MINOR PROJECT REPORT

ON KFC

Session: 2013-2016

UNDER THE GUIDANCE OF: SUBMITTED BY:-

SUPRIYA CHAUDHARY SIMARJOT SINGH

Enrollment No.02714901813

Course: BBA (B&I) 3rd Sem.

MAHARAJA SURAJMAL INSTITUTE

(Affiliated to Guru Gobind Singh Indraprastha University)

(Recognized by UGC U/S2 (F)) C-4 JANAK PURI, NEW DELHI-58

CERTIFICATE

This is to certify that the research project initiated to certify that is the innovative effort of

“SIMARJOT SINGH” ROLL NO-02514905010 and it has been accomplished under my guidance.

Certified that this project report “KFC” Is the bonafide work of "SIMARJOT SINGH” who carried

out the project work under my supervision.

SIGNATURE SIGNATURE

SIMARJOT SINGH SUPRIYA CHAUDHARY

SUPERVISOR

ACKNOWLEDGEMENT

A project can never become a success with efforts of only one individual. It requires a group of

people to complete a project at its best. And it’s my friends, my teacher and my family member

who have helped me to complete my project report.

The present work is just an effort to throw some light on “KFC”. The work would not have been

possible to come to the present shape without the guidance, supervision and help of number of

people.

With deep sense of gratitude I acknowledge the encouragement and guidance received from

Mrs. SUPRIYA CHAUDHARY, and other staff members.

I convey my heartfelt thanks to all those people who helped and supported me during the

course, of completion of my Project Report.

SIMARJOT SINGH

ENROLL. NO. 02714901813

Course: BBA (B&I) 3rd Sem.

KFC (Kentucky Fried Chicken)

Type: Subsidiary

Industry: Restaurant

Genre: Fast food

Founded: Sanders Court & Cafe

1930 in North Corbin, Kentucky

First franchise: 1952 in Salt Lake City, Utah

Founders: Harland Sanders

Headquarters: 1441 Gardiner Lane, Louisville, Kentucky, United States

Number of locations: 18,875 (2013)

Key people: David C. Novak (Yum! Brands Chairman and CEO)

Roger Eaton (Yum! COO and KFC President)

Muktesh Pant (KFC CEO)

Products: Fried chicken, chicken burgers, wraps, French fries, soft drinks, salads,

desserts,

Revenue: US$23 billion (2013)

KFC

(The name was originally an intitalism for Kentucky Fried Chicken) is a fast food restaurant

chain that specializes in fried chicken and is headquartered in Louisville, Kentucky, in the United

States. It is the world's second largest restaurant chain (as measured by sales) after

McDonald's, with 18,875 outlets in 118 countries and territories as of December 2013. The

company is a subsidiary of Yum! Brands, a restaurant company that also owns the Pizza Hut

and Taco Bell chains. KFC was founded by Harland Sanders, an entrepreneur who began selling

fried chicken from his roadside restaurant in Corbin, Kentucky, during the Great Depression.

Sanders identified the potential of the restaurant franchising concept, and the first "Kentucky

Fried Chicken" franchise opened in Utah in 1952. KFC popularized chicken in the fast food

industry, diversifying the market by challenging the established dominance of the hamburger.

By branding himself as "Colonel Sanders," Harland became a prominent figure of American

cultural history, and his image remains widely used in KFC advertising. However, the company's

rapid expansion saw it overwhelm the ageing Sanders, and in 1964 he sold the company to a

group of investors led by John Y. Brown, Jr. and Jack C. Massey. KFC was one of the first fast

food chains to expand internationally, opening outlets in the United Kingdom, Mexico, and

Jamaica by the mid-1960s. Throughout the 1970s and 1980s, KFC experienced mixed fortunes

domestically, as it went through a series of changes in corporate ownership with little or no

experience in the restaurant business. In the early 1970s, KFC was sold to the spirits distributor

Heublein, who were taken over by the R.J. Reynolds food and tobacco conglomerate, who sold

the chain to PepsiCo. The chain continued to expand overseas however, and in 1987 KFC

became the first Western restaurant chain to open in China. The chain has since expanded

rapidly in China, which is now the company's single largest market. PepsiCo spun off its

restaurants division as Tricon Global Restaurants, which later changed its name to Yum! Brands.

KFC's original product is pressure fried chicken pieces, seasoned with Sanders' recipe of 11

herbs and spices. The constituents of the recipe represent a notable trade secret. Larger

portions of fried chicken are served in a cardboard "bucket," which has become a well known

feature of the chain since it was first introduced by franchisee Pete Harman in 1957. Since the

early 1990s, KFC has expanded its menu to offer other chicken products such as chicken fillet

burgers and wraps, as well as salads and side dishes, such as French fries and coleslaw,

desserts, and soft drinks, the latter often supplied by PepsiCo. KFC is known for the slogan

"finger lickin' good," which has since been replaced by "Nobody does chicken like KFC" and "So

good”.

HISTORY

Harland Sanders was born in 1890 and raised on a farm outside Henryville, Indiana. When

Harland was five years old, his father died, forcing his mother to work at a canning plant. This

left Harland, as the eldest son, to care for his two younger siblings. After he reached seven

years of age, his mother taught him how to cook . After leaving the family home at the age of

13, Sanders passed through several professions, with mixed success. In 1930, he took over a

Shell filling station on US Route 25 just outside North Corbin, Kentucky, a small town on the

edge of the Appalachian Mountains.

It was here that he first served to travelers the recipes that he had learned as a child: fried

chicken and other dishes such as steaks and country ham.

After four years of serving from his own dining room table, Sanders purchased the larger filling

station on the other side of the road and expanded to six tables. By 1936, this had proven

successful enough for Sanders to be given the honorary title of Kentucky colonel by Governor

Ruby Laffoon.

In 1937 he expanded his restaurant to 142 seats, and added a motel he purchased across the

street, naming it Sanders Court & Café. Sanders was unhappy with the 35 minutes it took to

prepare his chicken in an iron frying pan, but he refused to deep fry the chicken, which he

believed lowered the quality of the product. If he pre-cooked the chicken in advance of orders,

there was sometimes wastage at day's end.

In 1939, the first commercial pressure cookers were released onto the market, mostly designed

for steaming vegetables. Sanders bought one, and modified it into a pressure fryer, which he

then used to fry chicken.The new method reduced production time to be comparable with

deep frying, while, in the opinion of Sanders, retaining the quality of pan-fried chicken.

In July 1940, Sanders finalized what came to be known as his "Original Recipe" of 11 herbs and

spices. Although he never publicly revealed the recipe, he admitted to the use of salt and

pepper, and claimed that the ingredients "stand on everybody's shelf."

After being recommissioned as a Kentucky colonel in 1950 by Governor Lawrence Wetherby,

Sanders began to dress the part, growing a goatee and wearing a black frock coat (later

switched to a white suit), a string tie, and referring to himself as "Colonel."

His associates went along with the title change, "jokingly at first and then in earnest,"

according to biographer Josh Ozersky.

The Sanders Court & Café generally served travelers, so when the route planned in 1955 for

Interstate 75 bypassed Corbin, Sanders sold his properties and traveled the US to franchise his

chicken recipe to restaurant owners.

Independent restaurants would pay four (later five) cents on each chicken as a franchise fee, in

exchange for Sanders' "secret blend of herbs and spices" and the right to feature his recipe on

their menus and use his name and likeness for promotional purposes.

In 1952 he had already successfully franchised his recipe to his friend Pete Harman of South

Salt Lake, Utah, the operator of one of the city's largest restaurants.

Don Anderson, a sign painter hired by Harman, coined the name "Kentucky Fried Chicken."

For Harman, the addition of KFC was a way of differentiating his restaurant from competitors; a

product from Kentucky was exotic, and evoked imagery of Southern hospitality.

Harman trademarked the phrase "its finger lickin' good," which eventually become the

company-wide slogan.

He also introduced the "bucket meal" in 1957 (14 pieces of chicken, five bread rolls and a pint

of gravy in a cardboard bucket). Serving their signature meal in a paper bucket was to become

an iconic feature of the company.

By 1963 there were 600 KFC restaurants, making the company the largest fast food operation

in the United States. KFC popularized chicken in the fast food industry, diversifying the market

by challenging the established dominance of the hamburger .

