Quality management in Kentucky Fried Chicken (KFC) Malaysia.

GRADUATE SCHOOL OF MANAGEMENT

(GSM)
MASTER OF MANAGEMENT (MOM)

TOTAL QUALITY MANAGEMENT (MGT 6650)

GROUP PROJECT: Quality management and

quality assurance in Kentucky fried chicken (KFC)
Malaysia.

PREPARED BY:
1.
2.
3.
4.
5.

Ahmed Bashir G1324933

Amina Zilic G1330318
Abdirizak
Mohamed Abdirahman G1413317
Kaci Farouk G1216741

Lecturer: Dr. Abdul Rahman

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

Table of Content

Titles

Page numbers

Introduction

Quality management system in KFC

Service quality management system in KFC

Quality assurance & control in KFC

Quality issues

Elaboration of quality issues in KFC

10

Recommendations

12

Elaboration of the recommendations points

12

Limitations

13

References

14

Introduction

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

KFC is a Malaysian institution, leading the fast-food market since late 1970s. In fact many in
Malaysia think of KFC as a local brand and not one from Kentucky. Since its launch the
brand has always enjoyed a youthful and forward-looking reputation. But in recent times,
with the aggressive approach of younger, urban, seemingly more exciting competitors, KFC
is losing its young consumers. KFC is the largest and most famous brand in quick service
restaurants of the fast food industry Malaysia. The firm opened its first outlets in Jalan Tungu
Abdul Rahman in 1973. Today the firm boasts 390 restaurants nationwide and controls 35%
market share of the fast food industry in Malaysia.
The next two tables will present the financial performance of KFC over 4 years (2011-2014)
and the financial highlight.

Revenue
Total Assets
Profit before

2011
2522.3
1838.2
215.5

2012
2798.8
1975.2
191.1

2013
3248.4
2141.1
199.7

2014
3482.4
2318.4
227.5

tax
Shareholders

1074.2

1167.2

1264.2

1374.9

equity
ROE
ROA

14.0%
8.4%

11.9%
7.0%

11.4%
6.7%

12.0%
7.1%

Table 1: KFC annual financial report (2011-2014)

Financial Highlights:
(RM million)

Revenue

2011
2798.8

2012
3025.0

2013
3248.4

2014
3482.4

Total Assets

1838.2

1975.2

2141.1

2318.4

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

Profit before
tax

215.5

191.1

199.7

227.5

Shareholders
equity
ROE

1074.2

1167.2

1264.2

1374.9

14.0%

11.9%

11.4%

12.0%

ROA

8.4%

7.0%

6.7%

7.1%

Table 2: KFC financial highlights

KFC revenue increased by 6.3% to RM 189.5 mil and profit before tax increased by 12% to
RM 27.8 mil in 2014 in cycle with the higher sales and improved margins. There were
numerous new restaurants added during the last 12 months which increased the store count to
608 restaurants at the end of December 2014. Safety and health services with new products
and promotions that were launched during the last period which effect positively on the sales
revenue. A generally improving retail environment, higher levels of advertising expenditure
and some successful promotions all contributed to the strongest sales improvement for the
brand in four years. High sales growth was achieved in spite of the challenging economic
environment and the rising costs of supplies, commodities and energy.
.

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

Total assets

Revenue

Profit before tax

A total asset was increased on the last years. The bulk of the increase has brought
significantly more control over supply chain and purchasing arrangements. In addition
property, plant and equipment increased with KFC transformation expenditure and also,
because of the expansion of the network of fast food stores including the establishment of the
new investments.
Return on total assets as a measure of how efficient the company employs the resources under
their control to generate income, as shown in the table, KFC has a positive return on assets
and equity because of its profitable operations and its capital structure

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

Quality management system in KFC

PERFORMANCE DIMENSION

DURABILITY DIMENSION

The grading of materials and

resources in KFC is
complying with performance
dimension as well as
friendliness & courtesy of
the sales personnel, officers,

KFC's Durability for their

processing machine (frying
machine, utensils, frozen
materials) are very important to
be kept, since it determines
their quality of maintaining their

AESTHETIC DIMENSION

PERCEIVED QUALITY
DIMENSION

The aesthetic dimension

consist how the layout
facility, outlets cleanliness,
interior design as well as the
food packaging in KFC

As known that KFC is ratified by

ISO 9000 because their
sustainable qualified quality of
product and services which they

RELIABILITY DIMENSION

SERVICE ABILITY DIMENSION

The reliability includes the

ability of KFC's machine to
be reliable into certain
periods (infrequency
of breakdown) and the
food services are well done
by right people

KFC's is considered as fast

handler of customer problem
about the service as well as
product complaints.

