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Case Study of KFC: Establishment of a Successful Global Business Model

By mid 1950s, fast food franchising was still in its infancy when Harland Sanders began his cross-country travels to market “Colonel Sanders’ Recipe Kentucky Fried Chicken.” He had developed a secret chicken recipe with eleven herbs and spices. By 1963, the number of KFC franchises had crossed 300. Colonel Sanders, at 74 years of age was tired of running the daily operations and sold the business in 1964 to two Louisville businessmen — Jack Massey and John Young Brown, Jr. — for $2 million. Brown, who later became the governor of Kentucky, was named president, and Massey was named chairman. Colonel Sanders stayed in a public relations capacity.

In 1966, Massey and Brown made KFC public, and the company was enlisted on New York Stock Exchange. During late 1960s, Massey and Brown turned their attention to international markets and signed a joint venture with Mitsuoishi Shoji Kaisha Ltd. in Japan. Subsidiaries were also established in Great Britain, Hong Kong, South Africa, Australia, New Zealand, and Mexico. In the late 1970s, Brown’s desire to seek a political career led him to seek a buyer for KFC. Soon after, KFC merged with Heublein, Inc., a producer of alcoholic beverages with little restaurant experience and conflicts quickly arose between the Heublein management and Colonel Sanders, who was quite concerned about the quality control issues in restaurant cleanliness. In 1977, Heublein sent in a new management team to redirect KFC’s strategy. New unit construction was discontinued until existing restaurants could be upgraded and operating problems eliminated. The overhaul emphasised cleanliness, service, profitability, and product consistency. By 1982, KFC was again aggressively building new restaurant units.

In October 1986, KFC was sold to PepsiCo. PepsiCo had acquired Frito-Lay in 1965, Pizza Hut in 1977 with its 300 units, and Taco Bell in 1978 . PepsiCo created one of the largest consumer companies in the United States. Marketing fast food complemented PepsiCo’s consumer product orientation and followed much the same pattern as marketing soft drinks and snack foods. Pepsi soft drinks and fast food products could be marketed together in the same restaurants and through coordinated national advertising .

The Kentucky Fried Chicken acquisition gave PepsiCo the leading market share in three of the four largest and fastest growing segments in the U.S., quick-service industry. By the end of 1995, Pizza Hut held 28 per cent share of $18.5 billion, U.S pizza segment. Taco Bell held 75 per cent of $5.7 billion Mexican food segment, and KFC held 49 per cent of the $7.7 billion, U.S chicken fast food segment.

Many cultures have strong culinary traditions and have not been easy to penetrate. KFC previously failed in German markets because Germans were not accustomed to take-out food or to ordering food over the counter. KFC has been more successful in the Asian markets, where chicken is a staple dish. Apart from the cultural factors, international business carries risks not present in the U.S. market. Long distances between headquarters and foreign franchises often make it difficult to control the quality of individual franchises.

In some countries of the world such as, Malaysia, Indonesia and some others, it is illegal to import poultry, a situation that has led to product shortages. Another challenge facing KFC is to adapt to foreign cultures. The company has been most successful in foreign markets when local people operate restaurants. The purpose is to think like a local, not like an American company.

Soon after KFC entered India, it was greeted with protests of farmers, customers, doctors, and environmentalists. KFC had initially planned to set up 30 restaurants by 1998, but was not able to do so because its revenues did not pick. In early 1998, KFC began to investigate the whole issue more closely. The findings revealed that KFC was perceived as a restaurant serving only chicken. Indian families wanted more variety, and the impression that KFC served only one item failed to enhance its appeal. Moreover, KFC was also believed to be expensive. KFC’s failure was also attributed to certain drawbacks in the message it sent out to consumers about its positioning. It wanted to position itself as a family restaurant and not as a teenage hangout. According to analysts, the ‘family restaurant’ positioning did not come out clearly in its communications. Almost all consumers saw it as a fast food joint specializing in a chicken recipe.

KFC tried to revamp its menu in India. Cole Slaw was replaced with green fresh salads. A fierier burger called Zinger Burger was also introduced. During the Navaratri festival, KFC offered a new range of nine vegetarian products, which included Paneer burgers. Earlier, KFC offered only individual meals, but now the offerings include six individual meals, two meal combos for two people, and one family meal in the non-vegetarian category. For vegetarians, there are three meal combos for individuals, and meals for couples, and for families.

Over the years, KFC had learned that opening an American fast food in many foreign markets is not easy. Cultural differences between countries result in different eating habits. For instance, people eat their main meal of the day at different times throughout the world. Different menus must also be developed for specific cultures, while still maintaining the core product — fried chicken. You can always find original recipe chicken, cole slaw, and fries at KFC outlets, but restaurants in China feature all Chinese tea and French restaurants offer more desserts. Overall, KFC emphasizes consistency and whether it is Shanghai, Paris, or India, the product basically tastes the same.

Questions For Discussion

• Analyse the case and determine the factors that have made KFC’s a success global business.
• Why are cultural factors so important to KFC’s sales success in India and China?
• Spot the cultural factors in India that go against KFC’s original recipe; KFC Fried Chicken.
• Why did Kentucky Fried Chicken change its name to KFC?

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KFC Marketing Strategy 2024: A Case Study

Kentucky Fried Chicken (KFC), the second-largest global fast-food chain, has built its success on a unique and robust marketing strategy. By leveraging digital marketing campaigns, KFC engages with customers, promotes menu innovations, and strengthens its brand positioning. The company’s marketing approach encompasses various elements, including customer experience strategies, social media marketing, influencer collaborations, and loyalty programs. Through these initiatives, KFC effectively connects with its target audience and creates a lasting brand image.

KFC’s marketing strategy revolves around customer-centric storytelling, allowing them to establish an emotional connection with their audience. By showcasing their menu innovations, KFC captivates customers and sparks their curiosity. The brand’s focus on brand positioning ensures that customers perceive KFC as a trusted and desirable fast-food option.

Key Takeaways:

• KFC operates in over 145 countries worldwide, solidifying its position as a global fast-food chain.
• The company targets four main customer groups: Children, Teens and young adults, Families, and Budget customers.
• With both vegetarian and non-vegetarian customer segments, KFC caters to diverse dietary preferences.
• KFC utilizes a mix of personal and non-personal marketing channels to maximize reach and engagement.
• The company employs various digital marketing strategies, including SEO, content marketing, email marketing, social media marketing , and video marketing.

KFC Consumer Profile

KFC, with its wide range of menu options, caters to a diverse consumer base consisting of both vegetarian and non-vegetarian customers. The brand understands the importance of demographic segmentation and targets various age groups and customer segments to ensure its offerings appeal to a wide range of individuals.

One of KFC’s primary target audiences includes children and teenagers who are drawn to the brand’s flavorful and unique menu items. KFC effectively captures the attention of young adults as well, with its affordable prices and convenience.

KFC understands the importance of family dining experiences and has developed its offerings to cater to families, making it a go-to choice for parents and children. Additionally, KFC recognizes the value of budget-conscious customers and creates value-driven options to make their meals more affordable.

By utilizing market segments effectively, KFC ensures that its customer profiles align with their core customer base. Teenagers and families form the primary customer profiles, while adults and budget-conscious customers form secondary and tertiary customer profiles, respectively.

With its diverse customer base, KFC continues to innovate its menu offerings and marketing strategies to meet the needs and preferences of different demographics. Through this approach, KFC maintains its position as a leading fast-food chain catering to a wide range of customers.

Example of KFC Customer Segmentation:

KFC’s consumer profile reflects its commitment to catering to diverse demographics. By using demographic segmentation and understanding the preferences of different customer segments, KFC ensures its menu offerings and marketing strategies resonate with its target audience. With its wide range of choices and affordability, KFC continues to be a popular choice among teenagers, families, and budget-conscious customers.

Types of KFC Marketing Channels

As a global fast-food chain, KFC understands the importance of utilizing various marketing channels to reach its target audience effectively. KFC employs both personal and non-personal channels to maximize its reach and engage with customers.

Personal Channels

KFC utilizes personal channels that involve direct communication with customers. These channels include in-person sales interactions and phone calls, allowing for personalized customer engagement. By providing a personal touch, KFC can address customer queries, provide recommendations, and offer assistance, enhancing the overall customer experience.

Non-Personal Channels

In addition to personal channels, KFC makes use of non-personal marketing channels to promote its brand and offerings. These channels encompass various offline and online methods, ensuring widespread visibility and engagement.

Offline marketing channels include traditional mediums such as newspapers, magazines, radio, and television advertisements. KFC leverages these platforms to showcase its products, promotions, and brand message to a wide audience. The strategic placement of billboards, posters, and leaflets in high-traffic areas helps reinforce brand awareness and attract potential customers.

Online marketing forms a significant part of KFC’s marketing strategy, enabling the brand to connect with customers in the digital space. KFC utilizes webpages, emails, and social media platforms to engage customers and promote its offerings. Through well-crafted webpages optimized for relevant keywords, KFC ensures its website appears prominently in search engine results. This search engine optimization (SEO) strategy increases its online visibility and drives organic traffic to its site.

KFC’s strong presence on social media platforms, such as Facebook, Twitter, and Instagram, allows the brand to connect with its audience and reinforce its brand image. Social media marketing enables KFC to drive brand loyalty, foster positive word-of-mouth, and create interactive digital experiences for its customers.

In addition to organic social media engagement, KFC invests in online advertising campaigns. By strategically partnering with popular websites and platforms, KFC increases its brand visibility and attracts new customers. These partnerships position KFC’s ads in front of target audiences, ensuring optimal reach and engagement.

Promotion campaigns, Events, and PR activities

KFC also employs various promotion campaigns, events, and PR activities to create a buzz around its brand. Special limited-edition menu items introduced during cultural events, like the Chinese New Year in China, cater to local preferences and celebrations, further reinforcing KFC’s localization strategy.

