
license and registration as per the Food Safety and Standards (Licensing and
Registration of Businesses) Regulations 2011 and also seek permission from the
Traffic Police in case you want your mobile food van to be mobile in the truest
sense of the word.
COMPETITION AND USAGE RATES
Usage rate or its inverse "vacancy rate" is an important variable for the hospitality
industry. Just as a factory owner would wish a productive asset to be in use as
much as possible (as opposed to having to pay fixed costs while the factory isn't
producing), so do restaurants, hotels, and theme parks seek to maximize the
number of customers they "process" in all sectors. This led to formation of services
with the aim to increase usage rate provided by hotel consolidators. Information
about required or offered products are brokered on business networks used by
vendors as well as purchasers.
Yum! Brands Inc. operates the Taco Bell, Pizza Hut, KFC, Long John
Silver's, and A&W chains. The company is the largest quick – service
restaurant concern in the world in terms of units with approximately 33,000
locations in over 100 countries across the globe. Taco Bell, Pizza Hut, and
KFC were part of PepsiCo Inc.'s restaurant group until 1997, when they
were spun off as Tricon Global Restaurants Inc. Tricon changed its name to
Yum! in 2002, the same year that Long John Silver's and A&W were
added to its holdings.
1952: Harland Sanders establishes his first franchise.
1958: Pizza Hut is founded by brothers Dan and Frank Carney.
1962: The first Taco Bell location opens.
1977: PepsiCo purchases Pizza Hut.
1978: PepsiCo acquires the Taco Bell chain.
1986: Kentucky Fried Chicken is added to PepsiCo's arsenal.
1997: PepsiCo spins off its restaurant holdings as Tricon Global Restaurants
2002: Tricon changes its name to Yum! Brands Inc.; the company acquires
Long John Silver's and A&W All American Food Restaurants.
INTRODUCTION OF YUM! BRANDS
Yum! Brands, Inc., based in Louisville, Kentucky, is the world's largest
restaurant company in terms of system restaurants with over 39,000
restaurants in more than 130 countries and territories. Yum! is ranked 201
on the Fortune 500 List with revenues of over $13 billion in 2012. The
Company's restaurant brands - KFC, Pizza Hut and Taco Bell - are the
global leaders of the chicken, pizza and Mexican- style food categories.
Outside the United States, the Yum! Brands system opened over five new
restaurants per day, making it a leader in international retail development.
The Yum! System is comprised of company - owned restaurants (about 20%
of the system) and franchised or licensed restaurants and operations (about
80% of the system). Yum! Brands does not own or operate its franchised
or licensed units.
Yum! System includes four operating segments: U.S., International
(Yum! Restaurants International), China and India Divisions. Outside the
United States in 2012, the Yum! system opened approximately five new
restaurants each day of the year, making it a leader in international retail
Yum! was created on May 30, 1997, as Tricon Global Restaurants, Inc. an
independent company, as a result of a spin - out of the former fast food
division of PepsiCo, which owned and franchised the KFC, Pizza Hut, and
Taco Bell brands worldwide. Because of the company's previous relationship
with Pepsi, Yum! Brands have a lifetime contract with PepsiCo, with
notable exceptions the contracts of franchisees. Yum's lifetime PepsiCo
contract, along with some scattered KFC franchises across the United States
which continue to maintain Coke fountain rights.
Yum! Brands, is connect successful professionals to brands people crave:
KFC, Pizza Hut, and Taco Bell! These drive and these team combined with
Yum! Brands can be a powerful combination!
Yum! Brands want to help leverage the experience to become a multi - unit
franchisee with some of the biggest brands in the restaurant industry.
Yum! Brands proven process supports every step of the way with
development experts, business coaches and a peer network of more than
1,200 experienced franchisees, all part of what they call the Yum! Value
Yum! Brands is committed to franchising with over 80% of the stores
owned by independent franchise operators. They are actively seeking
operators with the vision and capability to open multiple restaurants.
The history of Pizza hut began in 1958, when what is now the world's
largest pizza franchise was born. Today the Pizza hut company is part of
the Pepsi Empire, but back then two brother‟s borrowed $600 from their
mother and started to forge the history of Pizza hut.
Pizza Hut has subsequently branched out and developed franchises all over
the world. In fact it is diversity that has made the history of pizza hut so
successful. Their menus and recipes are not the same, different locations use
different suppliers and different toppings, according to the demand of their
clients. The building block of the history of pizza hut has been this
diversity, not often present in such a large concern.
The whole history of pizza hut has been achieved through innovation, but
the history of pizza hut really took off with union into the Pepsi Company
and more aggressive marketing techniques especially in the take out market
Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their
hometown of Wichita, Kansas When a friend suggested opening a pizza
parlor, they agreed that the idea could prove successful, and they borrowed
$600 from their mother to start a business with partner John Bender.
