JONATHAN P. RICOHERMOSO
1340, Purok Matahimik Cotta, Lucena City
Contact #:09293428368 / 09182135251
Email Add: Nahtanoj_pasaway@yahoo.com
To share my ability to work and talent also to enhance my skill for more improvement not only for
myself and also to the company I been working.
Date of Birth : November 26, 1988
Place of Birth : Lucena City
Age : 20
Height : 5’6”
Weight : 130 lbs.
Gender : Male
Citizenship : Filipino
Civil Status : Single
Religion : Roman Catholic
Father’s Name : Nilo P. Ricohermoso
Occupation : Carpenter
Mother’s Name : Gloria P. Ricohermoso
Occupation : Housewife
Special Skill : Operating Microsoft Access/Microsoft Excel/web design
Bachelor of Science And Entrepreneurship
Tertiary : City College of Lucena
Better living Subdivision Iyam Lucena City
Secondary : Lucena City National High School Cotta-Annex
Cotta Lucena city Quezon
2006 – 2007
Primary : Torrijos Central School
Utilizing and Maximizing Entrepreneurs
August 7, 2008
Activity Center Pacific Mall
Mr. Welfredo Assilo
City Councilor/ prof.
Mrs. Marcedita Torres
Head Program of Bachelor of Science Entrepreneurship
City City College of Lucena
Mrs. Dennia Ravara
Head Program of Bachelor of Science Public Admistration
City College of Lucena
“I hereby certify that the above information is true and correct to the best of my
Jonathan P Ricohermoso
Case Study: Kentucky Fried Chicken and the Global Fast-Food Industry
C Relevant Case Facts - History
• Early Life of Colonel Sanders
• Sander’s First Franchise in 1952
• New Management/culture for Kentucky Fried Chicken after KFC sale for $2M
• Acquisition of KFC by Pepsico/Tricon Global
• Heublein Makes Changes in 1970
• 1980’s Profit and Expansion
1 From $105 to 7.2 Billion in 50 years
• 1952, Col. Sanders started franchising his recipe door to door financed by his $105.00 SS Check
• 1964, Col Sanders had more than 600 franchised outlets in the US and Canada.
• 1964, Sold his interest in his company for $2 million to a group of investors.
• 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 of its qsr’s into independent 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.
Yum! Brands, Inc ., is a Fortune 300 company
Yum! Brands, Inc. global system sales totaled more than $22 billion in the year 2001.
Current Market Cap value on the NYSE is 7.2 Billion
• How would KFC maintain a market leadership in the global fast-food industry
• A competitive marketing strategy in the international market focused on the Latin American countries
A Internal Analysis Functional Areas
• Since 2001, Yum Brands Inc. has outperformed the market
• Computer Information Systems
• Newly established Computer information system
Positioning among competitors is favorable
unconventional methods of distribution
Objectives and goals are measurable and achievable
Constant improvement on quality of chicken
Producer and operators are strategically located
P SWOT ANALYSIS: Strengths
• The Management style of Col. Sanders was to rely on the basic goodness of the people around him and trust the
franchisees to play fair.
• KFC is a Market leader : World’s largest chicken restaurant chain and third largest fast-food chain in 2000
• Key Success Factor (KFC):
Effective store management/cleanliness
Key to continued growth was to find, motivate, and retain hard-working and entrepreneurial managers and franchisees
around the globe
• In addition to short term profits, store managers were also responsible for building local public relations, maintaining
employee morale, developing customer good-will, keeping tab on the competing chains and creating a legacy of special
chicken cooking recipe.
• Overall market image also became increasingly clear.
• KFC had a refocused international strategies to grow its company and franchise restaurant base all over the world.
• Competitive marketing strategy: Developed three types of chicken: Original recipe (pressure cooked) Extra crispy (fried)
Tender roast (roasted)
• Distribution strategy
• - First, focused on building smaller restaurants in non-traditional outlets like airports
• • Shopping malls, universities, and hospitals.
• Second, KFC continued to experiment with home delivery, which was already firmly established in Louisville, Las Vegas
and LA markets
• Third, KFC established “2 in 1” units that sold both KFC and Taco Bell or KFC and Pizza Hut
T Cont. Strength
• KFC continued to dominate the chicken segment ($4.4B) past its nearest competitor Popeyes at a distant second ($1.0B)
K SWOT ANALYSIS: Weaknesses
• Year 1986
• Management Shift- KFC was acquired by Pepsico from RJR Industries.
• Sweeping changes into the culture was initiated by the new management- this brings about demoralization to old KFC
employees and even franchisees.
• Several restructurings led to layoffs throughout KFC, replacement of KFC managers with PepsiCo managers
• Conflicts between KFC and PepsiCo cultures- this is manifested with PepsiCo’s stronger emphasis on performance rather
than loyalty expressed by Col. Sanders to KFC employees over the years.
t Cont. Weaknesses
• Market Segment (1990’s)
• 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.