KFC’s diverse marketing channels, both personal and non-personal, ensure a comprehensive reach and engagement with its target audience. The brand’s strategic blend of offline and online marketing, promotion campaigns, events, and PR activities showcases its commitment to creating a global presence while catering to local tastes and preferences.

Digital Marketing Strategy of KFC

KFC, operating in over 145+ countries worldwide, has a robust digital marketing strategy that encompasses various components to effectively engage with its diverse customer base. Key aspects of KFC’s digital marketing strategy include:

Social Media Marketing

Social media plays a crucial role in KFC’s digital marketing strategy. The brand prioritizes platforms like Facebook, Twitter, and Instagram to connect with its audience and strengthen its brand image. KFC’s Facebook page alone garners over 250,000 likes and attracts 5000+ comments on its posts, indicating a high level of engagement and quality interaction [1] . Through witty and engaging posts, KFC actively interacts with its followers, driving brand loyalty and positive word-of-mouth.

Email Marketing

KFC leverages email marketing as part of its digital strategy, utilizing interactive elements and AMP technology to engage with customers and personalize campaigns. By targeting mobile phone users, KFC ensures that its email marketing efforts reach a wide audience and provide an interactive and engaging experience for recipients.

Content Marketing

Content marketing is a significant component of KFC’s digital marketing strategy. The brand focuses on creating and distributing valuable and relevant content to attract and engage its target audience. This content may take the form of blog articles, videos, and social media posts, showcasing KFC’s menu offerings, promotions, and brand values to enhance customer satisfaction and drive brand awareness.

Video Marketing

KFC utilizes video marketing as a powerful tool to engage with its audience. The brand’s YouTube channel features short advertisements and has a considerable subscriber base, allowing KFC to showcase its products, promotions, and brand story in a visually appealing and engaging format. Through video marketing, KFC effectively captures the attention of its target customers and conveys its unique value proposition.

KFC’s digital marketing strategy is centered around enhancing customer satisfaction and highlighting its menu offerings. By prioritizing social media marketing, email marketing, content marketing, and video marketing, KFC effectively reaches its target audience, drives engagement, and strengthens its brand image.

Global Reach of KFC’s Marketing

KFC, a global fast-food chain, has successfully expanded its reach to more than 100 countries worldwide, showcasing its impressive global reach and successful expansion into diverse markets. This global presence allows KFC to cater to a wide range of consumer preferences and cultural backgrounds.

One key aspect of KFC’s global marketing strategy is cultural adaptation. The brand understands the importance of adapting its menu offerings, store designs, and marketing messages to suit local preferences and traditions. For example, in India, KFC introduced vegetarian options to cater to the predominantly vegetarian population, demonstrating its commitment to adapting to local preferences and attracting a wider customer base.

KFC also keeps a close eye on global market trends and adapts its strategies accordingly. By staying updated with trends such as sustainability and healthier food options, KFC reflects its ability to remain relevant and meet changing consumer demands. For instance, the introduction of grilled chicken caters to health-conscious consumers’ preferences and aligns with the growing global trend towards healthier eating.

Moreover, KFC leverages social media and digital platforms to engage with customers on a personal level and maintain a strong online presence. This allows the brand to connect with its target audience effectively and build strong relationships through interactive content, promotions, and customer interactions.

In line with the global trend towards sustainability, KFC has also implemented eco-friendly practices, including the use of biodegradable packaging. This appeals to environmentally conscious consumers and demonstrates KFC’s commitment to sustainable practices.

Overall, KFC’s global marketing strategies encompass cultural adaptation, responsiveness to market trends, and utilization of digital platforms. These strategies enable KFC to expand its market presence, resonate with local consumers, and maintain a strong brand image worldwide.

The Role of Digital Marketing in KFC’s Strategy

KFC recognizes the importance of digital marketing in today’s digital age. The brand understands that to stay competitive and relevant, it must have a strong online presence. By leveraging various digital marketing strategies, KFC aims to engage with its target audience effectively and build a loyal customer base.

Social Media Presence

One key aspect of KFC’s digital marketing strategy is its social media presence. The brand actively engages with its audience on popular social media platforms such as Facebook, Twitter, and Instagram. Through entertaining and informative content, KFC generates positive interactions and strengthens brand loyalty. By maintaining an active and engaging presence on social media, KFC stays connected with its customers and keeps them informed about new menu offerings, promotions, and events.

SEO Strategy

KFC focuses on search engine optimization (SEO) to ensure visibility in search engine results. By optimizing its website and content with relevant keywords, KFC increases its chances of ranking higher in organic search results. This improves its online visibility, attracts more organic traffic to its website, and enhances brand visibility. KFC also utilizes online advertising to complement its SEO strategy and further enhance brand visibility.

E-commerce Strategy

With the rise of e-commerce, KFC has embraced online ordering and delivery as part of its digital marketing strategy. The brand’s mobile app is available on both iOS and Android platforms, ensuring broad accessibility to customers. The app offers features such as order tracking, customization, saving favorite items, and locating nearby KFC locations. This provides convenience and flexibility to customers, allowing them to order their favorite KFC meals with ease.

Content marketing plays a significant role in KFC’s digital strategy. The brand creates and shares various types of content, including videos and articles, across multiple platforms. Through informative and engaging content, KFC aims to educate and entertain its audience, while also promoting its menu offerings and brand values. By sharing valuable content, KFC establishes itself as a trusted source of information in the fast-food industry and builds a strong connection with its target audience.

Digital marketing is a vital component of KFC’s overall marketing strategy. By leveraging social media platforms, implementing SEO strategies, embracing e-commerce, and focusing on content marketing, KFC enhances the overall customer experience, creates personalized marketing campaigns, increases customer engagement, and builds long-term customer loyalty. Through a comprehensive digital marketing strategy, KFC remains a prominent player in the fast-food industry and continues to connect with its target audience in meaningful ways.

Product Strategy of KFC

KFC has established a strong product strategy that revolves around constant innovation and catering to diverse consumer preferences. While the brand is renowned for its world-class chicken, fries, and sandwiches, KFC continuously expands its menu offerings to stay relevant in the competitive fast-food industry.

One key aspect of KFC’s product strategy is innovation. The brand understands the importance of adapting to changing consumer demands and preferences. As a result, KFC has introduced new menu items like plant-based alternatives and healthier options to meet the growing demand for nutritious and sustainable choices. This commitment to product innovation allows KFC to appeal to a wide range of customers and maintain its position as a market leader.

KFC’s product strategy also emphasizes variety and variety. The brand acknowledges that different customers have different tastes and preferences. To cater to this diversity, KFC offers a wide range of menu items that go beyond its signature offerings. This includes the introduction of vegetarian options in markets like India, where vegetarianism is prevalent. By adapting to local preferences, KFC demonstrates its flexibility and ability to cater to diverse customer needs.

Furthermore, KFC’s product strategy aligns with its commitment to providing a memorable and enjoyable dining experience. The brand leverages its expertise to deliver high-quality food with consistent flavors and textures. Whether it’s the crispy fried chicken, perfectly seasoned fries, or delectable sandwiches, KFC ensures that every bite is satisfying and reflects their commitment to quality.

KFC’s product strategy revolves around innovation, variety, and a focus on customer satisfaction. By continuously introducing new menu offerings, adapting to local preferences, and delivering an exceptional dining experience, KFC remains a sought-after fast-food brand globally.

Promotion Strategy of KFC

KFC, a global leader in the fast-food industry, adopts a strategic promotion strategy to build a strong brand image and connect emotionally with its consumers. Through creative and engaging advertising techniques, KFC effectively promotes its products and offerings across various platforms, including television, newspapers, magazines, and social media.

KFC’s advertising campaigns are renowned for their catchy slogans and humorous storytelling, which evoke a strong emotional connection with consumers. By leveraging the power of storytelling, KFC creates memorable experiences and reinforces its brand image in the minds of its target audience.

The brand recognizes the importance of social media marketing in today’s digital era and actively engages with its audience through popular platforms such as Facebook, Twitter, and Instagram. KFC’s social media presence is characterized by witty and engaging posts that resonate with its target audience. This social media marketing strategy helps KFC foster a loyal community of followers and strengthens brand loyalty.

KFC’s promotion strategy also involves localized marketing efforts to cater to specific market segments. For instance, in countries like India, where vegetarian options are preferred, KFC introduced menu items like the Veg Zinger to cater to the local market demand .

Furthermore, KFC aligns its marketing strategies with cultural events and traditions to resonate with local consumers. In China, the brand capitalizes on the Chinese New Year by implementing marketing campaigns that align with the festivities, thereby strengthening its connection with the target market .

To cater to the growing demand for healthier food options, KFC introduced grilled chicken as a healthier alternative. This not only meets the needs of health-conscious consumers but also expands the brand’s customer base. By addressing changing consumer preferences, KFC demonstrates its commitment to providing diverse menu offerings.

In addition to traditional advertising methods, KFC leverages the power of social media, print, and outdoor promotions to engage with its audience and convert skeptics into loyal fans. One notable example is KFC’s successful campaign to turn haters of its fries into fans, employing a multi-channel promotional approach with a budget of £230,000.

KFC’s promotion strategy revolves around building a strong brand image through creative and engaging advertising techniques. By evoking an emotional connection with consumers and utilizing social media marketing, KFC ensures its brand remains relevant, resonates with its target audience, and continues to thrive in the competitive fast-food industry.

Price Strategy of KFC

KFC employs a strategic price strategy that incorporates price differentiation and competitive pricing to meet the diverse needs of its customers. This strategy enables KFC to offer varying prices for its products based on factors such as the type of product and the target market.

Price differentiation plays a significant role in KFC’s pricing strategy. By adjusting prices based on specific products, KFC can cater to different customer segments and their willingness to pay. This approach allows KFC to offer affordable options to budget-conscious customers while also providing premium offerings for those willing to pay a higher price.

In addition to price differentiation, KFC utilizes competitive pricing to maintain its market position. By monitoring the prices of its competitors, KFC can adjust its own pricing to remain competitive in the fast-food industry. This ensures that customers perceive KFC as providing value for money and encourages repeat purchases.

