Kentucky Fried Chicken and Global Fast Food Industry

I attest that this document is an original creation submitted in accordance with the requirement for the Comprehensive Written Project (CWP) in Seminar in Business Strategy (GB-5388) during the Fall 2015 academic term.

Despite this, Chick-fil-A has posted positive increases in revenue all 40 years the company has been in business, many of which have been double-digit increases. These increases may seem extraordinary, but Chick-fil-A has used a strategy that ensures their success. Another factor which has the ability to have a major impact on profitability is the increasing price of chicken. With the increasing popularity of ethanol based fuels – made primarily of corn – it is becoming more costly to feed and raise chickens, whose main source of food is corn. This new demand for corn has increased the price, which is in turn passed onto the next buyer. It is necessary for Chick-fil-A to address this issue and formulate a plan of action to try to combat these rising costs.

According to the business insider, the fried chicken chain generates more revenue per restaurant than any other fast food chain in the US, according to a new QSR report, Chick-fil-A's average sales per restaurant in 2014 were $3.1 million.

Today, Chick-fil-A is a family owned business and has over 1900 branches all over the United States and compose a net worth of $7 billion. According to Speigiel (2014), “In 2013, Chick-fil-A made over $5 billion in revenue, up from 4.6 billion in 2012.” In 2014, sales for the company had reached over $6 billion, creating a fast-food restaurant that is completely different amongst its competitors. In fact, its closest competitor is the Yum Brands, Inc the owner of KFC, Taco Bell, and Pizza Hut. An article in Business Insider entitled, “ The 15 Fastest-Growing Retailers in America” had the company ranked at number 10 with a 13 percent sales growth since 2011 (2012). The rapid success of the popular southern restaurant has led to company opening its first store in New York City. According to Kuafman (2015), the restaurant will be located at New York University at 1000 Sixth Avenue in Manhattan’s Herald Square. The new

For the analysis the packaged food company ConAgra Foods, Inc (CAG) was chosen. According to ConAgra 2013 Annual report, ConAgra Foods, Inc. is one of the USA’s leading food companies. It has a strong brand recognition and consumer loyalty. ConAgra 's products are sold both in large supermarkets and convenience stores. Company operates in Commercial and Consumer Foods segments. The food industry is especially interesting for the research as the demand on food will stay relatively stable even during economic crises and is continuously growing.

The first KFC was opened in Tiananmen Square, China 1987; it struggled as western food was unknown to the east. This was still a very conservative nation, not prepared for the “Fast Food” takeover. The restaurant did pretty well, but grew slowly. The Harvard business review, stated that “in 1992 the Chinese government granted foreign companies greater access to markets, KFC China’s managers gradually developed the blueprint that would transform the chain.” (Yums' China, 2017) Although they have done well for themselves they struggled, as growth was steady but slow and their customer base was shrinking. “In November 2016 Yum China Holdings, Inc. became a licensee of Yum brands in Mainland China; they have exclusive rights to KFC.” (Yums' China, 2017) Yum controls approximately 7,300 restaurants and more than 400,000 employees in more than 1, 100 cities. YUMS generated over $8bln in sales in 2015.

“Chick-Fil-A has experienced more than 10% sales increase almost every year since launching in 1946 and their franchisees retention rate has been 96% for nearly 50 years.” (Kurse, 2015).

KFCOne of the major competitors for McDonald in the burger segment is KFC. It first came to India in 1995, where it was one of the first multinational food chains to have entered India. It proved not to be a very good time to have come to India where people were still not able to come to terms with multinationals coming to India, and it was targeted by many and remained a not so known food outlet, while the ones which came later became more popular. KFC India had to shut shop in the late 1990s after it faced heavy protests not only from anti-multinational groups but also animal rights' protector, PETA.

operates several fast food brands in Australia. KFC is the major brand that Yum runs. The main product of KFC is made by chicken meat. Therefore, the strength and the weakness of KFC are obviously. People who like chicken meat will highly be attracted by KFC. However, it gives customer who like fast food a limited choice. Just use the one kind of meat will make the brand to be more professional. But it also will narrow its potential markets.

In introduction stage KFC-J entered the market using market-skimming strategy as indicated in the U.S standard manual. Their products were high price and targeted only upper class. Gradually in 1972 after heavy losses in Osaka and start-up challenges, as a market strategy, Weston and his team adjusted prices to compete with typical Japanese take-out products. They also adjusted their prices to suit the middle class in order to penetrate the market.

Kentucky Fried Chicken (KFC) is a popular fast food chicken restaurant chain around the world. (Bell, Shelman, 2011) It is one of the subsidiary of Yum Brand. This company also operates the Pizza Hut and Taco Bell. (Yum! Brands, Inc, 2016) KFC was founded by Harland Sanders in 1952. (Bell, Shelman, 2011) Sanders was successful in creating the brand, even the logo of KFC brand is the portrait of him. He became a notable figure in American history thanks to his great contribution on creating KFC brand. Nowadays, KFC becomes more and more popular, the sales ranking of KFC was the 11th among the worldwide restaurant brands. (The QSR 50, 2015) The sales of KFC in 2014 was 4200 million dollars. (Details in Appendix 1) It means KFC has a large quantities of consumption needs. Actually, KFC has 14,577 restaurants around the world and 70% of them are located outside America (Yum Brand Annual Report, 2015). The restaurant profit was increased year by year from 2013 to 2015. (Details in Appendix 2) Therefore, it is potential to enlarge the customer base by analyzing consumer behaviors.

The company researched for the purpose of this paper is McDonald 's. This company 's history dates back since 1940 when Mac and Dick McDonald initially opened McDonald 's BBQ restaurant located in San Bernardino, CA. In 1948 they shut down the restaurant, just to reopen it as a self-service drive-in restaurant. According to About McDonald’s (2012), their menu included only 9 items, such as: milk, coffee, soft drinks, cheeseburger, hamburger, potato chips, and a slice of pie. Potato chips were then replaced by French fries. The history of this company is significantly market by Ray Kroc, who in 1954 at a visit to McDonald 's in San Bernardino decides to have a franchise of McDonald 's. A year later, in 1955, he opens his first restaurant in Des Plaines, Illinois. The franchising plan allowed growth and by 1965 there were more than 700 restaurants across United States. McDonald 's

On the other hand, buyers were more increasingly focusing on value and healthy foods. This condition can force McDonald and its competitor to offer product innovation that can attract the buyers and match with the buyers' requirements.

Providing customers with the best of both worlds: west meets east. In addition to its radical strategic approach of localization with regard to its food, they extended that viewpoint when selecting their management team. By hiring Chinese executives, Yum! Brands is able to build relationships with the local suppliers more easily and quickly. It definitely helps with their competitive advantage that chicken is a staple meat in China. Given these factors, it is clear that KFC has a competitive advantage in this market. However, taking a closer look at the industry and thinking longer-term, the competitiveness is undesirable but there is still potential to improve profitability. See the analysis

• Burger King’s sales have been falling steadily over recent quarters and were down 2.3% in the year to the end of June, while profits were flat compared to the same period a year earlier.