1) Kentucky Fried Chicken (KFC) began franchising in the 1950s under founder Colonel Sanders and expanded globally in the 1960s.
2) KFC was acquired by several large corporations between the 1970s-1980s including Heublein, R.J. Reynolds, and PepsiCo.
3) PepsiCo divested from KFC and other restaurant brands in the late 1990s to focus on snacks and beverages, forming the new company Tricon Global Restaurant.
1) Kentucky Fried Chicken (KFC) began franchising in the 1950s under founder Colonel Sanders and expanded globally in the 1960s.
2) KFC was acquired by several large corporations between the 1970s-1980s including Heublein, R.J. Reynolds, and PepsiCo.
3) PepsiCo divested from KFC and other restaurant brands in the late 1990s to focus on snacks and beverages, forming the new company Tricon Global Restaurant.
1) Kentucky Fried Chicken (KFC) began franchising in the 1950s under founder Colonel Sanders and expanded globally in the 1960s.
2) KFC was acquired by several large corporations between the 1970s-1980s including Heublein, R.J. Reynolds, and PepsiCo.
3) PepsiCo divested from KFC and other restaurant brands in the late 1990s to focus on snacks and beverages, forming the new company Tricon Global Restaurant.
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.