Renting a small building at 503 South Bluff in downtown Wichita and
purchasing secondhand equipment to make pizzas, the Carneys and Bender
opened the first "Pizza Hut" restaurant; on opening night, they gave pizza
away to encourage community interest. They chose the name "Pizza Hut"
since the sign they purchased only had enough space for nine characters
and spaces. Additional restaurants were opened, with the first franchise unit
opening in 1959 in Topeka, Kansas. The original Pizza Hut building was
later relocated to the Wichita State University campus. Pizza Hut's prototype
version of a restaurant (1950 – 1961) at Wichita State University. This was
only used at four prototype Pizza Hut locations. There are only a few menu
items on this version.
Dan and Frank Carney soon decided that they needed to have a good
standard image. The Carney brothers contacted Wichita architect Richard D.
Burke, who designed the distinctive mansard roof shape and standardized
layout, hoping to counter competition from Shakey's Pizza, a chain that was
expanding on the west coast. The franchise network continued to grow
through friends and business associates, and by 1964 a unique standardized
building appearance and layout was established for franchised and company owned stores, creating a universal look that customers easily recognized.
In 1978, Pizza Hut was acquired by Pepsico, who later also bought KFC
and Taco Bell. In 1997, the three restaurant chains were spun off into
Tricon, and in 2001 joined with Long John Silver's and A&W Restaurants
to become Yum! Brands. The oldest continuously operating Pizza Hut in the
world is in Manhattan, Kansas, in a shopping and tavern district known as
Aggieville near Kansas State University.
Pizza hut cannot be accused of not listening to their customers, when a
Dallas survey declared that most people like to dip their slices of pizza into
a sauce. Pizza hut quickly conducted their own survey online and then
added dippers to their pizza menus.
Marketing, the first thing that comes to our mind is about the personal
selling or the advertisement of goods and services. Though, the selling and
advertising are only the two
of many kinds of the marketing
Generally, the marketing activities are associated with the identification of
the particular needs and wants for the customer‟s target market yet
satisfying the customers
as better the competitors. Then, it includes the
market research for the customers who can analyze their needs so that the
management can make the proper decisions regarding the pricing, design,
distribution, and promotion.
Accordingly, the term marketing has many definition and one of these is
the one made by Boone and Kurtz which is the process for executing and
planning the pricing conception, distribution, and promotion of the goods,
ideas, and services for the given organization as well as events in
maintaining and creating the relationship which can satisfy the organizational
and individual objectives. On the other hand, according
to the book of
Ries and Trout, it goes beyond the traditional definition of marketing which
is the satisfaction of customers‟ wants and needs . This is the activity of the
human that directly satisfy the needs of customers through the exchange of
process. This is also the performance of the business activities that directs
the services and flow from the producers and to the consumers. Marketing
can also considered to be the performance of the activities that seeks the
organizational accomplishments to their objectives on anticipating the clients
or customers needs by the direction of the flow of need - satisfying services
and goods that came from producers and pass to the client or to the
customers. Thus, the marketing
can also be defined into process as the
identification of the customers needs, then, it needs to conceptualize the
needs to the capacity of the organization in producing. The communication
will then follow to the concept for the appropriate law into the power of
organization. The concept will be consequent the output to the customers
needs earlier. Lastly, the communication for the concept to the customers
needs to be done. Generally, the term can be used in order to describe the
business functions and most concerned to the demand fulfilling and
stimulating activities for the business organization.
A marketing plan must be created to meet clear objectives. Objectives guide
marketing actions and are used to measure how well a plan is working.
These can be related to market share, sales, and goals, reaching the target
communicate what marketers want to achieve.
7 P’S OF PIZZA HUT:
Worldwide and in India, Pizza Hut has come to become synonymous with
the „best pizzas under one roof‟. This is because at Pizza Hut the belief is
that every pizza has its own magic, thus making it a destination product –
which everyone seeks. It is this belief that has ignited the passion to create,
innovate and serve the finest product the industry has to offer, while setting
standards for others to strive to replicate. Pizza Hut is committed to
providing uncompromising product quality, offering customers the highest
value for money and giving service that is warm, friendly and personal. A
critical factor in Pizza Hut‟s success has been its unique dining experience.
