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KFCs e t t o g r o w a f r i c a n

A frica has been the next big thing for a long time. Sceptics say it will continue to be just that for many years to come.

However investment in Africa is growing. And with African markets booming, it looks like an increasingly attractive investment option.

“Africa is being democratified – Ghana is a great example – and good governance and good governments have been installed. Africa is now beginning to boom,” says Keith Warren, general manager of KFC’s African operations. “Chicken on the bone is the protein of choice in Africa,” the native South African, who doubles up as Managing Director Of Yum! Restaurants International, adds.

Yum! is well aware of the “African opportunity” and recently outlined plans to expand its KFC footprint in Africa from its current level of 655 restaurants to 2,100 a decade from now.

“Africa has vast potential,” says Warren.He stressed that the improved political

stability of various African governments, the region’s vast population and a growing middle class - as well as the fact that chicken is a dietary staple in Africa – has led Yum! to set its sights on the continent.

“The vast majority of KFC’s restaurants in Africa are in South Africa, but we are being more aggressive in opening new restaurants across the continent,” says Warren. “We currently operate in 10 African countries: South Africa, Nigeria, Lesotho, Namibia, Botswana, Swaziland, Mozambique, Egypt, Tunisia and Morocco.”

The first KFC in South Africa opened in 1971 and Yum! is accelerating development into Nigeria as well as launching into Ghana, Zambia, Malawi, Kenya, Tanzania, Angola, Senegal, Cameroon and the Democratic Republic of Congo, he explains. “More and more businesses are now moving into emerging markets as growth

KfC featUre

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Keith Warren, general Manager of Kfc’s africa operations, and

Managing Director of Yum! restaurants international, talks to ian armitage about Kfc’s success

in south africa, expansion plans and how the company is using the brand

to “improve the lives of others”.

in developed countries has slowed.” Warren points to examples like Wal-Mart

Stores Inc., which recently offered to buy 51 percent of South African retail giant Massmart Holdings Ltd., as evidence to support his claims. “Africa is attractive for Western brands,” he says. “People are now focusing on the emerging world and a lot of companies, especially Chinese ones, have invested in Africa.”

KFC has strong brand awareness in Africa. Of the roughly one billion people in Africa, Warren estimates it currently reaches 180 million.

The menus at African KFCs are similar to those in more developed markets, with the main difference being that there are more options for chicken pieces.

Warren says: “Africans stay away from processed foods. They want chicken on the bone.”

The great thing about the chain, he adds, is that it appeals to wealthier Africans as well as to people living on lower income levels.

The company sells four chicken wings for $1.20 and two chicken pieces with a portion of fries for $2.80.

“The combination of KFC being a global brand and it’s strength in Southern Africa has created a brand that is highly aspirational across Africa. People will save up to buy the $2.80 meal, even if only once every three months,” Warren says.

KFC sells chicken more cheaply in South Africa than most parts of the world because local labour costs are lower, he adds. “We appeal to wealthier Africans as well as to people living at a more modest income level,” Warren says. Yum! has 44 percent market share in South Africa and there are more than 600 KFCs in the country. It is South Africa’s biggest quick service restaurant brand.

It is hugely successful in South Africa and many of KFC’s staff training and development programmes, its environmental focus and promotion of

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KfC featUre

HuHtaMaKIWith over 90 years of history, Huhtamaki has a presence in over 30 countries and employs over 12,000 people worldwide. It strives to consistently provide unmatched expertise, operational excellence and innovative thinking - to help customers to sell more.

Huhtamaki is eco-savvy, concentrating on environmentally friendly raw materials and packaging technologies. Products are manufactured with the aim to protect natural resources, optimize process efficiency and to apply the best available techniques to reduce solid waste generation, effluent discharges and emissions.

Huhtamaki focuses on packaging for the food Service Industry, providing sustainably developed packaging – representing some of the world’s most renowned brands, such as KfC.

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healthier diets, and its social responsibility initiatives, are the first of its kind in the country.

“The KFC brand is very strong,” Warren stresses. “We are seeing significant growth.

“Africa over the next 10 to 20 years will have massive potential.”

