KFC’s Operation Strategies

By- Palash Goyal

2014MBA-15

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 Introduction
• Based in Louisville, KFC Corporation is the
franchisor of the world's most popular chicken
restaurant chain.
• KFC has been serving customers complete,
freshly prepared, family meals since Colonel
Harland Sanders founded the concept in 1952.
• There are more than 18,000 KFC outlets in 118
countries and territories around the world.
• There were 395 KFC outlets in India as of
December ,2014 and was also aimed to have 500
outlets by 2015 year end.
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 VISION AND MISSION

VISION:
To be leading integrated food services group
in ASEAN region delivering consistent
quality products and excellent customer focused

MISSION:
To maximize profitability, improve shareholder
value and deliver sustainable growth year
after year.

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 Logo

Tag Line

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Products of KFC

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 SWOT Analysis
Strengths Weakness

•World's second largest restaurant chain.
•Famous for its Original Recipe® fried
chicken, made with secret blend of 11
herbs and spices.
•Well recognized brand logo.
•Market leader in the world among
companies featuring chicken as their
primary product.
Opportunities
•Most KFC items have close substitutes in
market.
• Unhealthy food menu.
•Increase in food price (unaffordable by
middle class people).
• Having very few own activities in KFC
franchisees (copying other ides).
Threats

•Cross culture: There is a good acceptance •Saturated fast food markets in developed
of American culture of fast food in economies.
India. • Competition from McDonalds,(world’s
• Increased 18-25 age group. largest restaurant chain) and from other
•Increasing trends to take meal out of players.
homes. •High calorie food.
•Venture
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•Bird flu. 7
 Michel Porter Analysis
Buyer Power
• Large number of buyers (+).
• Switching cost is low(+), because
there are other fast food
restaurants (McDonalds, burger
king etc)that are offered more
affordable price.
• KFC started decreasing their
prices & offering discount to
attract customer back.(-)
• Buyers are able to influence the
price , as they are having many
choices.(+)
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Supplier Power
• Large no. of suppliers are available
for KFC’s raw material.(-)
• Switching cost is high, as
suppliers can’t switch easily
because there are others suppliers(
big suppliers, local market) too in
the market, supplying to
competitors of KFC.(-)
• KFC also terminated contract with
the supplier , as suppliers are
found doing something horrible
with the raw chicken. So KFC
decided to replace its supplier.(-)
8
Cont..

Threat of New entrants Threat of Substitute

Products
• Easy to enter the
market, as large no. of • Substitute are available
suppliers & resources in the market, offering
are available.(+) chicken product same
• Low entry barriers.(+) as KFC.(+)
• New entrants may • Substitutes available at
attract the existing lower price.(+)
customer of KFC.(+)

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Cont..

The Rivalry among the existing firm in the

Industry
• There are too many big giants in the market
like McDonalds, Burger king, Dominos, Pizza
hut etc. (+)
• McDonalds is giving a huge competition to
KFC, as the prices of McDonalds is
comparatively lower than KFC and more
varieties in menu card of McDonalds is
available.(+)
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STRATEGIC MAP

Service

No. of outlets

Price

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Extensive Menu
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 Order winners and Order qualifiers
Order winners and order qualifiers are the competitive features
of any organization that the customers examine before making
a purchase. So it is necessary for a company to analyse the
same.

Order Winners Potential Order loss Order qualifiers

•Unique taste of chicken. •Poor quality of food. •Quality of the food.
•Regional Menu. •High cost than the •Taste of the food.
•Dependable supply. competitors. •Take away.
•Restaurant location. •High lead time. •Lead time
•Opening/Closing time •Poor customer service. •Hygiene.
•Wide range of veg & non- • unethical.
veg items.

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 Delights

• Adding value to customer experience is

considered to be very significant component
in today’s business.

• Delights are novel and also adds value to the

customers there by improving customer
satisfaction.

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Cont..

KFC’s Order winners, qualifiers and delights

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 The four -stage model of operation
contribution

5/26/2016 The four stage model of operations contribution applied to KFC 16

 Supply Chain Management of KFC

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Cont..

KFC has a very simple supply chain. As the operations are on a relatively
small scale, all the operations are performed by the company (i.e. Cupola)
itself. The supply chain process can be summed up as a 3 step process:

Step 1:
Raw materials procured from various suppliers and stored at two
warehouses; the normal-storage and the cold-storage.

Step 2:
All product preparation is done at the branch except for the marination of
chicken and sold to customers at the branch itself or delivered at
the desired locations.

Step 3:
Warehouses replenish each branch according to their requirement (usually
three times a week)using company’s own vehicles and drivers upon the
request of the branch manage
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 STORAGE AND INVENTORY
MANAGEMENT
Chicken
Inventory of chicken is for 15 days. The storage area for
chicken is not in the warehouse itself but in a separate cold
storage area built right beside the warehouse in each region.
Before marinating, the chicken is stored in an organized form
in six separate cold storage rooms whose area is around 45 to
50 square feet, having a height of around 7 feet. The chicken is
stored in the same baskets which it comes in and stays there
till its turn for marinating .Marination is done in a separate
room in the same cold storage facility where the chicken is
first washed and mixed with the herbs and spices it needs. The
mixture is fed into a machine known as ‘Tumbler’ which
marinates it. After this is done the chicken is re packed into
labeled clear storage room again in organized form.

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 Assembly Line

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 Store Layout & Location

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 Cont..

Factors kept in mind while

Facility location analysis:

•Proximity to Customers.
•Business Climate.
•Total Costs.
•Infrastructure.
•Quality of Labor.
•Host Community.

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 KFC vs McDonald’s

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 Value Chain

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 Value Chain of McDonald’s

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 COMPARISON/FAST FOOD KFC MCDONALD’S
RESTAURANT

SPECIALIZES FRIED CHICKEN HAMBURGER

ESTABLISHMENT 1890 1940

AMOUNT OF OUTLET IN 372 : dec,2015 250+

INDIA

TOTAL OUTLETS 15000: dec,2015 36525: dec,2015

COUNTRIES 120 119

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 COMPARISON/FAST FOOD KFC MCDONALDS
ERSTAURANT

WIFI AVAILABLE AVAILABLE

DRIVE-THRU AVAILABLE AVAILABLE

SERVICE DELIVERY SYSTEM AVAILABLE AVAILABLE

THEME (COLOURS) RED & WHITE RED & YELLOW

FIRST OUTLET IN INDIA BRIGADE ROAD IN BASANT LOK IN NEW

BANGLORE DELHI

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 KFC Menu

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 McDonald’s Menu

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 Conclusion

•KFC is second largest fast food chain after McDonald’s,

prices of KFC are high and it targets to middle and upper
class people , where as McDonald’s targets to all class
people because of their low prices.

•KFC is specialized in chicken and till now no one can

beat it in chicken.

•To be the market leader KFC has to lower its price and
should widen its menu card in terms of variety of
choices as McDonald's have.

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