Crewmembers at Pizza Hut strive each day to provide „customer mania‟ the kind of service that ensures that every visit of the customer is a
Over the years Pizza Hut has also developed and successfully introduced a
range of products especially suited to the Indian palate. These products like
Chicken Tikka, Spicy Korma, Spicy Paneer and the Masala and Tandoori
pizzas have been a tremendous success. What has also given Pizza Hut a
competitive edge is that in addition to an extensive range of internationally
renowned pizzas like The Italian, the proprietary Pan Pizza and Stuffed
Crust, in India the menu offers the option of a complete meal. It includes
appetizers, a Salad Bar - where the customers can make their own fresh
salads, a range of soups, pastas and desserts.
In the past, Pizza Hut has successfully used the high / low pricing strategy
when setting the retail price of its products. The high / low retail pricing
strategy allows Pizza Hut to charge a price that is above the competition,
but also promote frequent sales to lower the price below them. Both Pizza
Hut and the beverage Mountain Dew are Pepsi subsidiaries, bundle pricing
will be used. Pizza Hut will be able to sell two products together at a
single price to suggest a good value. Different groups of customers are
willing to pay different prices for the same product. Pizza Hut can sell
"The Extreme" to the customers who will pay the higher price to be the
first to buy and also to the bargain hunters Finally , this strategy will
emphasize product and service quality. Pizza Hut sets a high initial price
for its products to send a signal to customers that its products are quality
and the service is excellent.
The objectives of promotion are to introduce a new product, stimulate
demand, change the short - term behavior of the customers, and encourage
repeat or greater usage by current customers. Pizza hut uses many
promotional strategies. The main promotion is a coupon to purchase. This
promotion is also distributed mainly by mail (VIP members), but also by
fliers on college campuses around the country in order to reach the target
market. They are using billboards on main stream places to get there
customer. They are also distributing door to door brochures to capture more
and more customers. Pizza huts also using marketing techniques. These are
the strategies Pizza hut is using for its marketing. Pizza huts try's to attract
the younger generation as their main market segment. Apart from this Pizza
Hut is using intense marketing strategies they are also giving ads in
magazines. Advertising camping will creates awareness of the products in
our target markets.
The type of distribution channel used by Pizza Hut is the direct channel.
The direct channel is successful when there is an extremely large market
that is geographically dispersed. The direct channel is also useful when
there are a large number of buyers, but a small amount purchased by each.
Pizza Hut uses three different methods of selling its products directly to the
market. The first method of distribution used by Pizza Hut is delivery.
Customers can call Pizza Hut ahead of time, place an order, and the order
is delivered to the customer's home.
Another method of distribution is for customers to dine - in. Customers can
go to the nearest Pizza Hut, place an order, and either leave with the order
or eat at the restaurant. One of Pizza Hut's largest competitive advantages is
its restaurant style facility. Pizza Hut offers a clean place to sit down and
enjoy the variety of pizzas, salads, and sandwiches in a fun, family
The third method of distribution is! Online ordering. Customers can now go
on the Internet and place an order. This method is useful because it allows
customers to view the entire menu, download any special coupons, and
order without having to disclose any credit card numbers. The market
coverage for "The Extreme" will be nationwide. Customers all over the
country will be able to order "The Extreme" by one of the three
Here the job design is not the most difficult task to do. Also there is no
employees in Pizza Hut, we came to know the criteria of selection. The girl
was from west India, she was only 10 th passed out. After this we it was
confirmed that there is no proper requirement of the educational background.
The only factor they were considering on the communication skills, how
they communicate with the customers.
Since the communication is the most important factor between the customer
and employee because the whole process is depended on giving the orders
for food. For this the Management conducted the training process for the
new employees. The Training is given for total 5 days. Out of 5 days, they
have 3 days for kitchen training and other 2 days in the main dining, that
is, how to take orders and basically how to communicate with customers
and make them happy by their services.
The design of the process of the pizza hut is very efficient pizza hut do
not follow any kind of hierarchy, all the employee is at the same level,
pizza hut has a very prescribe and well known process by adopting various
technology software which help them to upgrade their supply management
and also manage their crowd of customer efficiently.
The ambience of the pizza hut is good enough to catch up the people. They
provide a very good dining experience with high quality of atmosphere in
terms of their physical evidence. and pizza hut always try to upgrade with
changing envierment and modernization is key of success of the pizza hut.
PIZZA HUT, INC. COMPETITION
When it comes to tossing around dough, no one does it more often than
Pizza Hut. The unit of YUM! Brands operates the world's 1 pizza chain
with more than 13,000 outlets in about 90 countries worldwide. The chain
serves a variety of pizza styles, including its flagship Pan Pizza, as well as
Thin n' Crispy, Stuffed Crust, Hand Tossed, and Sicilian. Other menu items
include pasta, salads, and sandwiches. Pizza Hut offers dine - in service at
its characteristic red - roofed restaurants, as well as carry - out and delivery
service. About 15% of the restaurants are company - operated, while the rest
are franchised. The world's largest fast food company, YUM! Brands runs
KFC and Taco Bell in addition to Pizza Hut.