Furthermore, KFC incorporates market penetration techniques into its pricing strategy. The company initially offers lower prices to capture a larger customer base in new or intensely competitive markets. As KFC establishes its presence and competition increases, it adjusts its prices accordingly to maintain profitability without sacrificing customer satisfaction.

KFC’s price strategy strikes a balance between affordability and profitability. By employing price differentiation, competitive pricing, and market penetration techniques, KFC ensures that its pricing remains attractive to a wide range of customers while staying competitive in the market.

Key Pricing Strategies of KFC

Place Strategy of KFC

KFC, with its global presence in the fast-food industry, strategically locates its outlets to ensure accessibility and convenience for its target audience. This place strategy involves selecting strategic locations near schools, colleges, workplaces, and educational institutions, specifically targeting the youth demographic, which consumes a significant amount of fast-food products. By locating restaurants in these areas with high population density, KFC maximizes its reach and captures the attention of its target market.

In addition to physical locations, KFC has also embraced the growing demand for convenience by offering online delivery and ordering systems. Customers can easily access KFC’s menu offerings from anywhere by ordering online through the KFC website or partnered delivery apps. This online strategy caters to the evolving consumer preferences for seamless and hassle-free experiences by providing a platform for customers to order their favorite KFC products with just a few clicks.

By strategically selecting locations and embracing online delivery, KFC ensures that its customers can easily enjoy their menu offerings, whether they prefer dining in at a physical location or ordering from the comfort of their homes. This comprehensive place strategy aligns with KFC’s goal of providing accessibility, convenience, and a seamless experience for its customers.

Throughout the years, KFC has established itself as a global leader in the fast-food industry through its innovative and comprehensive marketing strategy. By utilizing a mix of digital marketing, product innovation, branding, and promotion techniques, KFC has successfully engaged with customers and maintained its position in the market .

One of the key strengths of KFC’s marketing strategy is its ability to adapt and evolve according to changing consumer preferences and global trends. With over 15,000 outlets in 100 different countries strategically located in areas with high foot traffic, KFC has been able to reach a wide customer base. The brand’s global ranking of 147 further highlights its sustainable positive brand positioning and top-of-the-mind awareness.

KFC’s success in both developed and developing nations showcases its ability to capture diverse markets. With more than 50% of its sales coming from developed nations and emerging markets like India showing high potential for growth, KFC continues to expand its global footprint.

Furthermore, KFC’s innovative marketing initiatives, such as the campaign to transform negative feedback on their fries and online engagement campaigns like “Design Your Own Bucket” and the “Currycature” campaign, have contributed to increased social media engagement and brand growth.

By leveraging social media platforms, partnering with influencers, and focusing on search engine optimization and online advertising, KFC has successfully reached a broader audience base and reinforced its brand image. With their commitment to customer satisfaction, continuous product innovation, and global expansion efforts, KFC remains at the forefront of the fast-food industry, poised for continued success in the future.

What is the marketing strategy of KFC?

How does kfc engage with customers through digital marketing, how does kfc localize its marketing strategies for different cultures, what role does digital marketing play in kfc’s overall marketing strategy, what is kfc’s product strategy, how does kfc promote its products and build its brand image, how does kfc determine its pricing strategy, what is kfc’s place strategy, what is the global reach of kfc’s marketing, how does kfc integrate digital marketing into its overall marketing strategy, why is kfc known for its menu innovations, related posts:.

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Nina Sheridan is a seasoned author at Latterly.org, a blog renowned for its insightful exploration of the increasingly interconnected worlds of business, technology, and lifestyle. With a keen eye for the dynamic interplay between these sectors, Nina brings a wealth of knowledge and experience to her writing. Her expertise lies in dissecting complex topics and presenting them in an accessible, engaging manner that resonates with a diverse audience.

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KFC Crisis Management Case Study: Preparing for the Unexpected

Crisis can strike unexpectedly and have a profound impact on a company’s reputation and bottom line.

The ability to effectively manage these crises becomes paramount, and one such case that captured global attention was the KFC crisis.

This blog post aims to delve into KFC crisis management case study examining the events of crisis and analyzing the company’s response.

By exploring the lessons learned from this event and studying best practices in crisis management, we can gain valuable insights into how businesses can navigate challenging situations, protect their brand reputation, and emerge stronger from adversity.

Join us on this journey as we uncover the intricacies of crisis management and uncover the key strategies necessary for successful resolution of a crisis.

Brief history of KFC as a global fast-food chain

Kentucky Fried Chicken, more commonly known as KFC, has established itself as a prominent global fast-food chain with a rich and fascinating history.

The story of KFC traces back to 1930 when Harland Sanders, a humble entrepreneur, started selling fried chicken from his roadside restaurant in Corbin, Kentucky. Known for his secret blend of 11 herbs and spices, Sanders’ fried chicken quickly gained popularity among the locals.

As word spread about the deliciousness of Sanders’ chicken, he began franchising his concept in the 1950s. This marked the beginning of KFC’s expansion into a worldwide phenomenon.

With its signature Southern-inspired flavors, crispy texture, and distinctive red and white branding, KFC grew rapidly across the United States and eventually ventured into international markets.

By the 1970s, KFC had become a global powerhouse, operating in numerous countries and serving millions of customers each day. Its success could be attributed not only to its mouthwatering fried chicken but also to its innovative marketing campaigns and strategic partnerships.

Over the years, KFC has continually evolved its menu to cater to changing consumer preferences, introducing new products like the famous KFC bucket, chicken sandwiches, and a variety of sides and desserts.

Today, KFC operates in more than 140 countries, with thousands of restaurants serving its iconic fried chicken to eager customers worldwide. The brand’s commitment to quality, consistency, and its unique blend of flavors has made KFC a beloved and recognizable name in the fast-food industry.

As we delve into the KFC crisis and its management, it is crucial to understand the significance of this global fast-food chain and its enduring legacy.

Through its journey, KFC has not only revolutionized the way people enjoy fried chicken but also faced its fair share of challenges, providing valuable lessons in crisis management for businesses worldwide.

Description of the specific crisis event

The specific crisis event that shook KFC and garnered significant attention occurred in February 2018. It all began when a major supply chain disruption caused a shortage of chicken, leading to the temporary closure of hundreds of KFC restaurants across the UK.

The shortage stemmed from issues with KFC’s new logistics partner, who experienced operational difficulties that disrupted the delivery of fresh chicken to the restaurants.

As a result, customers were met with signs on the doors of their local KFC branches, apologizing for the inconvenience and explaining the temporary closure.

Social media platforms quickly erupted with posts from disappointed and frustrated customers, expressing their disbelief at the absence of KFC’s famous fried chicken. The crisis intensified as the media caught wind of the story, further amplifying the negative publicity surrounding the situation.

The impact of this crisis was significant on multiple fronts. Not only did it disrupt the day-to-day operations of KFC restaurants, leading to financial losses, but it also tarnished the brand’s reputation.

Customers who had come to rely on the availability and quality of KFC’s chicken were left disappointed and turned to competitors for their fast-food cravings. 

The incident also raised questions about KFC’s supply chain management and the robustness of their contingency plans.

In the face of this crisis, KFC found itself under immense pressure to resolve the supply chain issues, reopen the affected restaurants, and regain the trust of its customers.

The company’s crisis management strategy and subsequent actions would play a crucial role in determining the trajectory of their recovery and the restoration of their brand reputation.

Initial response from KFC

In the wake of the supply chain disruption and subsequent closure of numerous KFC restaurants, the company swiftly took action to address the crisis and communicate with its customers.

KFC acknowledged the issue and released an official statement expressing regret for the inconvenience caused. They emphasized their commitment to providing high-quality food and assured customers that they were working diligently to resolve the situation as quickly as possible.

To keep customers informed, KFC utilized various communication channels, including their official website and social media platforms. They provided regular updates on the progress of resolving the supply chain issues and reopening affected restaurants.

These updates included transparent information about the challenges faced, the steps being taken to rectify the situation, and estimated timelines for the restoration of normal operations.

Furthermore, KFC proactively engaged with customers on social media, responding to inquiries, and addressing concerns in a timely manner. They expressed gratitude for the patience and support shown by customers during this challenging time, striving to maintain an open line of communication and demonstrate their commitment to resolving the crisis effectively.

KFC also collaborated closely with its franchise partners and suppliers to mitigate the impact of the crisis. They worked together to explore alternative solutions, such as sourcing chicken from different suppliers or redistributing stock from unaffected locations to minimize disruptions and reopen restaurants as quickly as possible.

While the initial response from KFC showcased a proactive approach to crisis management, the subsequent actions and long-term strategies implemented would be crucial in determining the ultimate success of their recovery and the rebuilding of customer trust.

Evaluation of the initial response

The initial response from KFC in addressing the supply chain disruption and communicating with customers demonstrated several commendable aspects of crisis management. Here is an evaluation of their response:

• Prompt acknowledgement: KFC promptly acknowledged the issue and expressed regret for the inconvenience caused. This proactive approach demonstrated their commitment to taking responsibility and addressing the crisis head-on.
• Transparent communication: KFC provided regular updates to customers through various communication channels, including their website and social media platforms. By sharing transparent information about the challenges they were facing and the steps being taken to resolve the situation, they instilled a sense of transparency and honesty, which are essential during a crisis.
• Engaging with customers: KFC actively engaged with customers on social media, responding to inquiries and concerns. This demonstrated their willingness to listen to customers and address their concerns promptly, which can help in maintaining a positive brand image and customer loyalty.
• Collaboration with stakeholders: KFC collaborated closely with franchise partners and suppliers to find alternative solutions and minimize disruptions. This collaborative approach showcased their commitment to working together as a team and finding solutions collectively, which can be crucial in overcoming a crisis.