In 1964, Sanders sold the company to a group of investors led by John Y. Brown Jr. and Jack C.

Massey for US$2 million (around US$15 million in 2013). The contract included a lifetime salary

for Sanders and the agreement that he would be the company's quality controller and

trademark . The chain had reached 3,000 outlets in 48 different countries by 1970.

In July 1971, Brown sold the company to the Connecticut- based Heublein, a packaged food

and drinks corporation, for US$285 million (around US$1.6 billion in 2013).promotional work

making him a prominent figure in American cultural history.

By the time of his death, there were an estimated 6,000 KFC outlets in 48 different countries

worldwide, with $2 billion of sales annually.

In 1982, Heublein was acquired by R. J. Reynolds, the tobacco giant.

In July 1986, Reynolds sold KFC to PepsiCo for $850 million (around US$1.8 billion in 2013).

PepsiCo made the chain a part of its restaurants division alongside Pizza Hut and Taco Bell.

The Chinese market was entered in November 1987, with an outlet in Beijing.

In 1991, the KFC name was officially adopted, although it was already widely known by that

initialism.

Kyle Craig, president of KFC US, admitted the change was an attempt to distance the chain from

the unhealthy connotations of "fried".

The early 1990s saw a number of successful major products launched throughout the chain,

including spicy "Hot Wings" (launched in 1990), popcorn chicken (1992), and internationally,

the "Zinger", a spicy chicken fillet burger (1993).

By 1994, KFC had 5,149 outlets in the US, and 9,407 overall, with over 100,000 employees.

In August 1997, PepsiCo spun off its restaurants division as a public company valued at US$4.5

billion (around US$6.5 billion in 2013).

The new company was named Tricon Global Restaurants, and at the time had 30,000 outlets

and annual sales of US$10 billion (around US$14 billion in 2013), making it second in the world

only to McDonald's. Tricon was renamed Yum! Brands in May 2002.

BRIEF HISTORY OF KFC

HOW IT ALL BEGAN!

Harland David Sanders was born September 9, 1890 in Indiana, USA. The young Harland

Sanders had many jobs such as a farmhand, a bus conductor, a steam boat driver, a soldier, and

a salesman. Eventually he became a business man owning a petrol service station in Kentucky,

one of the 52 states of the USA. Many travelers stopped at his service station wanting

refreshments and food. The Colonel saw this as a business opportunity and decided to offer

food to these customers. The Colonel enjoyed making his customers happy . He was passionate

about entertaining them with excellent food and superb service. His food and service was so

good that he was mentioned in several newspapers around the country. As a result he had to

expand his dining room to keep up with the increase in new customers. This 'Customer Mania'

experience made people drive from far away just to visit the Colonel's restaurant.

A WINNING RECIPE!

After careful testing for many years to find just the right combination of ingredients, the

Colonel knew that he was at last onto a winning recipe. When he added the 11th and final

ingredient, he was truly satisfied that he had created the best chicken he had ever tasted he

wanted to share it with the world! To this day, the Original Recipe of 11 Herbs and Spices is one

of the biggest secrets in the world the Finger Lickin' Taste‖ of KFC! The Colonel also introduced

the idea of using a pressure cooker to cook the chicken. This ensured that the product cooked

faster and produced the best results ever. The Colonel decided that his Original Recipe needed

to be introduced to people further from his home and from his state. At the age of 66, he

started selling his idea of Kentucky Fried Chicken by traveling from town to town, preparing his

famous chicken recipe for restaurants and their employees. Soon everybody wanted to try it

families stood in queues to try his great Original Recipe. Colonel Sanders appeared on national

Television promoting the idea of Kentucky Fried Chicken. He always licked his fingers as he

described the Original Recipe taste to viewers.

This is how the slogan ―It's Finger Lickin' Good‖ developed.

KFC is a subsidiary of Yum! Brands, one of the largest restaurant companies in the world. KFC

had sales of $23 billion in 2013. KFC has its headquarters at 1441 Gardiner Lane, Louisville,

Kentucky, in a three-story colonial style building known colloquially as the "White House" due

to its resemblance to the US president's home. The headquarters contain executive offices and

the company's research and development facilities.

KFC is incorporated at 1209 North Orange St, Wilmington, Delaware.

By December 2013, there were 18,875 KFC outlets in 118 countries and territories around the

world. There are 4,563 outlets in China, 4,491 in the United States, and 9,821 across the rest of

the world. Outlets are owned by franchisees or directly by the company. Eleven percent of

outlets are company owned, with the rest operated by franchise holders.

Although capital intensive, company ownership allows for faster expansion of the chain.

Most restaurants are furnished with images of the company founder, Colonel Harland Sanders.

As well as dine-in and take-out, many stand-alone KFC outlets offer a drive-through option.

KFC offers a limited delivery service in a small number of markets. Units include express

concessions and kiosks which feature a limited menu and operated in non-traditional locations

such as filling stations, convenience stores, stadia, theme parks and colleges, where a full scale

outlet would not be practical.

Average annual sales per unit was $1.2 million in 2013.

Worldwide, the daily average number of food orders at an outlet is 250, with most occurring

within a two hour peak-period.

As chairman and CEO of Yum!, David C. Novak ultimately has foremost responsibility for KFC

operations.

Sam Su is chairman and CEO of Yum!'s Chinese operations, and Muktesh Pant is the CEO of

KFC.

Richard T. Carucci is president of Yum!, and Roger Eaton is the COO of Yum! And the president

of KFC.

PRODUCTS

KFC’S CHICKEN BUCKET

KFC's core product offering is pressure fried on-the-bone chicken pieces seasoned with the

"Original Recipe". The product is typically available in either two or three piece individual

servings, or in a family size cardboard bucket, typically holding between 6 and 16 chicken

pieces. Poultry is divided into 9 different cuts (2 drumsticks, 2 thighs, 2 wings, 1 keel, and a

backbone based breast cut divided into 2 pieces. The product is hand-breaded at individual

KFC outlets with wheat flour mixed with seasoning in a two to four minute process. It is then

pressure fried for a maximum of seven minutes at 185 degrees Celsius. Following this, the

chicken is left to stand for 5 minutes in order for it to sufficiently cool before it is placed in the

warming oven.

It is KFC policy to discard chicken if it has not been sold within 90 minutes, in order to ensure

freshness.

The frying oil varies regionally, and versions used include sunflower, soybean, rapeseed and

palm oil.

A KFC executive stated that the taste of the chicken will vary between regions depending on

the oil variety used, and whether the chicken has been corn-fed or wheat-fed.

As well as its core chicken on the bone offering, KFC's major products include chicken burgers

(including the Zinger and the Tower burgers); wraps ("Twisters" and "Box masters"); and a

variety of finger foods, including crispy chicken strips and hot wings.

Popcorn Chicken is one of the most widely available KFC products, and consists of small pieces

of fried chicken.

In some locations, chicken nuggets are sold, and are sometimes sold, as in Australia, under the

"Kentucky Nuggets" trademark .

KFC adapts its menu internationally to suit regional tastes, and there are over three hundred

KFC menu items worldwide.

Some locations, such as the UK and the US, sell grilled chicken.

In Asia there is a preference for spicy foods, such as the Zinger chicken burger .

Some locations in the US sell fried chicken livers and gizzards.

A small number of US outlets offer an all-you-can-eat buffet option with a limited menu.

A number of territories, such as Japan, Jamaica, Trinidad, Barbados, Ecuador and Singapore sell

fried seafood products under the "Colonel's Catch" banner .

In Jamaica, what was originally a seasonal offering for the Lent period was expanded to a year-

round offering from 2010.

Value menu items are sold under the "Streetwise" name in locations such as Canada.

Side dishes often include French fries, coleslaw, barbecue baked beans, corn on the cob,

mashed potato, bread rolls and American biscuits. Salads include the bean salad, the Caesar

salad and the garden salad. In a number of territories, KFC sell onion rings.

In Asia, rice based side dishes such as kanji are often sold.

In Malaysia, chicken meatball soup is sold. In the US and Greece, potato wedges are sold

instead of French fries.

McCormick & Company is KFC's largest supplier of sauces, seasonings and marinades, and is a

long-term partner in new product development.

Due to the company's previous relationship with PepsiCo, most territories supply PepsiCo

products, but exceptional territories include South Africa, the Philippines, Turkey, Romania,

Greece and Barbados, which stock drinks supplied by The Coca-Cola Company, and Aruba,

which stocks RC Cola from the Cott Corporation.

