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KFC’s Operation Strategies

By- Palash Goyal2014MBA-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: 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.

VISION AND MISSION

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Logo

Tag Line

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Products of KFC

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Strategic Position

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SWOT AnalysisStrengths

•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.

Weakness

•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).

Opportunities

•Cross culture: There is a good acceptance of American culture of fast food in India.• Increased 18-25 age group.•Increasing trends to take meal out of homes.•Venture into newer markets.

Threats

•Saturated fast food markets in developed economies.• Competition from McDonalds,(world’s largest restaurant chain) and from other players.•High calorie food.•Bird flu.

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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.(+)

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.(-)

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Cont..

Threat of New entrants

• Easy to enter the market, as large no. of suppliers & resources are available.(+)

• Low entry barriers.(+)• New entrants may

attract the existing customer of KFC.(+)

Threat of SubstituteProducts

• Substitute are available in the market, offering chicken product same as KFC.(+)

• Substitutes available at lower price.(+)

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Cont..

The Rivalry among the existing firm in theIndustry• 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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Service

No. of outlets

Price

Extensive Menu

STRATEGIC MAP

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Operation Strategy

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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•Unique taste of chicken.•Regional Menu.•Dependable supply.•Restaurant location.•Opening/Closing time•Wide range of veg & non- veg items.

Potential Order loss•Poor quality of food.•High cost than the competitors.•High lead time.•Poor customer service.• unethical.

Order qualifiers•Quality of the food.•Taste of the food.•Take away.•Lead time•Hygiene.

KFC’s order winners and Order qualifiers

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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.

05/01/2023 15KFC’s Order winners, qualifiers and delights

Cont..

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The four -stage model of operation contribution

The four stage model of operations contribution applied to KFC

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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 RESTAURANT

KFC MCDONALD’S

SPECIALIZES FRIED CHICKEN HAMBURGER

ESTABLISHMENT 1890 1940

AMOUNT OF OUTLET IN INDIA

372 : dec,2015 250+

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

COUNTRIES 120 119

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COMPARISON/FAST FOOD ERSTAURANT

KFC MCDONALDS

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 BANGLORE

BASANT LOK IN NEW 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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