CONFORMANCE
DIMENSION

SPECIAL FEATURES
DIMENSION

This is the most

essential dimension for
KFC'scustomer since this is
tangibly measure the how
wellKFC's products &
services conform with
customer delight and

The special features are mostly

about KFC's additional product and
services which are offered by KFC
in fixed or seasonal period

Source: Stevenson, W.J. Operations Management: An Asian Perspective, 2012.

6

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

Service quality management system in KFC

CONVENIENCE
CRITERIA

RESPONSIVENESS
CRITERIA

COURTESY CRITERIA

TANGIBILITY CRITERIA

ASSURANCE CRITERIA

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

Quality assurance & control in KFC

Quality control is a process through which a business seeks to ensure that product quality is
maintained or improved and manufacturing errors are reduced or eliminated. Quality control
requires the business to create an environment in which both management and employees
strive for perfection. This is done by training personnel, creating benchmarks for product
quality, and testing products to check for statistically significant variations.

PRODUCT QUALITY
ANALYSIS
NutritionalQuality
CleanlinessQuality
Raw MaterialsQuality
Utensilsused Quality
Compliancewith
HalalFoundation

RESTAURANT QUALITYCHAMPS
Concept ofResto Quality
Cleanliness ofSanitation
and Facility
Friendlinessin Service
Management
Personal Hygiene and
Equipment
Maintenance and

SUPPLIER QUALITY
In-house
inspectionsand controlRawMaterials from
AyamasQuality
Compliance with JAKIM
Veterinarian HealthLogo
ISO 9001 Certification

FOOD SAFETYCONTROL
KFC HACCPProgram
Food
HazardPreventionPhysic
al,Biological and
Chemical
AspectControlling
Critical ControlPoint
Analysis
KFCDaily
operationchecklist

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

QUALITY ISSUES

CLEANLINESS QUALITY

CUSTOMER SERVICE
ASPECT

DELIVERY AND
LOGISTICS

FOOD QUALITY AND

HYGIENE

PEST CONTROL
MANAGEMENT

Quality management in Kentucky Fried Chicken (KFC) Malaysia.

CLEANLINESS
QUALITY

CUSTOMER
SERVICE
ASPECT

DELIVERY
AND
LOGISTICS

FOOD
QUALITY AND
HYGIENE

PEST
CONTROL
MANAGEMEN
T

-Below standards

-Every order takes 20

-High traffic jam

-Vegetarian or more

-Few cases reported

-Garbage

minutes while in

and tropical

health conscious

regarding

-Dirty floor, tables and

competitors the order

weather can cause

products

cockroaches

bathrooms

takes 5 minutes

the delivered food

-Purified oil

- Impolite and

to be dry and not in

inhospitable manner of

a good state

the staff
- Lack of passion for
serving KFC
management

Table 3: Explanation of quality issues in KFC

ELABORATION OF QUALITY ISSUES IN KFC

CLEANLINESS: Most KFC outlets have fallen way below the standards when it comes to
cleanlinessand is characterized by distinct distasteful smell rather than the aroma of freshly
friendchicken. This phenomenon is due to reasons pointed below:Garbage of the entire outlet
is thrown either right outside or very near the entrancetherefore causing repulsion in
customers entering the arena. KFC sees a high rate of customers every hour, with more guests
coming in for breakfast, lunch or dinner more will be the need to maintain the floors and the
bathrooms due to increased frequency of guests.

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Quality management in Kentucky Fried Chicken (KFC) Malaysia.