In Peru, the locally popular Inca Kola is sold.

In a number of Eastern European locations and Portugal, beer is offered, in addition to soft

drinks.

Launched in 2009, the Krusher/Krushem range of frozen beverages containing "real bits" such

as Kit Kat, Oreo and strawberry shortcake, is available in over 2,000 outlets.

Egg custard tart is a popular dessert worldwide, but other items include ice cream sundaes and

tres leches cake in Peru.

In 2012, the "KFC am" breakfast menu began to be rolled out internationally, including such

items as pancakes, waffles and porridge, as well as fried chicken.

11 HERBS AND SPICES

Sanders' Original Recipe of "11 herbs and spices" is one of the most famous trade secrets in the

catering industry.

The recipe is not patented, because patents eventually expire, whereas trade secrets can

remain the intellectual property of their holders in perpetuity.

A copy of the recipe, signed by Sanders, is held inside a safe inside a vault in KFC's Louisville

headquarters, along with eleven vials containing the herbs and spices.

To maintain the secrecy of the recipe, half of it is produced by Griffith Laboratories before it is

given to McCormick, who add the second half .

KFC ORIGINAL FRIED CHICKEN RECIPE

KFC initially used stove-top covered cooking pots to fry its chicken. In the 1960s, the officially

recommended model was the L S Hertzog developed "KFC 20-Head Cooker," a large device that

cost $16,000.

The Hertzog model had no oil filtration system, meaning that filtering had to be done manually,

and the pressure fryers occasionally exploded.

In 1969, an engineer called Winston Shelton developed the "Collectramatic 519" pressure fryer

that would self-filter the oil, and used precision timers and temperature controls.

Fred Jeffries, then vice president of purchasing at KFC, claimed that the invention helped fuel

the company's rapid expansion and success: "There's no way it could have grown like it did

without the Collectramatic. Stores were doing about $200,000 a year in sales on average with

the pots but they could never have done the $900,000 a year it became without Win's fryer."

Although a number of franchisees bought the Collectramatic, which had the support of Colonel

Sanders from 1970 onwards, John Y. Brown had already signed an exclusive contract to only use

the L S Hertzog fryer. Brown warned franchisees that they were in violation of their contract if

they used the Collectramatic.

Brown held his ground on the issue until he learned that his father, John Y. Brown, Sr., who was

a KFC franchisee himself, was also using the Collectramatic.

The issue was eventually resolved after Heublein purchased KFC and acquired Hertzog in order

to invalidate the contract.

The Collectramatic thus became the official pressure fryer for KFC from 1972 onwards.

Winston previously supplied KFC with holding cabinets, but since 2010, these have been

supplied by Henny Penny.

ADVERTISING

A Colonel Sanders statue outside a KFC outlet in Japan

Such statues are common outside Asian KFCs. Colonel Sanders was a key component of KFC

advertising until his death in 1980. Despite his death, Sanders remains a key symbol of the

company; an "international symbol of hospitality."

Modern renditions of the Colonel are sometimes used in post-1980 advertising.

In 1994, Henderson Forsythe portrayed the Colonel in a television campaign entitled "The

Colonel's Way."

From 1998 to 2001 an animated version of the Colonel voiced by Randy Quaid was used for

television advertisements.

In 2012, a UK advertisement entitled "4000 cooks" featured an actor made up to resemble

Sanders.

The ubiquity of Sanders has not prevented KFC from introducing a mascot aimed at children.

"Chicky," a young animated chicken, was first introduced in Thailand in the 1990s, and has since

been rolled out across a number of markets worldwide, mostly in Asia and South America.

SLOGANS

Early official slogans included "North America's Hospitality Dish" (from 1956) and "We fix

Sunday dinner seven nights a week" from 1957 until 1967.

The "finger lickin' good" slogan was used from 1956, and went on to become one of the best-

known slogans of the twentieth century.

The trademark expired in the US in 2006, and was replaced in that market with "Follow your

taste" until 2010.

In 2011, the "finger lickin' good" slogan was dropped in favor of "So good," to be rolled out

worldwide.

A Yum! executive said that the new slogan was more holistic, applying to staff and service, as

well as food.

"Nobody does chicken like KFC" was first introduced by KFC Australia in 1998, and has

continued to be used by the company in some markets.

LOGOS

The first KFC logo was introduced in 1952 and featured a "Kentucky Fried Chicken" typeface and

a logo of the Colonel.

It was designed by the Lippincott & Margulies corporate identity agency.

Lippincott & Margulies were hired to redesign it in 1978, and used a similar typeface and a

slightly different Sanders logo.

The "KFC" initialism logo was designed by Schechter & Luth of New York and was introduced in

1991, and the Colonel's face logo was switched from brown to blue ink .

Landor redesigned the logo in 1997, with a new image of the Colonel. The new Colonel image

was more thinly lined, less cartoonish and a more realistic representation of Sanders. In 2006,

the Colonel logo was updated by Tesser of San Francisco, replacing his white suit with an apron,

bolder colors and a better defined visage.

According to Gregg Dedrick, president of KFC's US division, the change, "communicates to

customers the realness of Colonel Sanders and the fact that he was a chef.”

CONTROVERSIES AND

CRITICISM ! Since the turn of the 21st century, fast food has been criticised for its animal welfare record, its

links to obesity and its environmental impact.

Eric Schlosser's book Fast Food Nation (2002) and Morgan Spurlock's film Super Size Me

(2004) reflected these concerns.

Since 2003,People for the Ethical Treatment of Animals (PETAhas protested KFC's choice of

poultry suppliers worldwide.

The exception is KFC Canada, which signed an agreement pledging to only use "animal friendly"

suppliers.

PETA have held thousands of demonstrations, sometimes in the home towns of KFC executives,

and CEO David Novak was notably soaked in fake blood by a protester . President of KFC's US

division Gregg Dedrick said PETA mischaracterized KFC as a poultry producer rather than a

purchaser of chickens.

In 2008, Yum! stated: "[As] a major purchaser of food products, [Yum!] has the opportunity and

responsibility to influence the way animals supplied to us are treated. We take that

responsibility very seriously, and we are monitoring our suppliers on an ongoing basis."

In 2006, Greenpeace accused KFC Europe of sourcing the soya bean for its chicken feed from

Cargill, which had been accused of clearing large swathes of the Amazon rainforest in order to

grow the crop.

In May 2012, Greenpeace accused KFC of sourcing paper pulp for its food packaging from

Indonesian rainforest wood.

Independent forensic tests showed that some packaging contained more than 50 percent

mixed tropical hardwood fiber, sourced from Asia Pulp & Paper (APP).

APP said such fiber can be found in recycled paper, or: "It can also come from tree residues that

are cleared, after a forest area has become degraded, logged-over or burned, as part of a

sustainable development plan. APP has strict policies and practices in place to ensure that only

residues from legal plantation development on degraded or logged-over forest areas and

sustainable wood fiber enters the production supply chain."

KFC said: "From a global perspective, 60 percent of the paper products that Yum! (our parent

company) sources are from sustainable sources. Our suppliers are working towards making it

100 percent."

In December 2012, the chain was criticized in China when it was discovered that a number of

KFC suppliers had been using growth hormones and an excessive amount of antibiotics on its

poultry in ways that violated Chinese law.

In February 2013, Yum! CEO David Novak admitted that the scandal had been "longer lasting

and more impactful than we ever imagined. The issue is of major concern to Yum!, which earns

almost half of its profits from China, largely through the KFC brand. In March 2013, Yum!

Reported that sales had rebounded in February, but that lower sales in December and January

would result in a decline in same-store sales of 20 percent in the first quarter .

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spends continue to impact quick-service restaurants business in the country. Yum! Restaurants

reported a 2% decline in its same-store sales in India even as sales in its biggest emerging

market, China, bounced..

KFC net profit rises by 7.4%

June 28, 2011 | ET Bureau KOCHI: Kerala Financial Corporation (KFC) has clocked a 7.4 % in the

net profit at Rs 35.82 crore for 2010-11. The company declared a dividend of 5 % for the year.

Business portfolio increased by 26.4 % to Rs 1125 crore and the disbursements rose 6 % to Rs

444 crore. The recovery of loans has improved by 18.73 % to Rs 355 crore.

