WELCOME TO OUR PRESENTATION

& Global Fast-Food Industry

Case Analysis

Presented For: Hare Krisna Kundo

Course Teacher,
Strategic Management
 Presenter

Presenters
Sl. No. Name Student Id
01 Md. Shohag Ali [Group Leader] 1265
02 Md. Khairul Islam 1286
03 Md. Nazrul Islam 1292
04 Md. Waish Hasan 1295
05 Nawshad Haque 1959
First Batch, BBA Program
Dept. of Finance & Banking
 First Presenter

Md. Khairul Islam

Student Id: 1292
 Introduction

"The Association of Kentucky Fried

Chicken Franchisees, Inc. is united to
protect, promote and advance the mutual
interests of all member franchisees and
the Kentucky Fried Chicken system“

- KFC Mission Statement

 KFC: Kentucky Fried Chicken
• Type : Subsidiary
• Industry : Restaurants
• Founded : 1930 (original) (North Corbin, Kentucky)
1952 (franchise) (3900 South State St, Salt Lake City, Utah)
• Founder(s) : Harland Sanders
• Headquarters : 1441 Gardiner Lane, Louisville,
Kentucky, United States (headquarters)
Delaware, United States (incorporation)
• Key people : David C. Novak
Chairman and CEO of Yum! Brands
• Revenue : $14.7 billion (2010)
• Employees : 455,000 (2010)
• Parent : Yum! Brands
• Website : www.KFC.com
 Business Condition

Outlets : over 17,000 (2011)

Covered Area : 105 countries and territories
Position : 2nd largest restaurant chain
(1st : McDonald's)
Major single markets : USA and China
Products : Major Segments are –
KFC Business Worldwide

(2011)
 Brief History
• 1930 : KFC Started by Colonel Harland Sanders
• 1952 : First "KFC" franchise opening in Utah
• 1964 : Sold to – Jack Massey and John Young Brown,
C.H. Sanders remain as goodwill ambassador
• 1966 : Listed as public company in NYSE
• 1971 : KFC was sold to Heublein for $285 million
• 1982 : R.J. Reynolds merged with Heublein
• 1986 : PepsiCo became parent company for $850 million
• 1997 : PepsiCo spun off its restaurants division as
Tricon Global Restaurants
• 2002 : TGR changed its name to Yum! Brands
 Next……..

Md. Shohag Ali

Student Id: 1265
 Case Analysis

Case Analysis contains:

 Global Fast Food Industry
 KFC SWOT Analysis
 KFC Strategies
• Pepsico Management
• Corporate
• Business
• Structure & Control

There will be recent Data too!!

 Global Fast Food Industry
 Fast Food
• Food that can be prepared and served very quickly

 Fast Food Market

• Sale of Food and Drinks for Immediate Consumption either on the Premises or for
consumption elsewhere

 Fast Food Industry Segments

• Burger Segment
• Sanwiches Segment
• Chicken Segment
• Pizza Segment
• Mexican Segment & etc.
Industry Outlest can be divided into 4 Types:
• Quick Service Restaurants
• Takeways
• Mobile & Street Vendors
• Leisure Locations
 Global Fast Food Industry, 1993

Leading Fast Food Chain, 1993 Top Chicken Restaurants, 1993

Name Units Counries KFC 57.1%
Pizza Hut 10,433 80 Boston Market 17.1
McDonald’s 23,132 72 Popeyes 9.7%
KFC 9,033 68 Chick-fil-A 8.3
Burger King 7,121 50 Church’s Chicken 7.7
 Global Fast Food Industry, 2004

Leading Fast Food Chain, 2004 Top Chicken Restaurants, 2004

McDonald’s 15.4% KFC (3rd in 1993) 36.8%
KFC 3.7 Chick-fil-A 13
Burger King 3.5 Popeyes 10.2
Wendy’s 2.5 Church’s Chicken 5.6
Subway 2.4 Boston Market 4.9
Other 72.5 El Pollo Loco 3.2
Bojangles 3.1
Other 23.2
 Financial Highlights

Year Growth Rate Value (Billion)

2008 6.6% $ 154.7
2013 (Forecasted) 29.3% $ 200
 American leads 52.4% of Total Maket’s Value in the world

 Factors:
 Rising Incomes of American Household
 Decreasing Time Availability for cooking (Everyone loves Time-saving)
 Higher divorce rate in Western world
 Increasing number of Women Workforce.
 Immigrants Ethnicity for food (Everyone always wants to raise his/her
country)
 KFC
Increasing Fast Food Chain

Why?
What
Reasons?
What
Strategies?

 Analysis From Case Will

Answer!
 Next……..