While the initial response from KFC showcased positive aspects, there are a few areas that could be further improved:

• Clear action plan : While KFC provided regular updates, it would have been beneficial to outline a clear action plan or steps being taken to rectify the supply chain issues. This would have provided customers with a better understanding of the progress being made and instilled confidence in the company’s ability to resolve the crisis.
• Compensation or alternative offerings: As an additional measure, KFC could have considered providing compensation or alternative offerings to customers affected by the closures. This could have helped in mitigating customer dissatisfaction and maintaining goodwill during the crisis.
• Proactive communication: While KFC was responsive to customer inquiries, there could have been a proactive approach to reaching out to customers who were directly affected by the closures. Proactively addressing customer concerns and offering support can go a long way in building trust and loyalty.

Communication channels used by KFC

KFC utilized various communication channels to address the crisis and keep customers informed. Here are some of the communication channels employed by KFC:

• Official Website: KFC utilized its official website as a primary platform for sharing updates and information regarding the supply chain disruption and restaurant closures. They dedicated a section or a prominent banner on the website to provide regular updates, explanations, and estimated timelines for the resolution of the crisis. This ensured that customers visiting the website could easily access the latest information.
• Social Media Platforms: KFC leveraged popular social media platforms such as Facebook, Twitter, Instagram, and YouTube to communicate with customers. They posted regular updates, statements, and videos to address the crisis, inform customers about the progress being made, and apologize for the inconvenience caused. Social media platforms allowed KFC to reach a broad audience, engage in two-way communication, and respond to customer inquiries and concerns promptly.
• Email Communication: KFC likely utilized email communication to reach out to customers who had signed up for their newsletters or loyalty programs. Through email updates, they could provide detailed information about the crisis, offer exclusive deals or promotions, and express their gratitude for customer support and patience during the challenging period.
• Press Releases and Media Statements: KFC would have issued press releases and media statements to communicate with the media and the public at large. These official statements would have outlined the details of the crisis, the actions being taken, and the company’s commitment to resolving the situation. Press releases and media statements are vital in shaping public perception and ensuring consistent messaging across various media outlets.

Lessons Learned from the KFC Crisis 

Following are the key lesson learned form the KFC crisis management case study:

A. Importance of preparedness in crisis management

The KFC crisis highlighted the crucial lesson of the importance of preparedness in crisis management. Being prepared means having a well-defined crisis management plan in place, including clear protocols and procedures to follow when unforeseen events occur.

Companies should anticipate potential risks and develop contingency plans to mitigate their impact. In the case of KFC, having a robust supply chain backup plan and alternative supplier relationships could have helped minimize the disruption caused by the chicken shortage. By proactively preparing for crises, businesses can respond more swiftly and effectively, mitigating the negative consequences and safeguarding their reputation.

B. Effective communication during a crisis

Effective communication is a fundamental lesson learned from the KFC crisis. In times of crisis, open and transparent communication with stakeholders is paramount. Promptly acknowledging the crisis, providing regular updates, and being accessible to address concerns demonstrate a commitment to transparency and build trust with customers, employees, and the public.

KFC’s use of various communication channels, including their website and social media platforms, allowed them to disseminate information widely and engage directly with customers. By maintaining open lines of communication, companies can manage expectations, alleviate concerns, and retain customer loyalty during challenging times.

C. The role of transparency and honesty

Transparency and honesty emerged as critical factors in the KFC crisis. Being transparent about the causes of the crisis, the challenges faced, and the steps being taken to resolve it helps build trust and credibility. KFC’s acknowledgment of the supply chain disruption and their commitment to resolving the issue demonstrated honesty, which is essential for maintaining the confidence of customers and stakeholders.

By openly sharing information, companies can demonstrate accountability, showcase their efforts to rectify the situation, and reassure customers that their best interests are being prioritized. Transparency and honesty are vital components of effective crisis management, enabling organizations to navigate challenging situations while preserving their integrity.

Final Words 

KFC crisis served as a significant case study in crisis management, highlighting important lessons that businesses can learn from. The crisis emphasized the importance of preparedness, emphasizing the need for robust contingency plans and alternative solutions to mitigate disruptions. 

Effective communication emerged as a crucial aspect, with KFC demonstrating the power of transparent and timely communication through various channels. Transparency and honesty played a pivotal role in rebuilding trust and credibility. By openly addressing the crisis, sharing information, and taking accountability, KFC showed their commitment to their customers and stakeholders.

About The Author

Tahir Abbas

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Table of Contents

Kfc consumer profile, types of kfc marketing channels, digital marketing strategy of kfc , kfc's social media marketing , kfc marketing strategy 2024: a case study.

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KFC uses demographic segmentation to serve the target market that has both vegetarian and non-vegetarian customer segments. Its offerings cater to kids, young adults, and almost all age groups. KFC's target audience can be categorized into four groups:

• Teens and young adults 
• Budget customers

Its primary customer profiles incorporate teenagers and families because most teenagers are impulsive, and they love to dine out with friends or order online to have a meal with their family. The secondary customer profile includes adults, and the tertiary customer profile has people with lower budgets.  

KFC started with an undifferentiated targeting strategy as it served the same menu worldwide. However, in recent times, it has started localizing its menu for better acceptability in the market. The KFC marketing strategy incorporates two types of marketing channels: Personal and Non-personal.

Personal channels involve communicating directly with the audience, such as a KFC salesperson introducing products to a customer in person or over the telephone. Non-personal marketing channels include the use of media both online and offline, such as

• Promotion Campaigns 
• PR activities 
• Social Media

The KFC marketing strategy primarily includes SEO , content marketing , email marketing , social media marketing , and video marketing. However, the company pays special attention to social media marketing and uses the most popular digital marketing platforms to highlight its price and customer satisfaction. 

KFC's Facebook and Twitter pages are extremely high on interactions with customers. 

KFC's Facebook Pages

KFC uses Facebook as a medium to educate its customers with new offers, products, discounts, and other schemes. It also uses Facebook to address customer grievances. The brand ensures that they put across product-oriented content. It promotes online ordering facilities via social media. 

KFC’s Official Facebook Page Displaying A Range of Meals

On festive occasions, the Facebook page has several animated photos that have often received tremendous responses and helped KFC connect with the audience on occasion. Their posts strike great engagement ratios, with likes soaring above 250,000 and comments reaching 5000+. On average, the total engagement level of the page is approximately 5% depicting quality interaction and engagement. 

KFC's team that handles its Facebook page is extremely quick in responding to customers. They encouraged the audience to lodge a complaint of dissatisfaction at their outlets.  

KFC's Twitter Handles

The Twitter handle of KFC is as interactive as the Facebook page. The team successfully pacifies unhappy customers and has an extremely high engagement level.

KFC’s Twitter Handle

To take interactions to the next level, the team organizes contests often integrated across Facebook and Twitter. They also promote new schemes and discounts via Twitter . Although the number of retweets or conversations on these tweets isn't quite high presently, the brand also seems focused on upscaling its business via Twitter. 

KFC's Instagram Handles

KFC’s Instagram Post with the Latest Offers

KFC has several verified pages on Instagram for various countries besides its main page. It uses this digital marketing platform mainly to attract customers by posting luring images of food items on its menu. The brand also publishes posts about its present offers, new introductions, and other schemes.

KFC on Youtube

KFC India Youtube Channel Displaying Ads

Although KFC has video marketing on its list of digital marketing strategies, it uses its YouTube Channel for advertisements only. It has short videos of not more than two minutes, but the channel still has a good number of subscribers. The company uses Youtube as a secondary medium to show its ads. 

KFC's Email Marketing Strategy

KFC restaurants create bulk mailings using the AMP technology to target its mobile phone users too. Its AMP emails are different from ordinary emails as these mails have interactive elements in the form of order buttons, product carousels, subscription forms, sliders, animations, an interactive showcase of meals, and more so that the emails do not get lost in the potential customer's inbox. The company also uses this strategy to segment its audience and personalize its email campaigns, targeting specific audiences. Their brand awareness campaigns lead to valuable conversions later.

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The KFC marketing strategy is strong and actively uses Twitter and Facebook to attract customers, share promotions and schemes, and solve customer grievances. The potential of YouTube has still not been completely explored by them. 

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KFC Marketing Strategy: A Comprehensive Analysis

KFC, or Kentucky Fried Chicken, is known worldwide for its finger-lickin' good fried chicken. But what sets this fast-food giant apart from its competitors? The answer lies in its effective marketing strategy . In this article, we will explore the key elements that have contributed to KFC's success and made it a household name.

Understanding KFC's Marketing Strategy

At the heart of KFC's marketing strategy is a strong focus on branding , product innovation , and advertising techniques. By understanding the role these elements play in the company's success, we can gain valuable insights into what makes KFC tick.

The Role of Branding in KFC's Success

KFC has built a powerful brand identity that resonates with consumers worldwide. The company's logo, featuring Colonel Sanders, is instantly recognizable. But branding goes beyond a logo – it encompasses the overall image, values, and experience associated with KFC. The consistency in branding has helped KFC establish trust and loyalty among its customers.

When customers see the iconic red and white KFC signage, they immediately associate it with the delicious taste of their famous fried chicken. The branding efforts have been so successful that even the sight of the Colonel Sanders logo can make mouths water in anticipation of a finger-licking good meal.

KFC's branding extends to the restaurant's interior design and customer service. The warm and inviting atmosphere, coupled with friendly staff, creates a memorable dining experience that keeps customers coming back for more. KFC has successfully created a brand that not only represents tasty food but also a sense of comfort and familiarity.

Related: Dyson Marketing Strategy: A Look at Home Appliance Go-to-Market Strategy and Branding

The Impact of Product Innovation

KFC is not just about fried chicken. The company has continuously introduced new products and menu items to cater to changing consumer preferences. From introducing healthier options to embracing plant-based alternatives, KFC has shown its commitment to keeping up with evolving trends and meeting the diverse needs of its customers.

One notable example of KFC's product innovation is the introduction of their Beyond Fried Chicken, a plant-based alternative to their traditional chicken. This move not only appeals to vegetarians and vegans but also to health-conscious consumers who are looking for more sustainable food options. By diversifying their menu, KFC has expanded its customer base and positioned itself as a brand that adapts to changing times.