KFC plans to invest about $500 million in its African expansion. But, the expansion will present plenty of challenges. In some countries, KFC imports its chicken from South Africa and Brazil. But there is still “a lot of protectionism in Africa,” Warren stresses. “In Nigeria and East Africa, imports of chicken are banned,” he says.

In those places, KFC has been working with local suppliers to ensure the quality and safety of their chicken meets the company’s high specifications.

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KfC featUre

All said, its growth plan is ambitious. “We are planning to open 20 KFC outlets in Nigeria in 2011,” says Warren. “We’ve got seven stores there now and we are going to build 20 next year.”

Yum! forecasts that it will have 300 KFC restaurants in Nigeria by 2020.

“We opened our first Nigerian KFC restaurant in December 2009,” Warren says. “Why Nigeria? Well, 160 million people, eating chicken on the bone, as their primary protein, has to be a good thing.

“Of course the poor infrastructure and bureaucracy as well as finding good partners are challenges.”

KFC in Nigeria is currently a joint venture between an existing Indian franchisee of the company (Devyani International Limited (DIL)) and a local Nigerian.

RAIB000326_KFC Africa_ad_3.indd 1 2011/02/16 11:40 AM

“Nigeria is just one of many countries,” Warren says.

KFC’s expansion can have positive effects for local industry players, he adds, citing the example of Rainbow Chicken in South Africa. “They’ve grown as we have grown in South Africa. They’ve built their business on KFC and we account for about 25 percent of their business.”

Growth will also be achieved in South Africa, where KFC is planning to open some 200 new restaurants in the next five years.

“South Africa enjoys one of the highest levels of penetration per population anywhere in the world,” Warren says. “If we look at the US, KFC has a penetration of 17 restaurants per million of the consuming population. Our penetration in South Africa is 36 restaurants per million of the consuming population. That is largely driven by brand strength, but as I said earlier, it also comes down to chicken on the bone being a valued source of protein and the ‘finger licking good’ taste of KFC.”

KFC is committed to Africa. Its Add Hope campaign is proof of this. By adding just R2 to your meal, you can help KFC feed vulnerable people, typically children, and make a real difference.

“In 2007, KFC decided to put hope on its menu and made a long-term commitment to fight hunger by focusing on the most vulnerable members of our communities,” says Warren.

Add Hope is an independent, trusted organisation. KFC donates all the resources and marketing, so that every cent it raises goes towards feeding hungry children in South Africa.

“Add Hope has driven greater awareness and much needed continued support for the global problem of starvation,” Warren continues. “We have a number of grassroots, national and high-profile initiatives, which give us an opportunity to engage with our local communities, often with the enthusiastic involvement of our staff.

“Add Hope aims to do just that: we want to Add Hope to people and to communities.

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KfC featUre

HerMeS Since 1977 Hermes has produced high quality ice cream cones and sweets & soft serve ice cream powders. Constantly introducing new technologies and techniques into its manufacturing process makes Hermes products particularly profitable in terms of quality, innovation and cost. taste, crispiness and look has for years made Hermes the finest on the market. every Hermes product is made from the finest quality materials. It pays close attention to every detail. even in the fast-paced automated world of today, Hermes relies on personal attention to ensure quality and customer satisfaction.

Hermes’ reputation for quality, reliability and service has been achieved through excess of 34 years of experience within the ice cream cone industry and is confirmed by its many customers.

Hermes is a proud supplier of ice cream cones to KfC and we wish them every success in their endeavours.

HERMES CONE & SNACK MANUFACTURERS93 Rustenburg Road, Krugersdorp West, 1739, Gauteng, South Africa

Tel: +2711 953 3757 Fax: +2711 665 1620 email : dennis@cones.co.za

www.cones.co.za

Proud suppliers to KFC , wishing them success in all their endeavours!

P.O. Box 1830 | Durbanville | 7551 | South AfricaTel: +27(0)21 975 8905 | Fax: +27(0)21 975 9022

Supplying KFC with Pineapple Rings

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“We want to make a real difference in the lives of ordinary South Africans. This is a long-term commitment that we have undertaken as a brand. We are dedicated to raising funds at every possible opportunity and making a sustainable difference in the lives of the underprivileged.”