Dominos Pizza, Inc. is a pizza delivery company located in United
States. The company was founded in 1990 and it is ranked as the
second largest pizza chain in the United States (Dominos). Currently, the
company has franchise of more than 9,000 corporate and franchised
products. The starting point for this comparison would be on the produc
stores, which are located in more than 60 international markets
(Dominos). The company operates in all 50 states in the United States
(Dominos). Domino’s Pizza was sold in 1998 and the company went
public in 2004. The company menu mainly features pizza, pasta, over baked sandwiches, wings, boneless chicken, salads, and others.
Pizza Hut, Inc. is a leading American restaurant chain that offers
different kinds of pizzas. The company was founded in 1958 by two
brothers, Dan and Frank Carney, in Wichita, Kansas (Pizza Hut). With
an initial capital of $600, the company opened the first Pizza parlor in
the region that has grown to the restaurant giant it is today (Pizza
Hut). is the largest world‟s restaurant company operating in more than
34,001 restaurant and delivery centers in more than 100 countries
(Pizza Hut). Pizza Hut has different restaurant formats. Pizza Hut
Express and The Hut are the main locations for fast foods including
pizza (Pizza Hut). These two offers limited menu t itself.
Considering the fierce competition between the two pizza kings, their
pricing strategy is mainly geared towards ensuring that they align
their products to this competition. One of the featured pricing for
both companies is that they tailor their price to the season. They
give deals that come with different prices. For example, Pizza Hut
has great value deals from $6 when one buys two pizzas (Pizza
Hut). A large pizza with three toppings goes for $10 while cheesy
bite pizza goes for $11.99 (Pizza Hut). Pizza Hut also sees 2 liter
and breadsticks for $5.00. In the same way, Dominos also offers
different deals (Pizza Hut). It offers carryout lunch deal for $5 that
comes with two toppings (Dominos). On pricing strategy, it therefore
appears that Pizza Hut has different pricing strategies that are meant
to attract customers.
Taco Bell is an American chain of fast - food restaurants based in Irvine,
California. A subsidiary of Yum! Brands, Inc., they serve a variety of Tex Mexfoods including tacos, burritos, quesadillas, nachos, other specialty items,
and a variety of "Value menu" items. Taco Bell serves more than 2 billion
customers each year in more than 5,800 restaurants in the U.S., more than
80 percent of which are owned and operated by independent franchisees.
KENTUCKY FRIED CHICKEN
Way back in 1930‟s Colonel Harland Sanders got some distinguished
Kentucky folks licking‟ their fingers. It‟s been In fashion since then!
Colonel Harland Sanders, founder of the original Kentucky Fried Chicken,
was born on September 9, 1890. When he was six, his father died and his
mother was forced to go to work while young Sanders took care of his
three year old sibling. This meant he had to do much of the family
cooking. By the time he was seven, Harland Sanders was a master of a
range of regional dishes.
After a series of jobs, in the mid 1930s at the age of forty, Colonel
Sanders bought a service station, motel and cafe at Corbin, a town in
Kentucky about 25 miles from the Tennessee border. It is here that Sanders
began experimenting with different seasonings to flavor his chicken which
travelers loved and for which he soon became famous. During the next nine
years he developed his secret recipe of 11 herbs and spices and the basic
cooking technique which is still used today. Sander's fame grew. He sold
his chicken on the highway! But when the highway was removed, he sold
up and traveled the United States by car, cooking chicken for restaurant
owners and their employees. If the reaction was favorable Sanders entered
into a handshake agreement on a deal which stipulated a payment to him of
a nickel for each chicken the restaurant sold.
By 1964, from that humble beginning, Colonel Harland Sanders had 600
franchise outlets for his chicken across the United States and Canada. Later
that year, Colonel Sanders sold his interest in the United States operations
for $2 million. The 65- year - old gentleman had started a worldwide empire
using his $105 social security cheque . Sadly, Colonel Harland Sanders. His
legacy lives on with KFC restaurants all over the world. KFC now stretches
worldwide with more than 13,000 restaurants in more than 80 countries and
territories around the world serving up the Colonel‟s Original Recipe. It is a
$13 billion brand based out of Kentucky and is the leading QSR around the
world which is based in Louisville, Kentucky. Yum! Brands own 5 brands,
out of which KFC is the largest brand within the Yum! Portfolio, founded
by Colonel Harland Sanders in the year 1938.
KFC is the world‟s No. 1 Chicken QSR and has industry leading stature
across many countries like UK, Australia, South Africa, China, USA,
Malaysia and many more. KFC is the largest brand of Yum Restaurants.