KFC's commitment to product innovation is not limited to new menu items. The company also invests heavily in research and development to improve the quality and taste of their existing offerings. Through continuous improvement, KFC ensures that their customers always enjoy the best possible dining experience.

The Power of KFC's Advertising Techniques

Advertising plays a crucial role in creating awareness and driving sales for KFC. The brand's advertising campaigns are creative, engaging, and often evoke a sense of humor. Whether it's the catchy jingle or the humorous storytelling, KFC's advertisements stay top of mind and generate a strong emotional connection with consumers.

One of KFC's most memorable advertising campaigns was the introduction of their "Finger Lickin' Good" slogan. This simple yet effective phrase perfectly captured the essence of the brand and became synonymous with the joy of indulging in KFC's delicious chicken. The slogan became so ingrained in popular culture that it is still associated with KFC to this day.

KFC's advertising techniques also extend to social media platforms, where the brand engages with its customers in a fun and interactive way. From clever memes to engaging contests, KFC keeps its audience entertained and connected. By leveraging the power of social media, KFC has successfully created a strong online presence and fostered a community of loyal fans.

KFC's marketing strategy revolves around effective branding, continuous product innovation, and engaging advertising techniques . By staying true to its brand identity, adapting to changing consumer preferences, and creating memorable advertising campaigns, KFC has established itself as a global powerhouse in the fast-food industry.

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The Global Reach of KFC's Marketing

KFC's success is not limited to a single market – it has successfully expanded its reach to numerous countries around the world. So, what does it take to adapt marketing strategies for different cultures and address global trends?

Adapting Marketing Strategies for Different Cultures

KFC recognizes that cultural nuances can significantly impact consumer behavior. To succeed in different markets, the company tailors its marketing messages, menu offerings, and even store designs to suit local preferences. This localization approach has helped KFC position itself as a brand that understands and respects the customs and tastes of diverse communities.

For example, in India, where the majority of the population follows a vegetarian diet, KFC introduced a range of vegetarian options to cater to the local market. By offering dishes such as the Veg Zinger and Veg Rice Bowl, KFC was able to tap into the Indian market and attract a wider customer base.

In China, KFC adapted its marketing strategies to align with the Chinese New Year, a significant cultural event. They introduced special limited-edition menu items and launched festive campaigns to celebrate the holiday. This approach not only resonated with Chinese consumers but also showcased KFC's commitment to embracing local traditions.

The Influence of Global Trends on KFC's Marketing

As a global brand, KFC must monitor and adapt to global trends. From sustainability to convenience-driven consumer behavior, KFC identifies emerging trends and incorporates them into its marketing strategies. By staying ahead of the curve, KFC remains relevant and appealing to a wide range of customers worldwide.

One global trend that has greatly influenced KFC's marketing is the growing demand for healthier food options. In response, KFC introduced grilled chicken as an alternative to its signature fried chicken. This move not only catered to health-conscious consumers but also positioned KFC as a brand that values customer well-being.

Another global trend that has shaped KFC's marketing approach is the rise of social media and digital platforms. KFC leverages these platforms to engage with its audience, create viral marketing campaigns, and gather valuable consumer insights. By embracing digital trends, KFC has been able to connect with customers on a more personal level and maintain a strong online presence.

KFC recognizes the importance of sustainability and environmental responsibility. The company has taken steps to reduce its carbon footprint by implementing eco-friendly practices, such as using biodegradable packaging and sourcing ingredients from sustainable suppliers. By aligning its marketing messages with the global trend towards sustainability, KFC appeals to environmentally conscious consumers and showcases its commitment to a better future.

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The Role of Digital Marketing in KFC's Strategy

No marketing strategy is complete without a strong online presence. KFC has embraced digital marketing techniques to engage with its customers in new and exciting ways.

What exactly does digital marketing entail for KFC? Let's delve deeper into the various aspects of KFC's digital marketing strategy and how it has helped the brand thrive in the competitive fast food industry.

Social Media and KFC's Brand Image

KFC leverages social media platforms to connect with its audience and reinforce its brand image. Through entertaining and engaging content, KFC stays relevant and forms meaningful connections with its followers.

For instance, KFC's witty and humorous posts on Twitter have become a sensation, garnering thousands of retweets and likes. By adopting a playful tone and incorporating pop culture references, KFC creates a unique brand personality that resonates with its target audience.

KFC's social media presence extends beyond just posting content. The brand actively interacts with its followers and exemplifies a nice approach to community management. This includes responding to comments and messages, which further strengthens the bond between KFC and its customers. This approach helps drive brand loyalty and generate positive word-of-mouth.

KFC's Social Media Channels

KFC has amassed millions of followers across its social media channels. The brand's social presence spans short form video platforms like TikTok and Instagram to corporate branding on LinkedIn.

This comprehensive approach to social media marketing has given KFC a broad platform to engage with its audience and establish its brand in the modern marketing landscape.

Check out KFC's primary social media profiles and pages:

• KFC Instagram
• KFC Facebook Page
• KFC YouTube
• KFC X / Twitter
• KFC LinkedIn

KFC's Use of SEO and Online Advertising

KFC understands the importance of search engine optimization (SEO) and online advertising in reaching and attracting potential customers. By optimizing its website and running targeted online campaigns, KFC ensures its message reaches the right audience at the right time.

When it comes to SEO, KFC focuses on optimizing its website for relevant keywords, ensuring that it appears prominently in search engine results. This allows potential customers who are searching for fast food options to easily find and consider KFC as their preferred choice.

In addition to SEO, KFC also invests in online advertising to increase its brand visibility. Through strategic partnerships with popular websites and platforms, KFC's advertisements are strategically placed in front of its target audience, maximizing the chances of attracting new customers.

KFC embraces the power of data-driven marketing. By analyzing customer behavior and preferences, KFC can tailor its online advertising campaigns to deliver personalized messages to specific segments of its target audience. This strategic use of digital marketing channels contributes to increased brand awareness and customer acquisition.

KFC's digital marketing strategy encompasses various elements, including social media engagement, SEO, and online advertising. By leveraging these techniques, KFC has successfully built a strong online presence, connecting with its customers on a deeper level and driving brand loyalty. As the digital landscape continues to evolve, KFC remains at the forefront, constantly adapting its digital marketing efforts to stay relevant and continue its growth in the fast food industry.

Related: Liquid Death Marketing Strategy Case Study: Slaying the Beverage Industry with Killer Branding and Marketing

The Future of KFC's Marketing Strategy

What lies ahead for KFC's marketing strategy? Let's explore the emerging trends and the company's commitment to sustainability and ethical marketing .

Emerging Marketing Trends and KFC

KFC recognizes the ever-changing marketing landscape and continues to innovate. From embracing technology, such as mobile ordering and delivery apps, to exploring new ways to engage with Gen Z, KFC stays at the forefront of emerging marketing trends . This adaptability ensures that KFC remains relevant for years to come.

One of the emerging marketing trends that KFC has embraced is the use of social media influencers. By partnering with popular influencers who align with the brand's values and target audience, KFC is able to reach a wider audience and create a buzz around their products. These influencers often create engaging content featuring KFC's menu items, which not only increases brand visibility but also generates excitement and curiosity among consumers.

Another trend that KFC has tapped into is experiential marketing. The company understands that consumers are looking for more than just a meal - they want an experience. KFC has created immersive dining experiences, such as pop-up restaurants and themed events, where customers can not only enjoy their favorite KFC dishes but also engage with the brand in a unique and memorable way. These experiences not only create a sense of exclusivity but also encourage customers to share their experiences on social media, further amplifying KFC's reach.

Sustainability and Ethical Marketing at KFC

As consumer awareness of sustainability and ethical practices grows, KFC has made strides to address these concerns. The company has taken steps to source ingredients responsibly, reduce its carbon footprint, and contribute to local communities. By prioritizing sustainability and ethical practices, KFC not only meets consumer expectations but also differentiates itself as a socially responsible brand.

KFC has implemented various sustainability initiatives to minimize its environmental impact. For instance, the company has invested in energy-efficient equipment and technologies to reduce energy consumption in its restaurants. Additionally, KFC has partnered with suppliers who follow sustainable farming practices, ensuring that the ingredients used in their menu items are sourced responsibly.

KFC is committed to giving back to the communities it operates in. The company actively supports local initiatives and charities, focusing on areas such as education, hunger relief, and disaster response. By engaging in philanthropic efforts, KFC not only strengthens its relationship with local communities but also showcases its commitment to making a positive social impact.

Related: Lululemon Marketing Strategy - A Closer Look

Final Thoughts on KFC's Marketing Strategy

KFC's effective marketing strategy has played a pivotal role in its worldwide success. Through a combination of strong branding, product innovation, and engaging advertising techniques, KFC has built a loyal customer base.

By adapting its marketing strategies for different cultures, embracing digital marketing, and staying ahead of emerging trends, KFC continues to thrive in an ever-changing marketplace. As the company looks to the future, its commitment to sustainability and ethical marketing only solidifies its position as a leading global brand.

Frequently Asked Questions About KFC's Marketing Strategy

What type of marketing does kfc use.

KFC employs a blend of traditional and modern marketing strategies to connect with its audience across different platforms. This includes engaging in digital marketing efforts through social media, search engine marketing, and content marketing to interact with customers online.

KFC invests in traditional advertising channels such as television, radio, and print to maintain widespread visibility. The brand also undertakes experiential marketing campaigns that create unique, branded experiences to foster a deeper emotional connection with its audience. Furthermore, KFC practices localized marketing strategies, tailoring its menu items and marketing messages to suit the cultural and regional preferences of its diverse global markets, ensuring relevance and appeal across various demographics.

What are the 4Ps of KFC marketing strategy?

The 4Ps of KFC's marketing strategy encompass Product, Price, Place, and Promotion.

KFC's product strategy is centered around its signature original recipe chicken, complemented by a variety of other menu items designed to cater to local tastes and dietary preferences, including burgers, wraps, salads, and vegetarian options.

