KENTUCKY FRIED CHICKEN AND

GLOBAL FAST FOOD INDUSTRY

PRESENTED TO: PRESENTED BY:
BABER KHAIRI RABEEKA KHAN ALI
BASIT JAWED
MOHAMMAD FARAZ
ARSALAN MALIK
AMINA SHEIKH
FARIYA NISAR
KENTUCKY FRIED CHICKEN AND GLOBAL FAST
FOOD INDUSTRY
In 1952, Harland Sanders began his travel around the United States
to find prospects franchisees for its Unique Chicken Recipe.

By 1960, Colonel Sanders had granted KFC franchises to more than
200 take home retail outlets and restaurants across United States

In the year 1963, KFC franchises touch the mark of 300 with the
revenue of $500 million.

On Sanders 74 birthday he was eager to lessen down the load of his
business, so he sold his business to two louisville businessman Jack
Messey and John Young brown Jr. for $2 million.

By the late 1960s KFC turned its attention to the Global Markets and
joined hands with Mitsuoishi Shoji Kaisha, ltd that enabled them
operation in England and Japan
Heublein, I nc:
In 1971, Heublein were in negotiations with the KFC
Heublein was in the business of Producing vodka, mixed cocktails
and other alcoholic beverages
Conflicts started between the managements
By 1977, new restaurant opening was lowered to 20, remodeling of
restaurants started as the services standards fell drastically.
This strategy enabled KFC to gain better control of the existing
franchises and then expand
R.J . Reynolds I ndustries, I nc.
In 1982, R.J Reynolds Industries acquired Heublein
This acquisition for a part of their corporate strategy of
diversification.
R.J Reynolds believed the KFC management were well versed to
manage this business hence they had no interferences, which avoided
various operating problems of KFC
In 1985, RJR acquired Nabisco Corporation and sold KFC to Pepsi
Co one year later
PEPSI CO PROFILE
Pepsi Co, Inc was formed in 1965 with a merger of Pepsi Co. and Frito-
lays, Inc.
Business lines
Soft drinks
Pepsi Cola
Diet Pepsi
Mountain Dew
Snacks
Lays Potato Chips
Doritos tortilla
Tostitos tortilla chips
Ruffles Potato Chips
RESTAUTRANT BUSINESS AND AQUASITION OF
KFC
Why did PepsiCo entered the Restaurant Industry?
Because,
Same Patterns of Marketing
Additional venue for the Sale of the Pepsi Co brands (Soft drinks)
Management Skills could be transferred and will be compatible in
these business.
So the acquisition initiated,
1977: Pizza Hut
1978: Taco Bell
1986: KFC
This acquisition gave them the leading market share in all the
segments.
HUMAN RESOURSE RESTRUCTING
It was a collision between two different cultures.
PepsiCo: Performance Oriented
KFC: Laidback and Loyalist
Harsh Comments were exchanged between the managements.
Two massive downsizings.
Immense Pressure on KFC management and employees
POOR RELATION WITH FRANCHISE
In 1989, John Cranor was appointed the President and CEO of KFC.
John Cranor in the same year addressed the Franchisees to explain
the details of new franchising contract. These were:
PepsiCo can takeover the weak franchises
Relocate Restaurants
Existing KFC outlets will not be protected against
competition from new outlets.
PepsiCo will have a right to increase royalty fees
This address of the Cranor backfired and resulted in the Protest of the
franchisees.
However in 1996, the most object able parts were removed by KFCs
new president David Novak.
A new contract was ratified by KFCs Franchisees in 1997.
PEPSI CO DIVESTITURE
Between 1990 and 1996, PepsiCo sale grew by 10% surpassing $31
billion.
However troubles were faced in the fast food segment where the
margin reduced from 8% to 4% in 1996.
As a result, PepsiCo food division absorbed half of the companys
capital
spending and generated one-third of the cash flows, declining its
ROA and stock price as compared to competitor Coca Cola.
In 1997 PepsiCo decided to forward its restaurant business to a new
company called Tricon Global Restaurant.
PepsiCos objective was to reposition itself as a soft drinkand snack
brand.
Later PepsiCo acquired Tropicana Products.
By the divestiture of Pizza Hut, KFC and Taco Bell sales fell down
by $11.3 billion and asset fell by $7 billion.
CHICKEN INDUSTRY
KFC is the market leader in the Chicken Industry with the Market
Share of 55.2% and sales of $ 4.4 billion in 1999.
However it has witnessed a decline of 15% in the last 10 years.
The competitors like Chick-Fil-A and Boston market increased
combined market share by 17%.
It was assumed that KFC will face competition from Boston Market
but the company filed bankruptcy due to mounted debt problem.
KFC Future Strategies
Drive aggressive international expansion and build strong brands
everywhere
Dramatically improve U.S. brand positions, consistency and returns
Drive industry-leading, long-term shareholder and franchisee value
KFC CURRENT STRATEGY
Marketing Strategy
In 1990, they focused on three types of Chicken: Fried, Extra Crispy,
and Tender Roast.
Launch of Buffet
Launch of Crispy Strips and Chicken Sandwich
Drive through and delivery points at nearby locations
Introduction of 2 in 1 and 3 in 1 restaurants
Major objective
Product development
Introduction on the Neighborhood Program
Expansion of franchise operation beyond Central America
Continued promotion of healthier image through removal of the word
"fried" from the name
Improve menu selection of rotisserie
Major issue
Low profitability and high risk of doing business
Minor issue
No defined target market.
Saturation of the U.S. Market.
Health Conscious Consumers.
Increased Start Up Costs.