Most outlets cannot keep up with the equal rate of restaurant cleanliness when thenumber of
increase. Cloths used to clean the tables are greasy and unkempt with no glasscleaner or
appropriate substitute used to lighten the stench. Use of the same material over andover
makes the tables oily and installs a sense of apprehensiveness in the guest.
SERVICE ASPECT:Statistics have shown that every order takes 5 minutes to register and
another 15minutes before its carried on to the consumer while the competitors take 4.5
minutes to take the order to the customer. Employees face problems in understanding and
providing a basicorder within the time limit of what is considered appropriate. Also, many
guests havecomplained regarding the impolite and inhospitable manner of the staff and the
time taken toserve the guest when the order is not as asked or gets late. Employees are known
to show helpless attitude towards the regular guest problems. With the lack of passion for
serving KFCmanagement has a lot to work upon which must be enforced on following.
Manager does nottake appropriate measure to win over the customer in case a customer issue
arises.

FOOD QUALITY:As per the Quality assurance guide on the KFC page, KFC has been
ethically awareand health conscious when it comes to setting its food menu in Malaysia. They
have arrangeda balanced regime offering salads and rice with snack plates and 100plus kinds
of drinksrather than high carbonated soft drinks. However, with increased awareness
regarding healthyfood with least preservatives KFC often gets a demand for vegetarian or
more healthconscious products. There is an increasing demand for more purified oil and
addition of morehealthy variety to choose from.
DELIVERY:With the tropical weather in the region and high traffic jams during peak hours
KFCdelivery struggles to keep up with the hindrances and deliver not just the product in time
buthigh standards and goodwill with it.

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Quality management in Kentucky Fried Chicken (KFC) Malaysia.

PESTS:With all standards satisfactorily maintained within the outlet and every measure taken
to terminate pests there still have been a few cases reported regarding cockroaches. This isdue
to the external area around the outlet which however, affects KFCs reputation.

RECOMMENDATIONS

Quality management
program needs to be
more: systematic
and customer
oriented

Cleanliness

Healthy atmosphere:
Pest controls,
friendly staff,
holistic oriented
system

ELABORATION OF THE RECOMMENDATIONS POINTS

For Kentucky FriedChicken, the company must be able to ensure that the products that they
offer are healthy andnutritional, so as to ensure also that their gain customer trust, loyalty and
respect. KFC must also give importance to the management issues to build a
healthyatmosphere for their employees to work in ensuring best quality and excellent service.
Sincetodays generation is prone to hypertension induced by cholesterol it must prioritize
inincluding healthy options in its menu by adding more fresh products like fruits and
vegetables. They must also cater to the vegetarian market which is a huge and neglected.
Lastly, being a retail outlet in a fast progressing and technology affluent circumstances KFC
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Quality management in Kentucky Fried Chicken (KFC) Malaysia.

must consider investing in such technology which not only enhances consumer satisfaction
but sells a memorable experience. The idea should be to make things hyper convenient and
meaningful in order to nurture a satisfactory and enhancing customer relationship. KFC must
aim at providing not just the product but an entire experience whichwill be share via social
media encouraging one of the guests friends to walk down the same
path in turn the KFC obtaining more consumers due to better basics such a quality,
cleanlinessand online security, hyper convenience such as ease-of-shop, home delivery,
online paymentsand experience such as edutainment and digital engagement.

The source of our data is mainly derived from the KFC global site and in Malaysia as well
from the studies about management operation in KFC.
Limitation
The limitation of this presentation is that the data is gathered through secondary method
which is by analysing the press release and provided information in theKFCs website

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Quality management in Kentucky Fried Chicken (KFC) Malaysia.

References
Stevenson, W.J. Operations Management: An Asian Perspective, 2012.
Jacobs, Chase, Aquilano.2012. Operations and Supply Management by McGrawHill, 2011
Suri, Rajan (1998a), Quick Response Manufacturing. A Companywide Approach
to ReducingLead Times, Productivity Press.McGraw-Hill, 9th Edition 2010. Doherty,
Jacqueline (12 May 2008).
Allen, S. (1986).The Experience of consumer behavior in digital marketing.
Macmillan inassociation with British Marketing Sociological Association.Baharin, N., Y.
Ishak & R. I. (2012).Factors Influencing Operation Management Applicationin Malaysia and
ASEAN Paper presented at the Prosiding Perkembangan Pengurusan danEkonomi
Kebangsaan Malaysia ke VII, Kuala Lumpur.KFC Malaysia Official
URL: www.kfc.com.my KFC World Official Site www.kfc.com (28/2/2015, 15:38)
URL: http://en.wikipedia.org/wiki/Quality_costs (1/3/2015, 11:42)

14