Renowned worldwide for it‟s finger licking good food, KFC offers its
signature products in India too! KFC has introduced many offerings for its
growing customer base in India while staying rooted in the taste legacy of
Colonel Harland Sander‟s secret recipe. Its signature dishes include the
“crispy outside, juicy inside” Hot and Crispy Chicken, flavorful and juicy
Original Recipe chicken, the spicy, juicy & crunchy Zinger Burger, Toasted
Twister, Chicken Bucket and a host of beverages and desserts. For the
vegetarians in India, KFC also has great tasting vegetarian offerings that
include the Veggie Burger, Veggie Snacker and Veg Rice meals. In India,
KFC is growing rapidly and today has presence in 11 cities with close to
I. PRODUCT - It must provide value to a customer but does not have to
be tangible at the same time. Basically, it involves introducing new products
or improving the existing products.
II. PRICE - Pricing must be competitive and must entail profit. The
pricing strategy can comprise discounts, offers, and the like.
III. PLACE - It refers to the place where the customers can buy the
product and how the product reaches out to that place. This is done through
different channels, like internet, wholesalers and retailers.
VI. PROCESS - It refers to the methods and process of providing a
whether the services are helpful to the customers, if they are provided
in time, if the customers are informed in hand about the services and
many such things.
VII. PHYSICAL (EVIDENCE) - It refers to the experience of using a
product or service.
KFC faces competition from a number of fast food companies which
include Burger King, Subway, McDonald‟s.
McDonald‟s, Subway, and Burger King.
KFC may offer chicken sandwiches and strips and other things of that
nature, they push a variety of other items more heavily, which generally
causes consumers to view them in an entirely different category from
restaurants like McDonalds.
Recent visitors at KFC outlets across the country have been getting a
surprise - there is a new, 10 - item, low – price menu on offer. Its highlight
is the 'Potato Krisper', a vegetarian burger costing Rs 25, where the fried
patty within consists almost entirely of potato. This was created exclusively
for the Indian market, the first time the global fast food giant has done so.
Indeed, it is also the first time KFC - known for its chicken items,
marinated in a 'secret sauce' - has ever created a potato burger.
Other items on the new menu, called the 'Wow' menu, include 'Chicken
Shotz - pieces of fried chicken - again available for Rs 25. 'Combos', where
a fizzy drink or other accompaniments are offered along with the burger or
the chicken fries, are available for just Rs 59. It is a steep price slash for
KFC, where all other items cost a lot more - the popular 'Chicken Zinger',
for instance, sells at Rs 99 a plate.
Not surprisingly, even more than the trendy music and décor at KFC
outlets, the new bargain – basement menu has proved a great attraction for
young people, especially students, whose disposable income is limited.
The key feature of the Happy Price Menu too is a potato burger called
McAloo Tikki, also priced currently at Rs 25. (It used to be Rs 20 when
Maharaja Mac costs Rs 95. A part – by part evaluation of the KFC and
McDonald's potato burgers shows there is hardly any difference between
them, though McAloo Tikki is a shade heavier.
BOSTON CONSULTING GROUP MATRIX ( BCG )
This technique is particularly useful for multi-divisional or multiproduct
companies. The divisions or products compromise the organisations “business
portfolio”. The composition of the portfolio can be critical to the growth and
success of the company. The BCG matrix considers two variables, namely..
x MARKET GROWTH RATE
x RELATIVE MARKET SHARE
The market growth rate is shown on the vertical (y) axis and is expressed as a %.
The range is set somewhat arbitrarily. The overhead shows a range of 0 to 20%
with division between low and high growth at 10% (the original work by B
Headley “Strategy and the business portfolio”, Long Range Planning, Feb 1977
used these criteria). Inflation and/or Gross National Product have some impact on
the range and thus the vertical axis can be modified to represent an index where the
dividing line between low and high growth is at 1.0. Industries expanding faster
than inflation or GNP would show above the line and those growing at less than
inflation or GNP would be classed as low growth and show below the line.
The horizontal (x) axis shows relative market share. The share is calculated by
reference to the largest competitor in the market. Again the range and division
between high and low shares is arbitrary. The original work used a scale of 0.1, i.e.
market leadership occurs when the relative market share exceeds 1.0.
The BCG growth/share matrix is divided into four cells or quadrants, each of
which represent a particular type of business. Divisions or products are represented
by circles. The size of the circle reflects the relative significance of the
division/product to group sales. A development of the matrix is to reflect the
relative profit contribution of each division and this is shown as a piesegment
within the circle.
x QUESTION MARKS
These are products or businesses, that compete in high growth markets but where
the market share is relatively low. A new product launched into a high growth
market and with an existing market leader would normally be considered as a
question mark. Because of the high growth environment, they can be a “cash
sink”. Strategic options for question marks include..