In terms of pricing, KFC adopts a competitive strategy that aims to deliver value for money while taking into consideration the local economic conditions and target customer segments.

The place aspect of KFC's strategy involves strategic location selection for its restaurant locations in high-traffic areas and an emphasis on online delivery platforms to maximize convenience for customers.

For promotion, KFC utilizes a mix of online and offline advertising, sales promotions, special offers, and local events to engage with customers and stimulate sales, ensuring a broad and effective reach.

What is KFC's business strategy?

KFC's current business strategy focuses on global expansion, innovation, and localization to drive growth and maintain its competitive edge.

The brand is committed to extending its international presence, particularly in emerging markets, by increasing its number of outlets and venturing into new regions. KFC places a strong emphasis on menu innovation, regularly introducing new and innovative products to keep the brand fresh and appealing.

Localization plays a critical role in KFC's strategy, with the brand adapting its menu and marketing efforts to align with local tastes, cultural norms, and preferences, a move that has been instrumental in its success across diverse markets. Additionally, KFC strives for operational efficiency by streamlining operations to reduce costs and improve customer service, leveraging technology in order processing and delivery services. The expansion of KFC's global footprint through franchising allows the brand to benefit from local expertise while mitigating operational risks.

What is KFC competitive strategy?

KFC's competitive strategy leverages differentiation and market penetration to maintain its position in the fast-food industry. The brand differentiates itself with its unique secret blend of 11 herbs and spices, high-quality ingredients, and distinct taste that sets it apart from competitors.

Through aggressive market penetration, KFC ensures that it remains accessible to a vast number of consumers by expanding the number of its outlets both domestically and internationally. KFC also focuses on enhancing the customer experience, improving service quality, restaurant ambiance, and engaging digitally to foster customer loyalty and encourage repeat business.

The brand is committed to adaptation and innovation, continuously updating its product offerings and embracing technological advancements in service delivery, such as mobile ordering and delivery services, to meet the evolving demands of consumers and stay ahead of competition.

About the Author

Hi, I'm Justin and I write Brand Credential. I started Brand Credential as a resource to help share expertise from my 10-year brand building journey. ‍ I currently serve as the VP of Marketing for a tech company where I oversee all go-to-market functions. Throughout my career I've helped companies scale revenue to millions of dollars, helped executives build personal brands, and created hundreds of pieces of content since starting to write online in 2012.

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Detailing the Business Model Of KFC from End-to-End

By Aditya Shastri

KFC holds a prominent position in the fast-food industry, with a presence in over 145 countries and an extensive network of 25,000 outlets, earning it the rank of the third-largest global fast-food chain. It was one of the 1st American fast-food chains to venture into international markets. As of 2023, the brand boasts a substantial estimated brand value of approximately $17,662 million.

Thus this makes us keen to know the business model of KFC. In this blog, we have listed the detailed business model of KFC which includes the value proposition, key partners, revenue model, cost structure, etc.

Before we start with its business model let us know about KFC as a company.

Colonel Harland Sanders, the founder of KFC, initially used to sell fried chicken from his roadside restaurant in Kentucky, USA. Colon Sanders, the founder of KFC kept the recipe of his trademark chicken a secret. 

KFC changed the way Americans ate chicken and posed a serious threat to the existing hamburger culture. Seeing the overwhelming response, Sanders decided to expand further by adopting the franchisee business model.    

Kentucky Fried Chicken ( K FC ), is a global fast-food chain that is widely known for its delicious fried chicken. Its headquarters is located in Louisville, Kentucky, in the United States. Founded by Colonel Harland Sanders in the 1930s, this brand is renowned for its secret blend of 11 herbs and spices, which makes their chicken irresistibly flavorful and crispy.

Sanders initially used to sell fried chicken from his roadside restaurant in Kentucky, USA. He kept the recipe of his trademark chicken a secret. KFC changed the way Americans ate chicken and posed a serious threat to the existing hamburger culture. Seeing the overwhelming response, Sanders decided to expand further by adopting the franchisee business model.    

Today, KFC’s distinctive red-and-white logo and finger-licking good chicken have made it a beloved household name with a global presence spanning more than 25,000 locations. Since 2002, KFC has operated as a subsidiary within the “YUM!” corporate family, which also owns several other well-known restaurant chains like Taco Bell and Pizza Hut, among others.

What’s new with KFC

Check out some current news about KFC:

Big Boro Eats

The KFC Youth Foundation launched a program “Big Boro Eats” to provide food aid and education to youngsters in Middlesbrough. The major aim of this initiative was to address the pressing issue of youth deprivation, with almost a third of children living in income-deprived households. The program was conducted for seven consecutive weeks from 24th July to 8th September. It included several activities such as teaching food-related skills, budgeting, and nutrition. Through this, they successfully created a safe and inclusive space for young people to develop life skills. This was a huge step towards establishing a permanent KFC Youth Foundation center in Middlesbrough.

Partnership with Deion Sanders and his family

KFC has partnered with NFL legend and University of Colorado Boulder head football coach Deion “Prime Time” Sanders and his family to promote their latest menu innovations, including new Kentucky Fried Chicken Nuggets. The Sanders family, who are longtime KFC fans, collaborated with the brand in various promotional activities. This partnership highlights the tradition of enjoying KFC as a family during meal times, with Coach Prime and his five children appearing together in promotional content. 

Drone delivery

In a recent cricket match between Australia and South Africa, a drone delivered a KFC chicken bucket to South African cricketer David Miller mid-match, creating an innovative and entertaining moment. The video was shared by the official handle of South Africa’s national cricket team. David Miller expressed his delight at the unique experience, praising KFC for their creative delivery method. The use of drones to deliver indicates a potential future trend in improving convenience and speed in food delivery services.

Target Audience of KFC

Below is a buyer persona for KFC which will help us understand the target audience.

Buyer’s Persona

Profession:

• Affordable options.
• Convenient locations.
• Diverse menu. 
• Quality foods.
• Loyalty rewards.

Interest & Hobbies

• Art and craft
• Playing Guitar
• Socializing with new people

Pain Points

• Inconsistent opening hours.
• Overcrowded restaurants and slow checkout process.
• Lack of healthy options. 
• Inconsistent portion sizes.

Social Media Presence

Let us now start reading in detail about the business model of KFC.

Business Model of KFC

KFC’s management cannot oversee all the operations of its outlets over the world by sitting in one city. Thus, KFC adopted the Franchise Model as its Business Model just like the other fast-food restaurant joint did.

The franchise model is used when the parent company has a unique product and gives permission through means of licenses to others to use its logo, brand name, operating methods, etc. An agreement needs to be signed where the franchisee agrees to strictly adhere to the conditions laid down by the parent company. 

Let us now see step by step the different pasts under the business model of KFC.

Business Model of KFC – Value Proposition

Let us see the below-listed value proposition of KFC:

1. High-quality food

As their tagline says “Nobody does chicken like KFC”. KFC makes sure that the quality is not compromised in any manner in any franchise all over the world. All the raw material goes through thorough quality checks. The food is always clean and fresh and prepared from scratch by the cooks in the kitchen. 

KFC makes sure that most of its items can be afforded by the fast-food eating population. However, the prices vary from location to location due to import duties, etc. They also have Super Meals, Buddy Meals, and Combo Meals that can fit your budget and value for money. 

3. Ambiance and staff

KFC ensures that the vibe of the restaurant is very family-friendly. The layout, the decor, and the music all help to create a lively and upbeat environment that does not make you want to leave but instead makes you want to spend more time with your loved ones. 

4. Variety of options 

KFC is constantly trying to come up with new and innovative ways to serve its customers’ needs. Although KFC specializes in non-vegetarian food, it makes sure to add a couple of items that cater to its vegetarian audience too. They try to come up with new dishes that satisfy the local tastes of the people of that location keeping its original roots intact. Eg. Tandoori Chicken Zinger in India, Scoff EE Cup in the UK, and Porridge in China.  

5. Brand name and loyalty

KFC is very popular and known worldwide for its food and services. It has created a long-standing loyalty from individual customers and families. Its iconic recipes comprising a secret blend of “11 herbs and spices” make you want to go back again and again.

Let us now see the different key partners of KFC.

Business Model of KFC – Key Partners

Handling such a huge business is not an easy job. One needs constant support on various fronts from the people specialized in that field so that the business operates smoothly and efficiently. The partners that make up the heart of the KFC Business Model are: 

1. Franchise Partners 

Franchise partners are very crucial to KFC’s success. Since they operate the restaurants they can make or break the brand image and identity. Thus, KFC shall make sure that it gives franchising licenses to only those food companies and private business owners whom they trust and they feel will be able to abide by the standards and rules. 

2. Suppliers and Vendors 

These partners supply the restaurants with raw materials, ingredients, equipment, and all those things that are necessary for the operating and day-to-day functioning of the business. It is crucial to tie up with only those suppliers that can provide good quality goods and services. 

3. Marketing Partners 

KFC needs to tie up with influencers on social media, celebrities, sports teams, commercial brands, advertising agencies, and other organizations that help to create a desire for the product, pique the interest of the customers , generate leads, and eventually lead to a sale. 

4. Delivery and Distribution Partners 

KFC needs constant support from its logistics partners, delivery agencies, home delivery services, etc that will help to streamline the process and enhance the customer experience. 

Let us now see the revenue model of KFC.

Business Model of KFC – Revenue Model

KFC earns most of its revenue from the sale of food and drinks to its customers (both online and in-store). It also earns from its franchise agreement through its licensing fees. As of 2022, KFC earned around US$ 31.116 billion worth of total revenue. The annual revenue for 2022 was 6.8 billion, which was estimated to be a 3.92% growth from 2021.

Let us now see the cost structure of KFC.

Business Model of KFC – Cost Structure

KFC’s pricing cannot be the same in every country. The price depends on various factors like- 

• the cost of equipment, raw materials, and ingredients
• operational costs, occupancy costs, 
• payments to its various partners 
• advertising costs, marketing costs, etc. 