Yum, partners to invest $10 bn in emerging markets by 2020

October 22, 2013 | PTI NEW DELHI: Yum! Brands Inc that owns KFC and Pizza Hut chains plans

to invest $10 billion along with its franchise partners to have 20,000 restaurants in emerging

markets, including India, by 2020. The fast food chain, which today announced its 40,000th

restaurant globally with the opening of an outlet in Goa, also said that by 2015 it will have over

1,000 KFC, Pizza Hut and Taco Bell outlets in more than 100 cities in India division that...

EARLY FRANCHISES

The Sanders Court & Café generally served travelers, so when the route planned in 1955 for

Interstate 75 bypassed Corbin, Sanders sold his properties and traveled the US to market his

chicken concept to restaurant owners.

Independent restaurant owners would pay five cents on each chicken sold as a franchise fee, in

exchange for Sanders' "secret blend of herbs and spices", his recipe and method, and the right

to advertise using his name and likeness.

In 1952 he had already successfully franchised his chicken recipe to Pete Harman of South Salt

Lake, Utah, the operator of one of the largest restaurants in the city.

Don Anderson, a sign painter hired by Harman, coined the name "Kentucky Fried Chicken".

Sanders adopted the name because it distinguished his product from the deep-fried "Southern

fried chicken" product found in restaurants.

Harman claimed that in his first year of selling "Kentucky Fried Chicken", his restaurant sales

more than tripled, with 75 percent of the increase coming from the sale of fried chicken.

In Utah, a product from Kentucky was exotic and evoked imagery of Southern hospitality.

As a franchise-led operation, KFC's success depended on the work of the early franchisees, and

Harman has been described as the "virtual co-founder" of the chain by Sanders' biographer .

Harman trademarked the phrase "It's finger lickin' good", which was eventually adopted as a

slogan across the entire chain.

In 1957 Harman bundled 14 pieces of chicken, five bread rolls and a pint of gravy into a

cardboard bucket, and offered it to families as "a complete meal" for US$3.50 (around US$30 in

2014).

He first trialed the packaging as a favor to Sanders, who had called on behalf of a Denver

franchisee who did not know what to do with 500 cardboard buckets he had bought from a

traveling salesman.

SALE BY SANDERS

KFC popularized chicken in the fast food industry, diversifying the market by challenging the

established dominance of the hamburger .

In 1960 the company had some 200 franchised restaurants; by 1963 this had grown to around

600, making it the largest fast food operation in the United States .

In 1963, Sanders met John Y. Brown, Jr, the son of his lawyer, John Y. Brown, Sr., at a political

breakfast.

Brown told Sanders that he was keen to join the company, which had developed a strong

reputation in the Kentucky area.

According to Brown, Sanders had lost interest in the business operations of KFC. Sanders

explained that he saw useful qualities in Brown, such as youth, enthusiasm and vision. Brown

and franchisee Dave Thomas agreed that Sanders "wasn't a very good businessman". Brown

convinced the financier Jack C. Massey to provide 60 percent of the acquisition capital, and

provided a major contribution himself, with smaller contributions from franchise holder Pete

Harman and company officials Lee Cummings and Harlan Adams.

Sanders then began to have doubts about selling the company, as members of his family were

against it.

Knowing that Sanders placed faith in astrology, Massey waited until he had a particularly

positive and dramatic horoscope before offering a price for the company. When Massey made

the written offer, Sanders read the figure, immediately consulted his horoscope, then agreed to

sell.

The group of investors acquired the company from Sanders in 1964 for US$2 million (around

US$15 million in 2013). The contract included a lifetime salary for Sanders and the agreement

that he would be the company's quality controller and trademark .

GROWTH Massey and Brown introduced standardization to the fragmented company.

After visiting Pete Harman's operations in Utah, they began to implement the stand-alone take-

out model across the entire chain.

Franchisees were ordered to delist their own menu items so that they could concentrate on KFC

products.

The restaurants were re-branded with a distinctive red-and-white striped color pattern and

mansard roofs with cupolas.

The roll-out of freestanding stores accelerated the company's growth as outlets exclusively

selling fried chicken proved to be more appealing to potential franchisees.

Sanders did not approve of all of the changes to the company that he had founded, and became

incensed when Massey moved company headquarters from Kentucky to Nashville, Tennessee,

which was closer to where Massey lived.

Sanders bellowed, "This ain't no Tennessee Fried Chicken, no matter what some slick, silk-

suited man says".

Sanders also became frustrated with some of the changes to the company, such as introducing

an initial franchisee fee of $4,000, and charging franchisees a percentage of total sales rather

than a nickel per chicken sold.

Sanders also believed that the company had reneged on their contract with him when they

opened operations in Canada, because as he understood it, the contract had granted him the

exclusive rights to operate in the country.

Sanders complained to the press

The Washington Post , "I don't like some of the things John Y. done to me. Let the record speak

for itself. He over- persuaded me to get out".

The outburst was embarrassing for Brown, who argued that he made the management

structure more efficient and treated the increasingly disgruntled Sanders with tact and

patience.

KFC was forced to renegotiate with Sanders regarding the Canadian activities , as he owned $1.5

million worth of stock and was using it to prevent Massey from listing the company publicly

until his points of issue were addressed.

Brown and Massey claimed that Sanders only had the rights to process chicken in Canada.

After they renegotiated the contract to guarantee Sanders exclusive rights over Canada, he sold

his stock to them, and the company went public in 1966.

After going public, the company bought out its 600 franchisees, and directly operated them

itself. Later that year, Massey resigned from day-to-day management of the company (although

he remained as chairman), and Brown announced that headquarters would be moved to

Louisville, Kentucky.

By 1967, KFC had become the sixth largest restaurant chain in the US by sales volume, and 30

per cent of sales were take-out.

Brown felt that the company had to expand quickly, or else emerging rivals such as Church's

Chicken would steal the company's lead; 863 outlets were opened in 1968. The company's

growth pushed its stock value to "stratospheric" levels, according to Reuters, and in 1969 it

was listed on the New York Stock Exchange.

Meanwhile, KFC entered into ventures with other companies. In 1969, Brown launched the

"Kentucky Roast Beef" restaurant chain, and "Colonel Sanders Inns" motels.

Brown believed that the Colonel Sanders brand could be used to market anything, but these

two ventures quickly failed.

That same year, KFC entered a joint venture with the California-based fish and chips chain H.

Salt Esquire, which proved more successful, but was sold off in 1980.

Massey resigned as chairman of the company in March 1970, and Brown took over his role.

The chain had reached 3,000 outlets in 48 different countries by 1970, but expansion was often

chaotic and poorly executed.

When he was promoted to regional manager, Dave Thomas complained that the company had

become too "corporate", sent him "a lot of Mickey Mouse memos" and that Brown lacked

motivational skill.

A member of KFC senior management described the international strategy as "throwing some

mud against the map on the wall, and hoping some of it would stick."

The first outlet in Japan was opened after just two weeks preparation, and it proved to be a

costly failure, losing $400,000 during its opening month and wasting more chicken than it sold.

ACQUISITION BY PEPSI CO.

In July 1986, Reynolds sold KFC to PepsiCo for a book value of $850 million (around US$1.8

billion in 2013). At the time, PepsiCo had interests in soft drinks and snacks, and also owned

the restaurant chains Pizza Hut and Taco Bell. Reynolds divested KFC in order to pay off debt

related to its recent purchase of Nabisco and to concentrate on its tobacco and packaged food

business. It was anticipated that PepsiCo would bring their merchandising expertise to the

company .Dan Koeppel of Ad week believed that the chain had been suffering from corporate

neglect, menu stagnation and mixed marketing messages; Nancy Giges of Advertising Age felt

that the chain had been "smartly revived" by R. J. Reynolds. KFC chairman Richard Mayer was of

the opinion that Reynolds had treated their restaurants division as a "hobby".

PepsiCo's acquisition was seen by some analysts as a means for the company to increase its

soft drinks sales. Before the takeover, only 1,000 of the 6,500 KFC outlets sold Pepsi Cola.

