Kentucky Fried Chicken is one of the largest fast food
Franchise concepts of today; it is present in various countries
around the world and it has been able to establish a renowned
International reputation in multiple continents. Starting in the
United States in the 1930s, it has grown to become a true
KFC has focused on foreign markets since the 1960s and
has found a new challenge today in conquering Asia.
The Kentucky Fried Chicken® was founded by Colonel Harland Sanders (born on September 9, 1890) at the age of sixty-five. KFC® is currently one of the largest businesses of the global food service industry and is widely known around the world as the face of Colonel Sanders.
Every year, over a billion KFC® chicken dinners are served featuring the Colonel’s “finger licking’ good” special recipe. The Colonel had spread his industry to more than 80 countries and territories globally.
KFC’s Journey From $105 to 9.7 Billion $ in 58 years
1952, Col. Sanders started franchising his recipe door to door financed by $105.00
1964, Col Sanders had more than 600 franchised outlets in the US and Canada.
1964, Sold his interest to Massey & Brown for $2 million .
1966, KFC went public
1969, Listed on the NYSE
1971, KFC was acquired by Heublein Inc . for $285 million .
1982, Heublein & KFC Inc . was acquired by RJ Reynolds
1986, RJ Reynolds & KFC , was acquired by PepsiCo, Inc . $840 million .
1997, PepsiCo, Inc . spined-off it to Tricon Global Restaurants .
2002, Tricon changed it's corporation name to Yum! Brands, Inc . .
Yum Brands, Inc . is the world's largest restaurant company in terms of system units with nearly 32,500 in more than 100 countries and territories.
Current Market value of the Yum Brands on the NYSE is 9.7 Billion $.
KFC continued to dominate the Chicken Segment, with sales of 4.4 billion in 1999.
Despite gain by Boston Market and Chick-fill A, KFC customer base remained loyal to the KFC brand because of its unique taste.
KFC has continued to dominate the dinner and take out segment of the Industry.
Strong trademarks recipes.
Ranks highest among all chicken restaurant chains for its convenience and menu variety.
Generate $1B each year
KFC was loosing market share as other Chicken chain increased sales at a faster rate.
KFC share of Chicken Segment sales fell from 71 percent 1989 , to less than 56 percent in 1999 , a 10 -years drop of 15 percent.
KFC leadership in U.S market was so extensive that it had fewer opportunities to expand its U.S restaurant base, which was only growing at about 1 percent per year.
Failed to rank in top 20 in growth in 2000.
Lack of knowledge about their customers.
Question of over franchising leads to loss of control and quality.
Lack of focus on R&D.
McDonald’s accounted for 35 percent of the Sandwich Segment while Burger King ran a distant Second, with a 16 percent market share.
Per store sale at Burger King remained flat and Hardee’s per store sale declined by 10 percent.
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 underperforming restaurants.
Boston Market was a new restaurant chain that emphasized roasted rather than fried chicken.
In 1999, Boston Market soon entered Bankruptcy proceedings.
Church’s broadened its menu to include buffalo chicken wings, macaroni and cheese, beans and rice and collard greens.
Baby boomers aged 35 to 50 constituted the largest customer group for fast-food restaurants.
McDonald’s with sales of more than 19 billion in 1999, accounted for 15 percent of the sales of the nation’s top 100 restaurant chains.
McDonald’s generated per store sale 1.5 million per year.
Much of the growth in dinner houses came from new unit construction in suburban market and small town.
In Family Segment, Steak n Shake and Cracker Barrel expend its restaurant by more than 10 percent.
KFC nearest competitor Popeye, ran a distant second with sales of 1.0 billion.
In early 1990s ’ many industry analysts predict that Boston Market would challenge KFC for market leadership.
Boston market and Chick-fil-A market share gains were achieved primarily by taking customer away from KFC.
Popeye’s replaced Boston market as the second largest chicken chain in 1999.
FINDINGS AND RECOMMENDATIONS
KFC was trying to increase market share in other regions of South America beside Maxico & Carabian. But financial constraints restricted KFC from doing so.
KFC focus on strengthening its position in Maxico & Carabian Only.
New Competitors like Habib’s and Wendy’s were establishing new restaurants in Maxico.
KFC had largest market share of fast food chains in Maxico.
Devaluation of Peso does not effected KFC, because their production plants in Maxico were utilizing local resources.
If KFC could increase company own restaurants, which enables it to control quality, services and restaurant cleanliness. Therefore more capital is needed.
On the other hand if company operated franchise based restaurants throughout Latin America, its brand image could be build and its competitors will be loosing first more advantage.
Latin American markets is developing markets, so its growth is high and entry barriers are low.
KFC could make strategic alliances with key suppliers to gain advantage over competitors in the market.
An a peeling business model and good strategy has golden opportunity to shape the rules and establish itself as the recognize market leader.