Which are all intensive strategies or divestment.
Successful question marks become stars. i.e. market leaders in
industries. However, investment is normally still required to maintain growth and
to defend the leadership position. Stars are frequently only marginally profitable
but as they reach a more mature status in their life cycle and growth slows, returns
become more attractive. The stars provide the basis for long term growth and
profitability. Strategic options for stars include..
Integration – forward, backward and horizontal
x CASH COWS
These are characterized by high relative market share in low growth industries. As
the market matures the need for investment reduces. Cash Cows are the most
profitable products in the portfolio. The situation is frequently boosted by
economies of scale that may be present with market leaders. Cash Cows may be
used to fund the businesses in the other three quadrants. It is desirable to maintain
the strong position as long as possible and strategic options include..
If the position weakens as a result of loss of market share or market contraction
then options would include..
Retrenchment (or even divestment)
These describe businesses that have low market shares in slow growth markets.
They may well have been Cash Cows. Often they enjoy misguided loyalty from
management although some Dogs can be revitalised. Profitability is, at best,
marginal. Strategic options would include..
Retrenchment (if it is believed that it could be revitalised)
Divestment (if you can find someone to buy!)
Successful products may well move from question mark though star to Cash Cow
and finally to Dog. Less successful products that never gain market position will
move straight from question mark to Dog.
The BCG is simple and useful technique for strategic analysis. It is convenient for
multi-product or multi-divisional companies. It focuses on cash flow and is useful
for investment and marketing decisions.
BCG MATRIX OF YUM! BRANDS.
Yum! Brands Inc. has several business units that are considered cash cows. The
first business unit that is a cash cow is Pizza Hut. In 2003, Pizza Hut's sales were 5
billion dollars. It has almost 50 percent of the industries market share. Although its
market share is fairly high, its growth rate is only 1.3 percent. The average sales
per unit are $605,700 throughout its 7,523 units Another cash cow is Kentucky
Fried Chicken (KFC). As well as Pizza Hut, KFC is also the market leader in the
chicken chain. In 2003, KFC's total sales were almost 5 billion dollars, more than
50 percent of the market share in the chicken chain segment. KFC had a growth
rate of 2.8 percent.
The average sales per unit are $897,800 throughout its 5,524 units. Despite its
dominance, KFC is slowly losing market share as other chicken chains increases
sales at a faster rate. Sales indicated that KFC's share of the chicken segment fell
from a high of 64 percent in 1993, a 10 year drop of 14 percent. The last cash cow
of Yum! Brands Inc. is Taco Bell. Taco Bell is Yum Brand Inc. most profitable
among the business units. In 2003, its sales were 5.3 billion dollars, averaging
$879,700 per unit. Although it has a high market rate, it only has a growth rate of
2.8 percent. Taco Bell was able to generate greater overall profits because of its
lower operating cost. Its profits also were greater because the cooking machinery
was simple, less costly, and required less space then a pizza oven or chicken
Despite the fact that the company has many cash cows throughout its business
units, it also has two dogs in A&W restaurants and Long John Silver's. In 2003,
A&W had sales of only 200 million dollars. That is over 5 billion dollars less than
the sales that Taco Bell exceeded. Additionally, Long John Silver's had sales of
777 million dollars, averaging $640,000 throughout its units. Its growth rate was a
low 2.8 percent six percent less than the industry leader McDonald's.
Whereas, Zinger is of KFC, Twister birthday buffer is of MC DONALDS, Rice
spice is of PIZZA HUT and Arabian rice is of LONG JOHN SILVER‟S.
SWOT analysis is a structured planning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. A SWOT analysis can be carried out for a product, place, industry or
person. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable to
achieving that objective. The technique is credited to Albert Humphrey, who led a
convention at the Stanford Research Institute (now SRI International) in the 1960s
and 1970s using data from Fortune 500 companies. The degree to which the
internal environment of the firm matches with the external environment is
expressed by the concept of strategic fit.
Setting the objective should be done after the SWOT analysis has been performed.
This would allow achievable goals or objectives to be set for the organization.
Strengths: characteristics of the business or project that give it an advantage over
Weaknesses: are characteristics that place the team at a disadvantage relative to
Opportunities: elements that the project could exploit to its advantage
Threats: elements in the environment that could cause trouble for the business or
Identification of SWOTs is important because they can inform later steps in
planning to achieve the objective.
First, the decision makers should consider whether the objective is attainable,
given the SWOTs. If the objective is not attainable a different objective must be
selected and the process repeated.