PepsiCo chairman D. Wayne Calloway stressed that soft drink preference was not a factor in the

KFC takeover . PepsiCo switched 1,800 company owned stores to their own soft drinks with

immediate effect. KFC management had previously given franchisees the freedom to sell any

soft drinks they wanted, but PepsiCo stated that it hoped it could convince them to stock Pepsi

products. The purchase of KFC by PepsiCo led to some fast food competitors switching from

Pepsi to Coca-Cola. One of the first to switch was Wendy's, whose chairman, Robert Barney,

stated, "In recent months, Pepsi has acquired another restaurant chain. Their interests are now

in conflict with Wendy's and we will not support a company that is trying to make our

customers its customers."In 1990, Burger King also switched to Coca-Cola from PepsiCo, citing

the growth of PepsiCo as a rival as a "large factor" in the switch. By July 1987, the "Chicken

Little", an inexpensive chicken slider made from dark meat, was introduced across KFC's US

stores, aimed at capturing the lunchtime market. Sales were reportedly disappointing, despite a

$31 million advertising campaign. In November 1987, KFC became the first Western restaurant

chain in China, with an outlet in Beijing. In 1989, first quarter sales at KFC rose 30 percent to

US$280 million. In July, president and CEO Richard Meyer left KFC in order to become the CEO

at Kraft Foods, and was replaced by John Cranor III.International growth and franchisee

disputes under John Cranor III.

In August 1989, Cranor proposed amendments to the existing 1976 contract for US franchisees:

PepsiCo could take over weak franchises, existing restaurants would not be safeguarded against

competition from new outlets, and PepsiCo would have the right to increase royalty fees. The

contract proved controversial amongst franchisees, who countered with a lawsuit, and the

issue was not resolved until 1996. PepsiCo was accused of behaving in an imperious manner

towards franchisees, who it believed were holding back the firm's growth, while the franchisees

believed they had been the backbone of the company during a succession of indifferent

corporate owners.

Cranor spent $42 million restructuring the company's operations worldwide. He invested an

additional $50 million to refurbish outlets and $20 million on a new computer system to link

outlet cash registers to the kitchen, drive-through window, manager's office and company

headquarters. Cranor also expanded the chain into non-traditional locations, beginning with a

150 sq ft kiosk selling seven items at a General Motors assembly plant in Dayton, Ohio.

Between 1986 and 1991, the chain built a further 2,000 outlets to bring its total number to

8,500, and sales grew from $3.5 to $6.2 billion. The chain had to contend with the rise of grilled

chicken as Americans became increasingly health conscious. KFC found itself competing against

the growing El Pollo Loco restaurant chain, as well as with Burger King, which had just

introduced the BK Broiler, a grilled chicken burger .

Delays in product development, cramped kitchens and the ongoing franchisee contract dispute

prevented the chain from rolling out a grilled product of its own. Franchisee relations became

tenser still when, in August 1990, PepsiCo announced plans to roll out a home delivery service

at all 5,000 US outlets by January 1991, without informing franchisees beforehand. In March

1991 the KFC name was officially adopted, although the chain was already widely known by

that initialism. The change was advised by the Schechter Group brand consultancy agency.

Research demonstrated that 80 percent of customers already associated the "KFC" initials with

Kentucky Fried Chicken. A spokesman for the chain said that it represented its diversified menu,

which was moving away from solely fried products. Kyle Craig, president of KFC US, admitted

the change was an attempt to distance the chain from the unhealthy connotations of "fried". In

1994, Milford Prewitt praised the "crafty and well-timed repositioning" in Nation's Restaurant

News. On the other hand, a 2005 editorial in Advertising Age stated, "the chain's jettisoning of

a venerable name—and distancing from the word fried — was ill-conceived and damaging. It

made a clear brand fuzzy."

The early 1990s saw successful major products launched throughout the chain, including spicy

"Hot Wings" (launched in 1990), popcorn chicken (1992), and, outside the US, the "Zinger", a

spicy chicken fillet burger (1993). In 1993, rotisserie style chicken, under the name "Colonel's

Rotisserie Gold", was introduced at over 30 per cent of US outlets. However, despite a $100

million investment in marketing, the product failed to gain sales traction. The launch of skinless

chicken, designed to appeal to health-conscious customers, failed; customers disliked the

unfamiliar texture, and the product resulted in increased overheads, which contributed to a 37

percent decline in operating profits in 1991. In June 1991, Singapore was chosen for the launch

of the first ever KFC breakfast menu. Products included chicken sausage, omelettes and

scrambled eggs, sold under the "Colonel's Country Breakfast" banner . Singapore was chosen

for the launch due to the growth of the breakfast market in that country. While the US division

struggled, becoming the weakest part of PepsiCo's restaurants division, elsewhere sales

boomed, with particular success in Japan. By 1992, slightly under half of all sales were outside

the US. By 1993, KFC in the Asia Pacific region accounted for 22 percent of all KFC sales. John

Cranor announced, "We're looking at almost unlimited opportunity for growth in Asia". By

1993, KFC was the leading Western fast food chain in South Korea, China, Thailand, Malaysia

and Indonesia, and was second to McDonald's in most other Asian markets, including Japan and

Singapore. Overseas operations often flourished while local management ignored or even

defied orders from Louisville headquarters.

10 CRAZY FACTS ABOUT KFC

THAT YOU MIGHT NOT

KNOW!

1.They Fiercely Guard Their Secret Recipe:

KFC maintains that they use a secret blend of 11 herbs and spices; it‘s been in their advertising

for awhile. The website BuzzFeed.com maintains that the handwritten recipe for the exact

name and amount of each spice is locked in a vault at the chain‘s corporate location in

Louisville,Kentucky.

2. KFC Parent Company Has Many Famous Kids:

KFC is currently owned by YUM! Brands. They also operate or once owned Taco Bell, LongJohn

Silver‘s, A&W,Wing Street, and Pizza Hut. The family reunion must be a fast food fest!

3. They Have a Creepy Reputation in China:

KFC was one of the first franchises to move into Asian markets. The chain‘s slogan used to be

finger-licking good,‘ which was changed in 2011. According to the BuzzFeed.com article, KFC

didn‘t do such a good job of translating its slogan when it moved into China. According to the

website, that slogan was erroneously translated into Chinese as eat your fingers off.‘ Doesn‘t

sound quite as tasty, does it?

4. There‟s a Rumor They Stole from Wendy‟s Founder:

Rumors and hoaxes certainly do abound in the fast food world. There‘s one going around that

Wendy‘s Founder Dave Thomas was once a franchisee of KFC and designed their popular fried

chicken bucket; that rumor is contradicted by attributing the bucket invention to a different

man altogether, Pete Harman, according to Yahoo Voices .

5. They Changed Their Name to KFC to Downplay „Fried‟:

According to that hoax debunked by Snopes.com, KFC changed its name from Kentucky Fried

Chicken because the U.S. government banned them from using the word ‗chicken‘ (the chain

was using mutant chickens, remember?). The fact of the matter is KFC just wanted the word

fried‘ out of its title due to the increasingly popular trend of eating healthy food.

6. KFC‟s Founder was a Troublemaker:

Harland David Sanders, the founder of KFC, certainly wasn‘t born with a silver spoon. He

moved out of his home at the age of 13 because he didn‘t get along with his stepfather, and he

lied about his age to enlist in the U.S. Army at the age of 16. He was also fired two different

times for fighting; once as a railroad worker scrapping with another employee and once as a

lawyer fighting with his own client while in court.

7. KFC Started in a Gas Station:

KFC‘s founder, Sanders, held many different jobs in his lifetime, according to KFC‘s own

biography. One of his last jobs before becoming the Colonel was the owner of a gas station. To

increase his income, he started selling fried chicken out of his own house, feeding customers at

his own dinner table. He did this for four years before opening a venue with tables just for

customers.

8. Colonel Sanders Was Not a Real Colonel:

While Sanders did enjoy a brief stint in the U.S. Army, his title of Colonel was not from the U.S.

military. It‘s a title of honor meant to denote good service or high accomplishments that benefit

the state of Kentucky. Sanders was awarded the title in 1935 by Gov. Ruby Laffoon, who

awarded the title to more than 5,000 other Kentuckians during his governorship.

9. The Original Fried Chicken Was Done in a Pressure Cooker:

Pressure cookers were invented right about the same time that Sanders‘s chicken restaurant

business was starting to really take off. The pressure cooker reduced the amount of time it took

to cook the chicken versus pan frying it and Sanders didn‘t want to deep fry it. However

Kentucky Pressure-Cooked Chicken doesn‘t sound quite as good.