Let us now see the customer segments and marketing strategy of KFC.

Business Model of KFC – Customer Segments and Marketing Strategy

KFC targets three main customer segments. 

• The Individual Customer- this customer is usually a working person who just wants something filling but it shall be quick, affordable, and accessible. 
• Families- KFC is a very family-friendly place. The staff too is trained in such a way that will make families feel at home. There is also a separate play area for young children and small toys in the meals. 
• Group Events- Be it a birthday party, an office get-together, or any celebration, KFC is your ultimate go-to destination. 

Sander’s picture is still used today for marketing purposes. It is considered to be KFC’s international symbol of hospitality. 

Business Model of KFC-Channels

KFC primarily caters to its customer base through a vast network consisting of over 25,000 outlets strategically located worldwide. This expansive network extends its reach to approximately 145 countries and territories across various continents, including North and South America, Asia, Europe, the Middle East, and Africa. They have dedicated and friendly sales and service staff who are readily available to assist the customers.

In addition to this, KFC offers the convenience of online ordering through their website or app . Customers can select their preferred dishes, place orders, and even schedule a delivery at their convenience. KFC has its own team of delivery drivers to ensure that food arrives at the doorstep. This option is great for those who prefer to order from the comfort of their homes.

Let us now see the competitor analysis of KFC.

Top 5 Competitors of KFC

• McDonalds : McDonalds is the world’s largest fast-food restaurant chain. It’s widely known for its yummy burgers, crispy fries, and refreshing drinks. People love to go there for a quick and tasty meal, and they have lots of different choices on their menu. McDonald’s is a place where one can enjoy delicious food with friends and family.
• Starbucks : Starbucks is a famous coffee chain found all around the world. They are the second largest competitors of KFC and they are known for their wide range of coffee and specialty drinks, like lattes and frappuccinos. People often visit Starbucks to enjoy a cup of coffee or to work/study in a cozy environment.
•   Burger King : Burger King is a fast-food restaurant chain recognized globally. They are famous for their flame-grilled burgers and a menu that includes items like the Whopper and chicken sandwiches. Burger King provides a convenient option for people looking for tasty burgers and fast meals.
• Subway : Subway is a global fast-food restaurant chain specializing in customizable sandwiches and salads. They offer a wide variety of fresh ingredients and bread choices, allowing customers to create their own sandwiches or choose from a menu of pre-designed options. Subway is known for its “Eat Fresh” slogan and is a popular choice for quick and healthy fast food options.
• Pizza Hut : Pizza Hut is a global pizza restaurant chain recognized for its diverse menu of pizza offerings. They offer a wide selection of pizzas, including classics like pepperoni. Pizza Hut often offers delivery and dine-in options, making it a convenient choice for pizza enthusiasts worldwide.

Before we conclude let us have a look at an example of a failed campaign that faced customer backlash.

Example of a Failed Campaign

The kfc coupon fiasco.

To market their newly revealed grilled chicken, KFC joined forces in 2009 with Oprah Winfrey. As a part of this business partnership, Oprah was to promote KFC’s offer of a free two-piece grilled chicken meal. Having underestimated Oprah’s influence, KFC was flabbergasted when an estimated 10 million people downloaded the coupon for the free meal online.

KFC customers felt cheated and infuriated when they were told they couldn’t receive the free chicken they were promised.

Not having enough of the product to meet the demand, KFC had to actually turn customers away and in some locations, close early. KFC was forced to drop the deal and apologize to its frustrated clientele.

Conclusion 

On the overview of the business model of KFC, we have can clearly see that the company utilized its business model very well and has been growing at a wide range.

In its value proposition, it has high-quality food, affordable prices, a variety of products, and brand name and loyalty which plays a crucial role in the growth of the business. It has different partners in the market which help it grow in the market like franchise partners, suppliers and vendors, marketing partners, and distribution partners.

It has a well-distributed cost structure which constitutes the cost of equipment, raw material, and ingredients, operational costs, occupancy costs, payments to its various partner’s advertising costs, marketing costs, etc. 

Wasn’t it interesting to know the business model of KFC? Learn how to grow your business using digital marketing, check out our website for more information . You can also check out Free Digital Marketing Masterclass by IIDE to understand what digital marketing is all about.

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Do share your thoughts about the case study in the comments below. Hope you liked this case study and found it informative and insightful!

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

Thank You for a brief and concise explanation on key points related to the KFC Business model.

Thanks, very informative. Kindly touch base on the organizational culture management of KFC stores in USA

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Experiment: How KFC boosted store sales by intercepting Aussies’ food decisions on Search

What we set out to test.

Can Search ads increase both online and offline sales by meeting people where they’re searching?

The background

A household name, Kentucky Fried Chicken (KFC) is one of the world’s largest fast food restaurant chains. Committed towards continuous growth, KFC was keen to shake up its advertising strategy to engage its Australian customers more effectively. In particular, the brand wanted to know how it could connect with hungry Aussies while they were deciding their next meals. With search interest in fast food accelerating by 30% during Australia’s COVID-19 lockdowns, 1 KFC was eager to capture this rising demand.

Search is an increasingly critical turning point for undecided diners. Every day, more than 465,000 food decisions are made on Google.com.au. 2 Faced with rumbling tummies, people make these decisions quickly and impulsively, with 61% spending less than 30 minutes to research their options . Amid this messy middle , consumers are fickle — in fact, 45% of Aussies will opt for their second meal choice just because it shows up while they’re searching, 3 giving brands like KFC an incredibly short window to find and influence these hungry customers.

With these insights in mind, KFC decided to run an experiment to test if Search ads could indeed intercept food decisions, thereby boosting sales both online and offline.

How we set the experiment up

Based on KFC’s store attributes and capabilities, the team identified two sets of statistically similar stores. They then ran a search query-based control/exposed test using Google’s GeoX tool, where the exposed test group had an elevated level of search activity compared to the control group:

• Control group: Without Search ad activity
• Test group: With Search ad activity

By comparing the difference in store sales performance, KFC could determine the incremental impact of its Search ads. Performance was measured both online and offline, in terms of website sales and visits to its brick and mortar stores.

KFC’s Search ads covered generic keyword topics, enabling the brand to stand out during searches for impulse-driven food-related queries. The experiment ran for a total of four weeks in New South Wales, with a single-state focus to minimise the impact of externalities such as lockdowns.

Solutions we used

• Generic keywords
• Geo experiments

What we learned

By tapping into the secrets of search behaviour, KFC unlocked impressive business growth. The test reported a tangible difference in sales performance, both online and offline, between the test and control groups.

The test group exposed to Search ads delivered:

This marketing case study proves the importance of an omnichannel strategy , as being discoverable online boosted KFC’s online and offline orders. The experiment drove a significant uplift in both sales and average order value. For every $1 invested, KFC saw a $2 return. This meant that when KFC showed up where hungry Australians were searching and intercepted their meal decisions, people were not only more likely to purchase from KFC — they also spent more.

By owning prime Search real estate, KFC captured consumer preference and became top of mind for its prospective customers. Since KFC only had to pay when the ad received clicks, this also helped to drive brand awareness for free, increasing efficiency.

Following the success of this pilot test, KFC plans to roll this out nationally.

"We were initially sceptical of the impact of Search in driving incremental sales for KFC. This robust experiment proved its value in driving growth for our business."

“The campaign has proven that utilising search as an omnichannel tool can be highly valuable for the QSR category. Going beyond a siloed search approach and having ruthless focus on business outcomes, helped us to develop a highly effective approach. We’ve been able to tap into more consumer moments and ultimately drive KFC ahead of the market.”

This case study is part of the Experiment with Google Ads program.

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1,2 Google Internal Data, 2021.

3 Google/The Behavioural Architects, Australia, Untangling the Messy Middle, n=1,000 prospective online purchasers per category, ages 18-65, Feb. 2020.

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More From Forbes

How kfc scales technologies across 22,000 restaurants around the world.

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KFC plans to have kiosks in 5,000 restaurants around the world by 2020.

If you think it’s tough trying to keep up with the dizzying pace of technology innovations in the restaurant space, try doing so across more than 22,000 restaurants in more than 135 countries. That's exactly what the KFC Global team is tasked with doing every single day.

Though there are vast disparities across many of these markets, KFC’s digital strategy is consistent across the system.

“It’s all about RED – relevant, easy, distinctive. The heart of all of that is easy and technology is the root of making everything easy,” said Gavin Felder, KFC Global’s chief financial officer, who oversees strategy, digital and technology, financial planning, supply chain and IT security for the chain.

For customers, achieving "easy" means implementing enhancements, like delivery, that are aimed at removing friction for customers and, ideally, contributing to positive sales. Doing so with such a large footprint, however, is easier said than done. That’s one of the reasons the company formed the KFC Digital Ventures Team about 18 months ago.

Based in the UK, the team essentially acts like a startup, taking on projects and developing those projects within a short time frame to see if and how they can work within the system.

“The team is trained in agile working methods. They’re product builders and developers who work in two-week sprints. We work in this waterfall way in which we advance the product piece by piece,” Felder said. “So when we’re building new platforms, we’re building the minimum skeleton first and then the flesh around it over time. This approach allows us to be more nimble. Our business is adjusting to how that little team works within the overall team.”

This process helps inform the KFC team what works where and what should be a priority. Right now, it’s clear there are three top priorities KFC is focused on to position the company as easy – delivery, click-and-collect and kiosks. How each is prioritized is different in every market. KFC has offered in-house delivery in the Middle East for decades, for example, and the mature channel drives over 30% of sales.

In the chain’s more developed markets, such as the UK, Australia and North America, the economics don’t work for an in-house model, so the team has to figure out which aggregators offer the best terms for both franchisees and customers. In the U.S., that means Grubhub, which signed a partnership agreement with parent company Yum Brands early last year.

As delivery reaches an inflection point across the world, Felder thinks KFC can differentiate by leveraging its signature offerings ( bone-in chicken retains heat well ) and by steering clear of the actual word “delivery.”

