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Kentucky Fried Chicken

and its SWOT Analysis


INTRODUCTION OF KFC

Kentucky Fried Chicken is one of the largest fast food


Franchise concepts of today; it is present in various countries
around the world and it has been able to establish a renowned
International reputation in multiple continents. Starting in the
United States in the 1930s, it has grown to become a true
multi-domestic company.
KFC has focused on foreign markets since the 1960s and
has found a new challenge today in conquering Asia.
HISTORY

The Kentucky Fried Chicken® was founded by


Colonel Harland Sanders (born on September 9,
1890) at the age of sixty-five. KFC® is currently one
of the largest businesses of the global food service
industry and is widely known around the world as
the face of Colonel Sanders.

Every year, over a billion KFC® chicken dinners are


served featuring the Colonel’s “finger licking’ good”
special recipe. The Colonel had spread his industry
to more than 80 countries and territories globally.
KFC’s Journey From $105 to 9.7
Billion $ in 58 years
1952, Col. Sanders started franchising his recipe door to door financed by $105.00
1964, Col Sanders had more than 600 franchised outlets in the US and Canada.
1964, Sold his interest to Massey & Brown for $2 million.
1966, KFC went public
1969, Listed on the NYSE
1971, KFC was acquired by Heublein Inc. for $285 million.
1982, Heublein & KFC Inc. was acquired by RJ Reynolds
1986, RJ Reynolds & KFC, was acquired by PepsiCo, Inc. $840 million.
1997, PepsiCo, Inc. spined-off it to Tricon Global Restaurants.
2002, Tricon changed it's corporation name to Yum! Brands, Inc. .
NOW:
 Yum Brands, Inc. is the world's largest restaurant company in terms of system units with
nearly 32,500 in more than 100 countries and territories.
 Current Market value of the Yum Brands on the NYSE is 9.7 Billion $.
SWOT ANALYSIS
STRENGTHS
KFC continued to dominate the Chicken Segment, with sales of 4.4
billion in 1999.
Despite gain by Boston Market and Chick-fill A, KFC customer base
remained loyal to the KFC brand because of its unique taste.
KFC has continued to dominate the dinner and take out segment of
the Industry.
Strong trademarks recipes.
Ranks highest among all chicken restaurant chains for its
convenience and menu variety.
Generate $1B each year
MARKET SHARE
WEAKNESSES
KFC was loosing market share as other Chicken chain increased
sales at a faster rate.
KFC share of Chicken Segment sales fell from 71 percent 1989, to
less than 56 percent in 1999, a 10-years drop of 15 percent.
KFC leadership in U.S market was so extensive that it had fewer
opportunities to expand its U.S restaurant base, which was only
growing at about 1 percent per year.
Failed to rank in top 20 in growth in 2000.
Lack of knowledge about their customers.
Question of over franchising leads to loss of control and quality.
Lack of focus on R&D.
OPPORTUNITIES
McDonald’s accounted for 35 percent of the Sandwich Segment while Burger
King ran a distant Second, with a 16 percent market share.
Per store sale at Burger King remained flat and Hardee’s per store sale declined
by 10 percent.
In family Segment, Friend’s and Shoney’s were forced to shut down restaurants
because of declining profits.
Within the Pizza Segment, Pizza Hat and Little Caesars Closed underperforming
restaurants.
Boston Market was a new restaurant chain that emphasized roasted rather than
fried chicken.
In 1999, Boston Market soon entered Bankruptcy proceedings.
Church’s broadened its menu to include buffalo chicken wings, macaroni and
cheese, beans and rice and collard greens.
Baby boomers aged 35 to 50 constituted the largest customer group for fast-food
restaurants.
THREATS
McDonald’s with sales of more than 19 billion in 1999, accounted for 15
percent of the sales of the nation’s top 100 restaurant chains.
McDonald’s generated per store sale 1.5 million per year.
Much of the growth in dinner houses came from new unit construction in
suburban market and small town.
In Family Segment, Steak n Shake and Cracker Barrel expend its
restaurant by more than 10 percent.
KFC nearest competitor Popeye, ran a distant second with sales of 1.0
billion.
In early 1990s’ many industry analysts predict that Boston Market would
challenge KFC for market leadership.
Boston market and Chick-fil-A market share gains were achieved primarily
by taking customer away from KFC.
Popeye’s replaced Boston market as the second largest chicken chain in
1999.
FINDINGS AND
RECOMMENDATIONS
FINDINGS
KFC was trying to increase market share in other regions
of South America beside Maxico & Carabian. But
financial constraints restricted KFC from doing so.
KFC focus on strengthening its position in Maxico &
Carabian Only.
New Competitors like Habib’s and Wendy’s were
establishing new restaurants in Maxico.
KFC had largest market share of fast food chains in
Maxico.
Devaluation of Peso does not effected KFC, because
their production plants in Maxico were utilizing local
resources.
RECOMMENDATIONS
If KFC could increase company own restaurants, which enables it to
control quality, services and restaurant cleanliness. Therefore more
capital is needed.
On the other hand if company operated franchise based restaurants
throughout Latin America, its brand image could be build and its
competitors will be loosing first more advantage.
Latin American markets is developing markets, so its growth is high
and entry barriers are low.
KFC could make strategic alliances with key suppliers to gain
advantage over competitors in the market.
An a peeling business model and good strategy has golden
opportunity to shape the rules and establish itself as the recognize
market leader.
CONCLUSION

FOCUS OF THEIR STRATEGY SHOULD BE ON THE


COUNTRIES LIKE CHINA, AND INDIA ETC BECAUSE THEY
PROVIDE MARKETS WHICH HAVE HIGH GROWTH RATE
ON THE OTHER HAND…..

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