10. KFC Is Dragging YUM! down in China:

YUM! Brands is just about killing it on all fronts: Taco Bell has had a few good years with its

Doritos-flavored tacos and revenue is through the roof. Except in China. KFC is pretty common

in the largest Asian country, but it is not doing so well at the moment. Fears of bird flu are

keeping Chinese diners away from KFC and its chicken meals.

KFC‘s PLAN

KFC Plans to Expand New Restaurant

Jul 31 14

KFC announced that it plans to expand. In particular, its subsidiary Fast Foods AKK has opened a

new KFC restaurant in Vilnius.

KFC Corporation Announces Availability of Extra Crispy Boneless for Limited Time

Jan 13 14

KFC Corporation has announced the availability of Extra Crispy Boneless in restaurants

nationwide through February 2, 2014. The Extra Crispy Boneless Go Cup is available for just

$2.49 and the Favorites Bucket is only $12.99 (All prices at participating locations for a limited

time. Tax not included.).

KFC Announces Twist to Boneless Chicken

Jan 2 14

KFC announced twist to its Boneless chicken by offering it for a limited time in the brand's

signature Extra Crispy(TM) recipe. Extra Crispy Boneless will be available at KFC locations

nationwide through February 2. And KFC is offering more ways than ever for customers to enjoy

this crispy, crunchy variety -- expanding on snack, lunch and dinner options by offering Extra

Crispy Boneless in a Go Cup, 2-piece Combo or as part of a 10-piece Favorites Bucket.

Training/Support

A complete 8 week KFC training program is required covering basic brand training, leading a

shift and leading a restaurant. The training incorporates online training modules with hands on

practice with a certified training manager in a training restaurant. YUM! University offers a

complete curriculum of management and leadership courses for you and your team.

Performance Improvement Program and support are offered by each of the brands .

Qualifications

$1.5 million net worth and $750,000 in liquid assets. Passion for operations excellence and

team building. Must have a vision for multi-unit restaurant ownership and the financial

wherewithal to bring the vision to reality.

PRODUCT:

Product planning:

Their product is classified as consumer product as it has no intermediates. It also offers

specialty goods. The stock turnover of KFC is relatively high. The prices and quality of the

product is always compared. Their product includes Goods (Burgers, Chicky Meals etc) and

Services (cleanliness, quick service, parties, and meetings).

Product Strategy:

It was launched here as an innovative product. KFC has got one product line but later they

introduced products in the same line to protect their market share. New product ideas are

generated from: Customer services (comments cards) Gallops survey (mystery shoppers) They

have a Quality Assurance department that decides the new product innovation. Q.A.

department prepares screening of new ideas and product‘s feasibility report. This department

does the technical evaluation (whether it is practical to produce the new product or not). The

products are tested externally by offering trials to customers by giving them free samples. KFC

uses telemarketing, print media, billboards and most recently televised marketing for

promotion.

KFC adds a new product in its present assortment based on their competitors, product‘s

adequate demand, the satisfaction of key financial criteria and its compatibility with

environmental standards.

Product Mix strategies:

The product mix strategies are in relation to:

Competitors:

KFC has a head-on competition with McDonalds so wherever they place their products; KFC

goes there as well. Locally in Pakistan KFC face a close competition with the local brands like

AFC (Al-Baik Fried Chicken), Fried Chicks, Dixy Chicks etc which are producing more or less the

same product as KFC. Attributes: The brand KFC is so strong that it is the attribute itself.

Quality: KFC products are based on high quality and prices.

Product Mix Expansion and Contraction:

KFC keeps on modifying their product through line extension and other methodologies. Line

Extension is being done through introducing new meals offers. The alteration of existing

products is also done and this function is performed by the Quality Assurance department. The

department decides which product should be sold and when (seasonal products as rice and

soups offered in winters). Functional modification is also done by the Q.A. department to

introduce new recipes. Other than expansion contraction is also being dealt with as when the

new deals or offers are not sold as expected, Q.A. department contracts the previous offers and

introduces new offers.

Change in Product Positioning:

KFC products were first offered to upper socio-economic group. Later, introducing discounted

and lower price deals, they are now dealing in masses. So, KFC has traded down. In doing so

KFC has used the same brand name and same high quality product.

Product Branding, Packaging and Labeling: Brand Name: KFC Color: Red, white

Symbol: Colonel Harland Sander’s picture and KFC written with it. Master Brand: The brand

itself is so dominant, that it immediately comes in mind.

KFC Brand:

KFC's brand identity is the logo featuring Colonel Harland Sanders, one of the best-recognized

icons in the world. It is trademarked registered brand and is distinctive, adaptable to addition to

product line. It suggests something about product. It is legally protected and registered.

Brand Equity and Strategy:

The brand equity is very high as the value added by brand to the product effects the product

selling. And the Brand strategy followed is that the KFC is marketing the entire output under

products own brand. Pepsi and Nescafe are the complementary brands associated with KFC.

Packaging Strategy:

KFC makes its own disposable packaging. If they need promotion Pepsi contributes in improving

the packaging quality. KFC does family packaging. They use paper material for packaging to

avoid health hazards and environmental pollution.

Labeling:

KFC does brand labeling. Some of its products also have informational labels such as Halal,

Veggie Burgers and Chicky Meals.

PRICE:

In introduction stage KFC entered the market using market-skimming strategy. Their products

were high price and targeted only upper class. Gradually they trickle down focusing on the

middle class to penetrate the market. Also KFC follows one price strategy. Price is determined

according to the rates of the raw materials and policies of the Govt. The political and legal

forces often affect the policies of KFC and eventually results in change of prices that is due to

imposing of taxes.

PLACE:

Distribution Channel: KFC has only one channel of distribution i.e. direct where the goods are

transferred to the consumer directly. KFC has no middlemen. Distribution of Consumer Goods

and Services: KFC does distribution of consumer goods directly to the consumer. It also does

distribution of services to the consumer like parking, sitting, home delivery, etc. KFC does

intensive distribution on its outlets. (All and everything on every outlet). KFC gets Wheels! KFC

launched its first mobile unit, which took the streets of Karachi by storm. The mobile unit has

been designed to cater to the needs of those who are on the go, and have little time to stop by

at a restaurant. It also provides a unique convenience of enjoying the delicious KFC offering

anytime, anywhere, thus making fast food truly fast and convenient. It intends to further

develop its mobile network nationwide through more such units.

PROMOTION:

The logo features Colonel Harland Sanders that is one of the best logo in the world has created

its name as a standard in the market. Today the Colonel‘s Spirit and heritage are reflected in

KFC‘s brand identity.

KFC by its advertisements derives the desire in the customer to come and enjoy healthy food in

their favorite restaurant. They spend 2% of its profits on advertisement. They use print media

and most recently doing televised marketing to promote it products. Their advertising media

involve: Newspapers, Pamphlets, Billboards and Television. KFC does both the primary demand

Advertising (―Become a Chicken Fanatic‖) and the selective demand advertising (e.g. ―Zinger

Meal‖). In its advertising it give informative messages like ―Keep the city Clean‖. KFC does

institutional advertising to stimulate demand. When KFC offers new products then it does

product advertising. KFC‘s ad‘s act as counteracts which means to drive the customer to KFC i.e.

it uses pull advertising strategy. They also provide wit the key chains, watches, bags, tee-shirts

etc. to its customers with the purchase of different meals as a part of their promotional

activities. They also provide with certain midnight packages, birthday packages and lot more.

KFC has put big hoardings on the busy areas of Pakistan and have an effective advertisement

campaign on the media in order to motivate its customers. The colors used in advertising are

Red, White and blue which itself is recognition for the brand. KFC have joint sale promotions

with different companies like HP, Philips, Value Meals, Pepsi-Cola. And most recently with ARY

Gold digital and World Call Internet services. Also KFC Proud Partners are Del Monte, Culligan,

Shan and Peek Freans (EBM). PSO had made a scheme in which PSO had given the coupons of

KFC having 10% off. (1 coupon was given after each purchase of 10 liters of petrol)

KFC in its advertisements says;

“Nobody does chicken like KFC”

“We do chicken right”

Hence, focuses on product advertising. KFC does mass selling in order to reach its target market

(as it has trickle down). KFC in its ads try to convert people to people who eat boring bland fast

food over to KFC. The message conveyed in the ads is recognition for the brand. KFC does

competitive advertisement with its head on competition with McDonalds. Regarding this KFC

uses Pricing below competition strategy.