Users of SWOT analysis need to ask and answer questions that generate
meaningful information for each category (strengths, weaknesses, opportunities,
and threats) to make the analysis useful and find their competitive advantage.
SWOT Analysis of KFC
KFC Corporation was founded by Colonel Harland Sanders in 1952. KFC, also
known as Kentucky Fried Chicken is a chain of fast food restaurants based in
Louisville, Kentucky, in the United States. KFC is part of Yum! Brands, Inc (the
world‟s largest restaurant company in terms of system restaurants, with more than
36,000 locations around the world). Every day, KFC serves more than 12 million
customers in 109 countries and territories around the world. KFC operates more
than 5,200 restaurants in the United States and more than 15,000 units around the
world. The SWOT analysis of the KFC Corporation is given below:
KFC continued to dominate the Chicken Segment, with sales of 4.4 billion in
Strong trademarks recipes.
Ranks highest among all chicken restaurant chains for its convenience and
Generate $1B each year.
KFC is the world‟s biggest chicken restaurant chain and 3rd largest fast-food
KFC is a market leader in chicken foods for 50 years. It has more than 50
percent of the market share and has secret recipe of spice and 11 herbs.
KFC is a most identifiable brand in chicken/fried food.
It has the strong location, store management, motivated work force and
KFC has a good image all over the globe and is globally placed for many years.
It has a strong distribution network such as outlets in shopping malls, airports,
Positioning among competitors is favorable.
Unconventional methods of distribution multi branding.
Management Objectives and goals are measurable and achievable Team
Constant improvement on quality of chicken
KFC was losing market share as other Chicken chain increased sales at a
Lack of knowledge about their customers.
Question of over franchising leads to loss of control and quality.
KFC finds difficulty in entering the German market (culture incompatibility)
KFC sales stagnated. There was widespread discontent among the
whom felt the new owners did not understand the chicken business and were
not providing leadership expected from a franchisor.
Company stores floundered and become underperforming the franchised
further convincing franchisees that the company did not know its own
(KFC HQ acquired them to company-owned)
Lack of focus on R&D.
KFC is not innovative because it serves only the chicken products to the
customers. It does not offer new or differentiated products.
KFC fell after the market in offering new products because it was doubling
other fast food chains to remain competitive.
Mergers with different corporations resulted in big cultural problem for KFC
employees such as Merger with PepsiCo.
The company is only focusing on few locations and is ignoring to visit or
check standards at franchises in different countries.
KFC is facing problems to maintain the higher standards of hygienic food. It
is being charged in different countries due to poor standards of hygienic
food. Some of the important examples in this regard.
Changing demographic trends provides opportunity to diversify into new
products and locations.
Increasing demand for foodstuff eaten outside the home.
Expand globally to capture the untapped markets and increase the revenue.
Expansion for the Latin American markets/ Mexican market.
Consumers are becoming health-conscious; introduce new products line for
Be environment responsible because it will improve the public image of
KFC and will help it to increase its revenue.
Diversify into other fast-food and meals.
Overseas expansion with the rapid economic growth and trend toward twoincome families that had fuelled the growth of fast-food industry in the
1950s and 1960s were appearing in the late 1960s in the other country.
US market maturity- many restaurants expand to international markets as
strategy for growing sales.
KFC is an American company and 35 largest restaurant chains in the world
(2000) were American firms Expansion program for the Mexican
American markets NAFTA advantage Demographic trends (demand for
food eaten outside of the home.
McDonald‟s accounted for 35 percent of the Sandwich Segment while
Burger King ran a distant Second, with a 16 percent market share.
In family Segment, Friend‟s and Shoney‟s were forced to shut down
restaurants because of declining profits.
Within the Pizza Segment, Pizza Hat and Little Caesars Closed
Boston Market was a new restaurant chain that emphasized roasted rather
than fried chicken.
KFC is facing strong competition from its competitors, such as McDonalds,
Yum and Subway.
It is also facing competition from local restaurants in different countries of
The company is facing problem in maintaining same standards at their
To sustain a market leadership position in the global fast-food industry.
Sustaining U.S. market leadership is also another important threat for the
Other players are turning to new menu offerings, location and outlets.
Increasing number of health conscious consumers.
Saturated fast food industry in the U.S Market.
High rates on the prices as compared to the other brands selling same items
may cause the customer‟s shift.
Less economical packages and deals are being offered in comparison of its
biggest competitor McDonalds, which work on the strategy of seasonal
induction of tempting deals.
Shift of customer demand to more healthy and fresh food, avoiding the all
Less variety of products pose a threat to the company, as they have very few
products other than their portfolio” Fried chicken”.
Saturation of the U.S. market
Increasing competition and rising sales of substitute products.
Obstacles associated with expansion in Mexico.