• KFC chicken segment sales fell from 71% in 1989 to less than 56% in 1999.
K SWOT ANALYSIS: Weaknesses
• KFC finds difficulty in entering the German market (culture incompatibility)
• KFC sales stagnated. There was widespread discontent among the franchisees, some of 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 operations, further convincing franchisees that the
company did not know its own business. (KFC HQ acquired them to company-owned)
c SWOT ANALYSIS: Opportunities
• Overseas expansion with the rapid economic growth and trend toward two-income 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 market/Latin American markets
• NAFTA advantage
• Demographic trends (demand for food eaten outside of the home)
D SWOT ANALYSIS: Threats
Consumer health food trend
Saturated fast food industry in the U.S. market
S Strategic Management
• Market Development
• KFC will introduce their present and new products and services into new geographic/demographic areas.
• Product Development
• Bring back rotisserie chicken
• Concentric Diversification
• Add more to KFC product & service variety to the public
Determine area’s demand to determine boundaries
Meals will be sold at cost
Determine effects on budget
D Company Strategy
• Primary objective is to take advantage of the potential growth in other countries, to establish a strong position and to
develop their image. Key Success Factors are ever continuing cost savings through R&D, innovations and use of new
technology to work efficiently. These success techniques will lower costs and increase profits in the industry.
• KFC uses an integrated low cost/differentiation leadership, since it can count on its brand name and original taste and
recipes to be unique while at the same time compete on price using the benefits of cost savings from economies of scale.
• Based on the analysis, we can conclude that they should start by solving their internal issues such as management and
restaurant menu before thinking about expanding. They should work on the management issues to create a good
atmosphere where employees are happy to work in. I certainly do not believe that by treating employees poorly, a
company can be successful.
• They also need to make sure that their restaurants offer a diversified menu, provide their customers with quality food,
excellent service and restaurant cleanliness. KFC should always listen to their customers and try to follow the new trends
on the market in order to fully satisfy their customers. Otherwise, competitors will satisfy them and will eventually
outperform you as Boston did with its grilled chicken.
• Even though, KFC seems to have an emotional attachment to their original recipe that made their success, they definitely
need to move on and develop new products that customers want in order to increase their financial performance and value.
We have seen that Boston and Popeye’s are stealing customers away from KFC because they understood what customers
wanted and started offering healthier items. KFC should certainly do the same and enhance their menu.
• • Concerning their expansion strategy, KFC should start by closing a few non-profitable stores in the US that are
currently drowning money from KFC. This will allow KFC to get the cash necessary to invest in new markets, which offer
more growth potential. We have seen that the US market is not as attractive as it used to be , it has become saturated and
certainly does not appear to have a bright future ahead. There is also the competition in the US that makes it really hard to
compete in, whereas in other foreign markets that are quasi untouched as I will discuss more in detail later. KFC has to
select countries based on their attractiveness and make sure that they can provide above-average returns, which will be
discussed more in detail in the intermediate term.
• • But first, they need to have a clear vision, solve the internal issues and get some cash in order to make sure that they are
strong as a company and ready to compete internationally before going ahead with their expansion project.
• ü Create a great working atmosphere
• ü Develop a healthier menu
• ü Get some cash from selling unprofitable restaurants
• ü Evaluate countries based on attractiveness
• Concerning investing internationally, extremely attractive countries that can provide above-average returns are regions that
have chicken as traditional dish such as Asia and Latin America. Those regions should certainly be prioritized while
developing an international expansion. While they start attacking those new markets, they should keep in mind to focus
locally even though they go international in order to overcome certain barriers such as language, law and a good
understanding of needs. Targeting new countries usually work better if you adapt to the local market.
u Long Term
• They need to stay close to their mission (provide customers with quality food, excellent service and restaurant cleanliness)
and make sure to know how to achieve their long-term objectives. They also have to keep innovating and coming up with
new items regularly. Remember that even though, they come up with similar products, customers are most likely going to
try them. They also have to follow the trend and go hand in hand with customers to satisfy their changing needs, as we
have previously discussed with the current healthier food trend. They also want to keep an excellent image by treating
employees fairly and keeping a good control over franchises to make sure they follow the company’s procedures.
• Concerning the American market, they should always keep an eye at competitors and see if possible mergers or
acquisitions could be made. McDonald’s has been faster than KFC when they acquired Boston, which could have really
helped KFC regain its loss market share and reduce competition. They also have to keep working on their low-
cost/differentiation strategy by better taking advantage of their competitive forces such as economies of scales, bargaining
power, image/brand worldwide recognition.
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 $.
5. SWOT ANALYSIS
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
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
6. MARKET SHARE
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
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
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
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.
10. 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
FOCUS OF THEIR STRATEGY SHOULD BE ON THE
COUNTRIES LIKE CHINA, AND INDIA ETC BECAUSE THEY
PROVIDE MARKETS WHICH HAVE HIGH GROWTH RATE
ON THE OTHER HAND…..