KFC sponsor‘s many NGO‘s and other social welfare organizations. They also offer different

deals according to the season and occasions.

KFC as a market leader:

It has covered 80% of the market share in fast food industry KFC has recognition around the

world and has been globally positioned for many years in Pakistan and to capture the market

share in Pakistan adopts champs philosophy. Strategic Planning is the process of developing and

maintaining a strategic fit between the organizational goals, capabilities and its changing

marketing opportunities and is done by KFC in a well defined manner. Strategic planning sets

the stage for the rest of the planning in the firm. KFC is looking that how much its current

strategies are beneficial for them. Although these are good and profitable but dynamic changes

in environment are requiring identifying the attractive Opportunities.

That is the reason that they are expanding their market size by focusing on sub urban areas and

targeting middle class people by providing them differentiated products at a fair price. They are

opening their new mobile outlets in there potent ional markets. KFC is also going to increase its

sweet dishes to avail the opportunity available for them. KFC in a Growing Market: The market

of KFC is increasing day by day. Being a food market it is always considered in a growing market

because it increases continually with the population. Their growth is continuously increasing

and if they want to be a leader, they have to develop a strategy which is predominantly a

market expansion strategy and in this way they will not lose their leadership. It has greatly

increased their market share in Pakistan by following different strategies that may be regarding

their products, prices, placement or promotions. They have been following the strategies for

market expansion by targeting the new users of the product, describing the new uses of the

product and by showing them more usage of the product.

S.W.O.T ANALYSIS

The S.W.O.T analysis includes the strengths, weaknesses, opportunities and threats faced by

KFC . These all are described in detail as under:

Strengths: It is the oldest and finest in Business having a high Goodwill. It does not have any Core

competitor in chicken serving. They have a large Number of Outlets at prime locations . They

serve variety of items under single menu. They are successful in maintaining their loyal

customers. It has an incentive of being a Multinational Organization e.g. economies of scale,

government incentives etc.

Weaknesses:

Business activities are being carried out. KFC has handled this situation its major weakness in

the presence of Multinational competitors in the market e.g. McDonalds (specialized not in

chicken serving but in burgers) and the other weakness faced by KFC is the imported raw

material which usually rise their prime cost.

Opportunities: The opportunities are the cheap and easy availability of labor. The increase consumption of fast

food has increased the market size of KFC. As the consumer usually prefer ―All under one

roof‖, therefore, in order to increase their sales turnover they can increase or add the served

items.

Threats:

The threats faced by KFC are the entrance of many new competitors into the market that may

be local or international brands.

PEST ANALYSIS

The Pest Analysis includes the political, economical, socio-culture and technological factors.

These are described in detail as under:

Political Factors:

The political factors includes the government policies as KFC being a foreign company, but they

have to obey the policies of the Government laid by the government of Pakistan, the country

where the very tactfully and has obeyed the policies of the Government as prescribe by the

government in order to run this kind of business. The other major factor is the pricing policies.

KFC maintain & design its price policies keeping in view the income & income distribution of the

people living in the country. That‘s why all the classes are the target market of KFC. And the

most important factor is the political instability. As in Pakistan, there are political crises faced by

the government, these greatly affect the business of KFC.

Economical Factors:

The economic factors includes the income of the people, KFC is going to target. Income is an

important economical factor of the KFC. This factor decides which class KFC is going to target .

In the early time of KFC, they were focusing on the upper class but they after some time

changed their strategies and started to target the mass market by introducing some different

kinds of meals and offers through which we can say that they target the middle & the upper

level as well. The consumption behavior of the people plays an important role. KFC also

estimated the consumption behavior of the people, their liking and disliking and make decision

accordingly. Payment method is an important factor in the economical factor of the KFC. They

check the behavior of the regarding the payment methods of the people. They check whether

the gives money in the form of cash or plastic money.

Technological Factors:

The technological factors include the Pace of change at a fast level. KFC has strategy to

introduce new technology whenever they think that it is a time to introduce new technology.

Research & Development is also an important factor in the Technological factor. KFC always

support the work of research & development in order to introduce the new technology. Capital

formation means stock of machinery. KFC has a stock of machinery in order to run its business

activities. In other words KFC has a good amount of Capital Formation.

UNITED STATES

KFC Yum! Center in Louisville, Kentucky

Advertising played a key role at KFC after it was sold by Sanders, and the company began to

advertise on US television with a budget of US$4 million in 1966.

In order to fund nationwide advertising campaigns, the Kentucky Fried Chicken Advertising Co-

Op was established, giving franchisees ten votes and the company three when deciding on

budgets and campaigns. In 1969, KFC hired its first national advertising agency, Leo Burnett.

A notable Burnett campaign in 1972 was the "Get a bucket of chicken, have a barrel of fun"

jingle, performed by Barry Manilow.

By 1976 KFC was one of the largest advertisers in the US.

Young & Rubicam (Y&R) was KFC's agency of record in the US from 1976 until December 2000.

From 1978 to 1980 "It's nice to feel so good about a meal" was the slogan.

It was chosen because KFC had identified consumer guilt as its core marketing obstacle.

Meanwhile, KFC hired the Mingo-Jones agency to target African American audiences.

Mingo-Jones coined the "We do chicken right" slogan, which was later adopted across the

whole chain from 1981 until 1990.

"Nobody's cooking like today's KFC" was used from December 1990 until March 1991.

From 1991 to 1994, the television campaign focused on the fictional town of Lake Edna.

When he took over the CEO role at KFC, David Novak ended the campaign, which he derided as

"hokey."

The campaign was replaced by one with the tagline, "Everybody needs a little KFC," which

Novak credited with helping to boost sales at the company.

CHINA

KFC is the largest restaurant chain in China, with 4,563 outlets. KFC became the first Western

fast food company in China after its first outlet opened in Qianmen, Beijing, in November 1987.

Local food items include rice congee and tree fungus salad, with an average of 50 different

menu items per store. In December 2012, the chain faced allegations that some of its suppliers

injected antiviral drugs and growth hormones into poultry in ways that violated food safety

regulations. This resulted in the chain severing its relationship with 100 suppliers, and agreeing

to "actively co-operate" with a government investigation into its use of antibiotics. KFC China

sales in January 2013 were down 41 percent against the previous year . To counter sluggish

sales, the menu was revamped in 2014.

JAPAN

Japan is the third-largest market for KFC after China and the United States with 1,200 outlets.

In Japan, 70 percent of sales are takeout, with customers tending to buy fried chicken for

parties and other special occasions and eating it as a side dish.

KFC Japan was originally formed as a joint venture between the American parent and the

Japanese Mitsubishi Corporation.

After four years of negotiations, Mitsubishi was awarded the franchise rights to KFC in Japan,

and a test store was opened at the Osaka World Expo in March 1970.

After the début proved to be a success, the first store proper was opened in the suburban

location of Nagoya in November 1970.

The American parent wanted suburban locations, whereas Mitsubishi had argued for city

centre locations, as the car had not been widely adopted in Japan at that time.

Two more locations were opened in Osaka, but the stores struggled, and after less than a year

operations had lost JP¥ 100 million.

As a result of this failure, Mitsubishi's original plan for urban locations was pursued.

The first new strategy store opened in Kobe in 1972, an up market residential area with a large

Western expatriate community.

The new strategy was a success, and by December 1973, 100 outlets had been opened.

In December 1974, KFC Japan began to promote fried chicken as a Christmas meal.

Eating KFC as a Christmas time meal has since become a widely practiced custom in Japan.

Harland Sanders himself visited the Japanese operations in 1972, 1978 and 1980.

In August 1990, KFC Japan was listed on the Tokyo Stock Exchange.

KFC had benefited from the economic boom in Japan during the 1980s, but a rapid expansion

of outlets saw franchisees taking market share from each other, and around 100 outlets were

closed down in the mid-1990s.

In 2000, KFC Japan reported sales of nearly $598 million.

In December 2007, Mitsubishi assumed majority control of KFC Japan in a JP¥ 14.83 billion

transaction.