SWOT ANAYSIS OF PIZZA HUT
Is a restaurant chain and international franchise based in Addison, Texas, USA (a
northern suburb of Dallas) specializing in American-style pizza along with side
dishes including (depending on location): buffalo wings, breadsticks, and garlic
bread. Pizza Hut is the world's largest pizza restaurant chain and is a subsidiary of
Yum! Brands, Inc., whose restaurants total approximately 34,000 restaurants,
delivery carry out units, and kiosks in 100 countries. The chain was founded as a
pizzeria in 1958 by the Carney brothers - Dan and Frank.Borrowing $600 from
their mother, the brothers purchased some second-hand equipment. The then
Wichita State University students took a family pizza recipe, rented a small
building, and opened the first restaurant at a busy intersection in Wichita, Kansas.
The oldest continuously-operating Pizza Hut in the world is in Manhattan, Kansas,
in a shopping and tavern district known as Aggieville.
Over 20,000 franchises around the world.
Brand leader in the UK.
Innovative range of pizzas under one roof.
Famous television advertising.
Food attracts people of various ranges from young to old.
Sound financial situation and international turnover.
100% owned by yum!
Pizza Hut sits on top of global full-service restaurant tree.
Through pizza hut being the largest restaurant chain in the world, this
obviously means they dominate their market, and can invest in new
products, example new pizzas.
They have low competition, although they do have competitors such as
dominos pizza, yet they have an advantage over these as pizza hut are a
restaurant as well as a take away unlike dominos pizza, this means pizza hut
may have more sales therefore more income, which may help pizza hut with
any improvements or adjustments needed to the business.
Pizza hut has a huge market segment, attracting more customers meaning a
higher percentage in sales, which may lead to greater profits.
Loyal customers are feeling that the satisfaction of the pizzas is declining.
This may lead to low customer satisfaction and a reduction in customers and
credibility in the market, this may lead to customers converting to main
competitors such as dominos pizza.
While Novak said Pizza Hut‟s expansion into China is going exceedingly
well, there is battling problems in New Zealand and Australia. This
therefore meaning they are losing money in places such as new Zealand and
Australia, this could be due to their culture and lifestyle, maybe meaning
pizza hut need to introduce a more varied range of products to attract
customers of all lifestyles and cultures.
There are complex computer systems and internal conflicts from
franchisees, this leads to de-motivation of staff. Lowering the quality of
products (pizzas), service to customers, and could lead to a lack of new
Pizza Hut can introduce new Pizzas with different crust sizes and flavours.
This may attract new customers with new tastes and this may increase their
Pizza Hut has expanded into the Indian market menu and looks to the old
favourite to bolster sales in the US.
Pizza Hut has targeted upscale products and a downscale consumer base;
this will attract customers who are more willing to buy these Pizzas.
Rising competition undermines Pizza Hut as consumers go for greater
convenience; this will lower the amount of sales consumed by Pizza Hut as
these sales are going to smaller companies who are charging less.
Rising cheese costs threaten margins, cheese is essential to the business as it
is there primary good, there for they are unable to go with out it, this may
lead to Pizza Hut eventually buying goods from abroad or buying cheaper
Threat from Dominos pizza, also from Mc Donald‟s who have tried to
introduce a new meal that is a Pizza called: McPizza. So Pizza hut will have
to improve or maintain the quality of the pizzas in order to compete with
Dominos and McDonalds, to ensure that Pizza hut dominate this market.
They will also have to keep their prices down and this may lead to them
buying good from abroad where it is cheaper.
As a restaurant company, is to put a YUM on people's faces around the world,
satisfying customers every time they eat YUM! BRANDS food and doing it better
than any other restaurant company. A&W, KFC, Long John Silver's, Pizza Hut,
and Taco Bell offer customers food they crave, comeback value, and customerfocused teams. The unique eating experience at each of YUM! BRANDS
restaurants makes customers smile and inspires their loyalty for life. Toward that
end, YUM! BRANDS 750,000 associates around the world are trained to be
PIZZA HUT have many targets which it has achieve in a given period of time.
The time-period is mostly a year. Therefore, in order to fulfill the targets different
strategies are adopted by PIZZA HUT It can be concluded that these strategies
have been successful and there is flexibility in the strategies, as they can be
changed with the changes in the market conditions as well as the targets.
KFC operates in the environment that is influenced by the diverse cultures, ethnic‟s
customers, religious tenets, political systems, consumer watchdog groups, and
fierce competition from other entities seeking to erode some of the dominant
market that KFC enjoys. Including all of its shareholders in the process of ensuring
that quality, values, customer‟s relations, willingness to change with the winds of
consumer preference has been that recipe for success