The KFC’s philosophies are adapted from the Yum! Dynasty Model, he says.

As well as Add Hope, KFC recently announced a new partnership with Cricket South Africa. The deal relates to mini-cricket, the entry point to the sport, and KFC has committed to a sponsorship programme of five years with the option of extending a further five years further down the line, Warren says.

“That’s right, KFC recently took over the reins of the mini-cricket programme,” he explains. “KFC is committed to cricket from the ground up.”

For more than two decades mini-cricket has been giving primary school children,

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KfC featUre

Established over thirty years ago, Lufi l Packaging boasts a proud record as one

of South Africa’s leading manufacturers of printed and plain paper bags and associated

packaging products.

Our Products and FeaturesPaper Bags

Flat Bags | Boutique Bags | Bakery Bags | S.O. Bags | Sjoppers | Duplex Bags Charcoal Instantlite | Satchells | Potato Bags

OptionsPrinting | Plain | Printed | Material | Virgin | Recyclable | Compostable

Wrapper TissueGreaseproof or Resilio Serviettes (1 or 2 ply)

Environmentally-friendly paper packagingEstablished thirty years ago, Lufi l Packaging manufactures a comprehensive range of environmentally-friendly paper packaging solutions in South Africa.

The company supplies a diverse range of industries from industrial and government to healthcare and pharmaceutical. The largest sector, however, is fast food where Lufi l is a market leader.

All Lufi l’s products can be supplied plain or printed, with customer-specifi c sizing and construction.

Lufi l also uses resilio paper , which provides an economical solution to the duplex bag to eliminate leaking. Resilio has a high grease and moisture resistance and was specifi cally developed to resist high-in-fat food products.

The added advantage of resilio is that it offers grease resistance plus the benefi ts of paper, being that the porosity of the paper means the food will not sweat.

In addition to its own range of products, Lufi l is also the local agent for Rapid Action Packaging (RAP). A major player in the British packaging sector, RAP boasts a customer list that includes the most prominent UK-based retailers and fast food operators.

RAP specialises in the design and manufacture of innovative, cost effective and environmentally responsible packaging solutions and aims to maintain a leading edge in the market as a producer of designs that are ergonomic, economic, and environmentally responsible. Its wide range of packaging systems include fl exible food wraps, short-life and long-life carton sandwich wedges, fresh and long-life food trays and the Softpak fl ow wrapping lines.Made predominantly of paper they provide a greater surface area for branding which differentiates it from other traditional fi lm fl ow packs with labels applied.

©RICH PRODUCTS CORPORATION OF SOUTH AFRICA77 Earp Street, Ophirton, 2091PO Box 39286, Booysens, 2016, South Africa.Tel: 0860-0-RICHS | www.richs.com

Rich Products Corporation is known around the world as a pioneer in the frozen food

industry and a leading supplier and solutions provider to the food service, in-store bakery,

and retail marketplaces. Since 1945, the company’s history has been

marked by innovative breakthroughs, an unparalleled commitment to “Caring For Customers Like Only a Family Can™”.

Rich Products_QP.indd 2 16/2/11 12:13:11

from all walks of life, the opportunity to experience the game of cricket, learning basic skills from batting to bowling and fielding in an entertaining environment.

“KFC Mini-Cricket is more than just about the game; it’s an opportunity to teach children valuable life lessons and social skills such as teamwork and discipline, while promoting a balanced and active lifestyle,” Warren says. “It is all about reinforcing the principle that we are part of the, or aspire to be part of the, fabric of daily life for every South African. That means being part of things like cricket and being part of things like encouraging a responsible and balanced lifestyle, particularly amongst the youth. Naturally when you have blokes like AB De Villiers that came through mini cricket in their day, it is also about developing the talent of the future South African cricket team.”

Somewhere in fast-food heaven, Colonel Harland Sanders is smiling. eND

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55 Cape Road Port Elizabeth Eastern Cape, Port Elizabeth

Tel: 0860 100 222 Email: kfccustomercare@121group.co.za

www.kfc.co.za