UNITED KINGDOM

A KFC Outlet in London

As of December 2013, there were 784 KFC outlets in the United Kingdom. About 70 percent of

outlets are run by franchisees, with the remainder company owned.

The company employs 24,000 people.

Around 400 sites are drive-through outlets.

Average outlet turnover is between £1 and £1.5 million.

Annual sales amount to 60,000 metric tonnes of chicken, 60 percent of which is purchased

from the four largest suppliers in the UK, including Faccenda Group

and 2 Sisters Food Group, and delivered fresh to outlets at least three times a week .

The remaining 40 percent is sourced from companies in Europe, Thailand (including Charoen

Pokphand Foods) and Brazil.

All of the Original Recipe chicken is sourced within the UK .

England had the first overseas branch of KFC which opened in Preston in the North West in May

1965, and was the first American fast food restaurant chain in the country, pre-dating the

arrival of McDonald's, Burger King and Pizza Hut by almost a decade.

The first London branch opened in North Finchley in November 1968.

In 1971 there were 31 outlets; by 1975 the chain had grown to 250 outlets.

In the late 1970s and throughout the 1980s, KFCs began to introduce seating. KFC opened its

first drive through restaurant in the UK in 1984.

By 1987 the company had almost 400 outlets.

In 2006, the company stopped pre-salting its fries and removed transfats from its products.

In 2012 palm oil was replaced by rapeseed oil in the fryers.

Between 2004 and 2014, KFC UK increased its offering of "portable" foods: burgers, wraps and

salads.

During that period, sales rose from around £500 million to almost £1 billion.

In 2012, KFC UK invested £9 million to install ovens in all of its outlets, so that it could offer

griddled chicken.

In 2013, KFC rolled out Lavazza coffee across all of its UK outlets.

AUSTRALIA AND

NEW ZEALAND

There are over 600 KFC outlets in Australia, and around 100 in New Zealand.

KFC was the first American style fast food chain to open in both countries. In 2013, KFC

reported an annual turnover of almost A$2 billion for its Australia and New Zealand operations.

Yum! Directly operates 160 KFC outlets in Australia.

The largest of the 53 independent franchisees in Australia is Collins Foods, which operates 169

stores. KFC's major poultry suppliers in Australia are Inghams, Steggles and Turi Foods.

The first Australian KFC was opened in 1968 in Guildford, a suburb of Sydney.

The franchise was owned by a Canadian entrepreneur called Bob Lapointe.

Between 1970 and 1971, 75 outlets were opened.

This had a major impact on Australian chicken production, which increased by 38 percent

during the period.

By 1995 there were 452 outlets, and the company employed 12,000 staff .

That year, Australia produced 35 percent of KFC's international earnings.

The first KFC opened in New Zealand in 1971 at Royal Oak, a suburb of Auckland.

In 1989, PepsiCo acquired the 50 percent stake in KFC New Zealand that it did not already own

from the local Goodman Fielder conglomerate.

In 1991 New Zealand turnover topped NZ$100 million for the first time

INDIA

In December 2013, there were 361 KFC outlets in India.

As well as the standard KFC offerings, the chain sells a chickpea burger, a paneer burger, hot

wings with chilli lemon sprinkles and other country-specific products.

A major franchise holder is QSR Brands (M) Holdings, which operated 26 outlets as of 2012.

The first Indian KFC was a two-storey outlet on the fashionable Brigade Road in Bangalore in

June 1995.

According to journalist Michael White, the company could not have chosen a "more difficult

venue for its maiden entrée into the country."

Bangalore housed the headquarters of the Karnataka Rajya Raitha Sangha, one of the most

influential, vocal and anti-foreign investment farmers' associations in the country.

The first outlet suffered protests from left wing, anti-globalization and environmental

campaigners, as well as local farmers, who objected to the chain bypass ing local producers.

Many Indians were concerned about the onslaught of consumerism, the loss of national self -

sufficiency, and the disruption of indigenous traditions.

The protests came to a head in August 1995, when the Bangalore outlet was repeatedly

ransacked.

The KFC outlet in Bangalore demanded, and received, a police van permanently parked

outside for a year The outlet was closed on September 13, 1995 by local authorities, who

claimed the company used illegally high amounts of monosodium glutamate (MSG) in its food.

However, the outlet reopened for business within six hours of its closure, after the Karnataka

High Court blocked the local authorities' order on an appeal by KFC. The company had argued

that it prepared food in India using the same formula as in 77 other countries.

A second outlet opened in Delhi, but was closed by the authorities throughout November,

purportedly for health reasons, but more likely to avoid a repetition of the Bangalore incident.

The Delhi outlet soon closed permanently.

KFC began to expand outside of Bangalore in 2004, with a localized menu that was the most

extensive meat-free menu across the chain's worldwide operations. It introduced a vegetarian

menu that included rice meals, wraps and side dishes and, like McDonald's, served eggless

mayonnaise and sauces. Unnat Varma, marketing director of KFC India, states "The vegetarian

offerings have made the brand more relevant to a larger section of consumers and that is

necessary for KFC's growth." KFC also began using Indian spices and cooking techniques to

localize its chicken dishes. By 2008-09, KFC operated 34 outlets in India.

In 2014, KFC launched the "So Veg, So Good" menu as part of an India-specific promotional

strategy focused on enhancing their vegetarian range. Dhruv Kaul, marketing director of KFC

India, stated, "The So Veg, So Good menu launch does not mean that we are moving away from

our core chicken offerings. It enhances and strengthens our existing vegetarian range and helps

broaden the brand's relevance in a diverse country such as India".

INDONESIA

In Indonesia KFC is the largest Western restaurant chain, with 466 outlets as of December 2013.

The chain has grown to hold an estimated 32 percent market share, and menu items include

spaghetti, wraps and chicken porridge.

The master franchisee is PT Fast-food Indonesia.

The first outlet opened in Jakarta in 1979.

Salim Group, Indonesia's largest conglomerate, became a major shareholder in 1990, which

provided the company with funds for major expansion.

DEVELOPING MARKETS

KFC continues to grow in Asia. In Malaysia there were 579 outlets as of December 2013.

KFC first entered the Middle East and North Africa (MENA) market in the early 1970s. There are

over 500 outlets in the MENA region.

It purchases most of its poultry from Sadia of Brazil.

In 2012, KFC operated 577 restaurants across 36 countries in the Caribbean and Latin America

region.

The company hopes to expand its African operations, where it is already the regional leader

among US fast food chains.

The company is slowly expanding across the African continent, opening 70 outlets, but

progress has been hampered by sourcing issues, such as a lack of quality suppliers.

RECCOMENDATIONS KFC is a market leader in providing Fried chicken. As KFC, so it is competing with the dominant

market signs like pizza hut, McDonalds. N its product category, it is doing really well but they

need improvements in their hot menu. They should also make their menu dynamic, by

introducing new meals after certain period of time. New items should be introduced by varying

the taste. They should also try the local taste addressing the local food lovers, thus it will help

to increase their market share. The prices of KFC are reasonable as compared with other fast

food restaurants. But as price is always a primary concern for the customer, therefore, they

should adopt certain strategy to attract the customers. And it can only be done by lowering the

prices. It could be by introducing some discount packages for families, employees, students or

regular customers. The membership card can be used to provide certain extra value to the

customer. AS far as placement of the products is concerned, it is an important factor, for a

company to increase its market share, by targeting the right customer. KFC needs to have more

outlets, at commercial areas. It will help to target the actual as well as the potential customers.

Mobile outlets may be an effective addition as well. KFC has large customer equity, but being a

market symbol, a company should strive for having more actual customers. KFC should work for

having more solid marketing departments. They should organize and run the proper

advertisement campaign. It would definitely be an incremental factor for their sales. They can

also use the brand promotions. They can set up the promotional campaigns. All they need is an

effective marketing department to facilitate the promotional activities.

BIBLIOGRAPHY Reference Books, Journals, Newspapers, Websites, Reports,

Examples as how to write are given below: Books: Kotler

Philips,

Marketing Management: Analysis, Planning Implementation

& Control 9th Edition 1998, Prentice Hall of India Ltd., New

Delhi

Magazines, Journals & Newspapers: Name of article -

Business Today,

22 May, 2007 Name of article - The Times of India, Mumbai,

Internet: www.webindia.com

www.crm.com/papers/php.htm

www.google.com

www.yum.com

www.kfc.co.in