Md. Waish Hasan

Student Id: 1295
 Unique made it easy

Unique Taste From Secret

Receipe
That’s why KFC Slogan is:

It's finger lickin' good

(One of the best-known catchphrases of 20th century)

Follow your taste

 Culture: Way To Success

• Colonel Sanders’s laid back management approach

• Known as “The Colonel” Approach
– Job stability and security
– Strong loyalty among employees
– Friendly, relaxed atmosphere
– Franchise friendly

– Little day-to-day interference from management

 PepsiCO Management
• Acquired KFC for $841 million in 1986
– Pizza Hut, Taco Bell, KFC
• New franchise contract
• Reduced staff
• Replaced KFC managers with their own
• Based on performance
– High performance, accountability, and drive
– Created unstable future for management
• Franchise Contract
– Take over weak franchises
– Relocate restaurants
– Make changes to existing restaurants
• KFC franchise association sued PepsiCo
 SWOT Analysis: Strengths

• Strengths
– A subsidiary of Pepsi Co
– KFC’s secret recipe
– Name recognition & reputation
– Co-Branding
– International expansion & expansion through franchising
– Good stability and security with strong loyalty among KFC
employees and franchises
 SWOT Analysis: Weakness

• Weaknesses
– Consumer began to demand healthier foods.
– Inability to quickly bring new products to market
– PepsiCo’s poor relationship with franchises
– Failure to penetrate in some foreign markets
– Limited menu offerings
– Non-traditional locations lack
 SWOT Analysis: Opportunities

• Opportunities
– The Mexican market
– Peso devaluation
– “Dual branding”
– Australian opportunity
– New distribution channels
– Less Time availability in Cooking
– Rest Europe and Africa Markets
 SWOT Analysis: Threats

• Threats
– Saturation of the U.S. market
– Increasing competition and rising sales
of substitute products
– Changing preferences of consumers
– Obstacles associated with expansion in
Mexico
 Next ………

Md. Nazrul Islam

Student Id: 1292
 Strategies: Refranchising

• Relatively slow growth rate 1992-1997

– Due to selling company-owned restaurants BACK to franchisees
• Company-owned
– Easier to control
– Higher levels of investment with low returns
• 1993 PepsiCo concerned with Coca Cola’s returns
 Strategies: Corporate Level

• Corporate Level Strategies

– Switched from franchise to company owned in
their larger markets
– Interest in local community (Neighborhood)
– Combing the two concepts in the same unit
– Changed name and Logo
– Introduced different menu items to keep up
with local competitors
– Updated Technologies in Service and Production
unit
 Strategies: Corporate Level
– Switched to highly performance based
management strategies
– More responsibility assigned to franchisees and
marketing managers
– Pay closely aligned with customer service and
restaurant performance
 Strategies: Business Level

• Business Level Strategy

– Closed unprofitable restaurants
– Strive to fill the needs of local
markets by hiring locally and
offering menu items that reflect
the culture
– Reestablish and maintain an
emphasis on clean and updated
restaurants paying close
attention to service while
maintaining product consistency
– Cutting out marginal products
 Structure and Control Systems

• Structure and Control Systems

– Managers rotated based performance and experience
– Promoted quickly
– “You may have performed well last year, but if don’t perform well this
year, you're gone and there are 100 ambitious guys with Ivy League
MBA’S at PepsiCo who would love to take your position” –
 PepsiCo Manager (Case pp. 206)
– Went from laid back culture to highly competitive performance based
 Next ……….

Nawshad Haque
Student Id: 1959
 Recent Controversies

• Controversies
– Animal cruelty
– Health

– Alleged rainforest destruction

– Allegation of racial stereotyping
 Animal Crueltry
• PETA is an animal rights activist group
– People for the Ethical Treatment of Animals)
– States “Chickens are probably the most abused
animals on the planet”
– PETA is extremely upset with KFC due to the process
in which KFC kills there chickens (like electrical
stunning and throat slitting)
– Animal Care Standards should be established

• YUM! brands states that

– Works with Animal Welfare Advisory Counsel in
order to implement the humane death of the
chickens and
– Continuously works towards specific performance
measures for humane animal treatment
 Health, Rainforest destruction

• Health
– Use of Palm or soyabean oil for frying
– CSPI (Centre for Sceince in Public Interest) bought a file against KFC
– After this, KFC introduced Healtheir Oil

• Rainforest Destruction
 Greepeace accused KFC for destroying rainforest in Indoneasian for making
paper pulp and soyabean for chickens from Cargill and Amazon
 KFC says “Our suppliers are working towards making it 100%” by using
sustainable sources
 Racism

• Racism
• Racism in Advertisment in 2010
• In that Advatisement - an Australian cricket fan feeling "awkward"
when surrounded by West Indies fans, and sharing a bucket of KFC to
befriend them.
• KFC ceased running the commercial immediately
 Recommendations
• Recommendations
– Continue to expand internationally (like Argentina, Scandinavian countries,
Mediterranean Sea area, rest of Africa)
– Strong relationship in “Dual branding”
– Offer a healthier selection of items
– In addition to offering new products, chains lowered prices, improved
customer service and established restaurants in nontraditional locations. (i.e.
Wal-Mart)
 Question or Visit

Thank You!!
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6th-semester/Strategic management