“’Delivery’ just feels very corporate. We don’t want just be an ‘us too’ in delivery, but something that is very unique to KFC. In the past, KFC has always been one of those unique brands that was allowed into your home and put onto the middle of your dinner table,” he said. “We know there’s a huge business to be built around delivery for us, and the question is how we build it to be more distinctive to our business.”

Click-and-collect is another priority for KFC, and for good reason.  According to Nielsen , millennials prefer click-and-collect over home delivery when it comes to grocery shopping, which could easily translate into the restaurant space as more consumers get used to the channel. There are plenty of case studies to inspire KFC’s continued expansion of this channel as well. In Australia, for example, 98% of KFC restaurants offer click-and-collect and checks are 20% higher. The company is quickly ramping up this service, with plans to offer click-and-collect in about 18,000 of its 22,000 restaurants by next year.

“We have been pleasantly surprised with click-and-collect. We thought it could be interesting when we started, but we also wondered what the real benefit was since you’re still going to sit behind a stack of cars or in the queuing system in the store,” Felder said. “But it’s actually been a phenomenal success for us. It’s allowed us to access customer data, and customers are giving us credit for taking that small piece of friction away.”

Then, there’s kiosks. During Yum’s Q4 earnings call , COO David Gibbs said KFC will have kiosks in 5,000 restaurants by 2020. If McDonald’s kiosk rollout is any indication, this deployment should provide a bit of a sales lift for KFC. Last year, McDonald’s CEO Steve Easterbrook said average checks from kiosk orders are higher because customers tend to linger longer and select more offerings at a kiosk than in front of a worker.

Felder confirms that order anxiety is a real thing and is therefore optimistic about kiosks’ potential.

“You can take your time at a kiosk and not have to worry about five people standing behind you that may give you anxiety. For us, any small piece of friction we can take away–from the ordering stage to the collection stage–customers are rewarding us for,” he said. “The more we open up access and take friction away and make things easier and open up more options, that just gives customers more reasons to choose us.”

Beyond delivery, click-and-collect and kiosks, KFC is also working on a mobile app with a goal of providing a "unique" experience for fans. What that means, exactly, isn't clear at this point. Having a loyalty program within that app also remains an open question.

“If you don’t do loyalty well, you’re essentially just giving food away to your most loyal customers. If you do it well – if you can figure out how to make a seamless, rewarding experience and then use that customer data to better serve and re-target that customer, that’s where the magic is,” he said. “Everybody’s trying to figure out just what that looks like.”

The good news for KFC is that the company shares its headquarters with Pizza Hut, which Felder calls “one of the most evolved digital businesses in QSR.” Indeed, Pizza Hut was the first pizza chain to launch an iPhone app , which it did in 2009.

“We’re not starting from scratch, we’re learning from what Pizza Hut has learned around data science, loyalty, performance marketing and how to wrap that all within an app experience,” Felder said.

Employee-facing technologies also a priority

Felder also makes a point to note that the KFC Global team is focused on more than customer-facing platforms. With nearly 1 million team members across the system, the company is also exploring ways technology can make their lives easier. Right now, there are two employee-facing technologies that have emerged as the most promising–voice and Google Glass.

KFC is experimenting with voice automation in a handful of countries (not the U.S.) to facilitate back-of-house training. For example, if an employee needs to be reminded of a step in the cooking process, they can ask just ask Alexa instead of washing their hands, retrieving the textbook to find the answer, and then washing their hands again.

Meanwhile, KFC struck a partnership with Google last year in Ecuador that allows its teams there to be trained using Google Glass technology. The technology provides real-time audio/visual learning cues to tell an employee how to prepare a product step by step.

“We want to build on that because we’ve had much higher engagement levels from our team and they love the technology. It's super early, but I think it’s got broad implications,” Felder said. “We genuinely believe that if we can make a very demanding job easier for our team members, it’s going to translate into a better engaged employee and a much better customer experience. For us, it’s always about finding the right technology.”

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The inside story of the great KFC chicken shortage of 2018

Why didn't the chicken cross the road? Because of a single point-of-failure in the chicken restaurant's supply chain and lack of contingency planning, that's why.

With over three quarters of its locations closed on Monday, KFC was thrust into the national news as the fried chicken shop that had run out of chicken. But as the details emerged, the blame was moved to DHL.

Having become the chain's new logistics partner on February 14, the day the crisis began to take shape, the company and its single warehouse in Rugby (as opposed to previous contract holder Bidvest's six) were put under intense scrutiny for their failure to deliver KFC's ingredients. What led to the break down of the supply chain? Are DHL wrong for using one depot? And how long until the situation returns to normal? We asked a pair of experts to find some answers.

At around 01:40 on February 14, a collision involving seven vehicles took place between junctions two and three of the M6. One man was killed, and two others injured. Police closed off the area between the two junctions to investigate, and eventually arrested a man on suspicion of causing death by dangerous driving. Shortly afterwards, a pair of lorries collided near junction one, although neither driver was injured.

These three junctions are in the vicinity of Rugby, where DHL's warehouse is located. With its lorries getting stuck in the traffic as soon as they left the depot, and no other locations to send deliveries from, the delays that would lead to the KFC chicken shortage began here. In a statement, DHL said it was working with KFC to re-open all its stores in the coming days. "Whilst we are not the only party responsible for the supply chain to KFC, we do apologise for the inconvenience and disappointment caused to KFC and their customers by this incident,” the spokesperson continued. KFC did not respond to a request for comment.

Many have questioned the wisdom of operating out of a single warehouse, but according to Richard Wilding, professor of supply chain management at Cranfield School of Management, this is apparently not uncommon.

"You have something called the 'golden rectangle' that is between Milton Keynes, Rugby, Daventry and Northampton," he says. "If you locate a facility in that rectangle, you can deliver overnight to just about anybody in the United Kingdom. This is quite a standard way of working for supply chains of this type."

However, even if it is possible to use a single warehouse, Samir Dani, professor of logistics and supply chain management at the University of Huddersfield's Business School, thinks that it isn't always appropriate to do so. "Companies may operate out of one warehouse, but you have to think about the product. There are legality issues around the quality of the produce and the contamination that can happen is not handled properly. That's the problem with food, distribution can't be thought about like any other supply chain."

The lack of chicken began to hit on February 16. KFCs started to shut down locations in response to their missing ingredients, meaning that by February 18, only 266 of the 870 restaurants in the UK and Ireland were open. Locations in Northern Ireland and the Republic of Ireland have not been affected due to different logistical arrangements.

Dani says the cause of the crisis which shut over two thirds of KFC's locations will be debated for a long time to come, but believes the decision to use the single depot didn't help matters. "Serving the length and breadth of the country from one warehouse is a complex task anyway. The fact that it was a new warehouse, new IT system, and the handover was just happening, makes this a perfect storm."

But the full cause of the great chicken crisis is more complex. "Using a single location will not be the lone cause of this particular problem at all," says Wilding. "There will have been a number of elements which have come together. Demand, automation in the facility, the planning software, all those sorts of things interacting together. There may be a particular cause which will come out of this, but pinpointing that may be a tricky thing."

Dani thinks poor preparation may also be to blame. "It's a complex scenario, but I think it would mainly be the network planning. To send perishable products into the stores, you have to think about what kind of network you need, how many distribution centres? I think that planning may have had a failing of some kind. The IT systems may not have had the right checks before going live, if so, what were the contingency measures in those circumstances?" In a supply chain, he continues, disruption can happen for lots of reasons, but in the case of KFC a number of things have seemingly gone wrong at once.

Disruption is fairly common in supply chains. Wilding says that approximately ten per cent of chains experience disruption during a year. Normally these aren't noticeable because only a small number of locations or a certain item would be affected. But in KFC's case, with its specialised menu and single warehouse, the problem was much larger, and quickly noticed by customers.

In terms of returning to normality, Wilding says there are a few separate questions to consider. "How long will customers still be noticing the disruption? Probably for another few days. However, the overall disruption to the whole network, including the chicken farms and so on, that's going to go on for a longer period of time. Then you've got to ask how long it's going to take for KFC to rebuild confidence with its customer base."

It's safe to say that public confidence in KFC is shaken. Between phone calls to Tower Hamlets Police complaining about the limited menu, and a movement in Bristol to nationalise the chain to prevent future trouble, regaining the people's trust will be a formidable task for Colonel Sanders. No matter how finger lickin' good his products might be.

Dani thinks people are missing the point by focusing on just the restaurants and their customers. "The bigger question is from a sustainability and food waste perspective. KFC have 500 farmers in the network that deliver chickens, which is the beauty of the model because it lets them use fresh chicken. What's happening to the farmers in this situation? What's happening to the chickens that are in the system at the moment? How much of it is being wasted?"

Plenty, as it turns out. There have been reports of entire lorries of chicken spoiling in the depot, as drivers are kept waiting for hours just to enter; another driver said the temperature regulator on his trailer had been set incorrectly, leading to more food waste .

So, what can we learn from all of this? Perhaps it's the importance of planning for the worst. "I think in this scenario you cannot see any contingency planning in place," Dani says. "They are reacting to the situation as a crisis rather than saying that they had thought about this scenario and are going to go back to stability very quickly. So I think it's shown that they were not resilient enough."

For Wilding, the tale of KFC highlights an oft-overlooked area of competition. "The key thing to recognise is that competition is no longer between individual companies, it's between the supply chains they are part of."

"What makes up those supply chains is lots of different companies, lots of different relationships, all trying to manage processes, infrastructure, equipment, information systems and its staff, to make all of that perform in a synchronised way, so that the customer gets the chicken they want."

This article was originally published by WIRED UK

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KFC — A transformed digital ordering platform, merging KFC’s iconic brand with unparalleled convenience.

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Most quick-service restaurants treat their websites as purely transactional moments, assuming that consumers are already converted and ready to order. KFC was no different. They let third-party delivery services handle most online orders, while they prioritized in-person experiences to reinforce their brand.

But consumer expectations have been shifting rapidly. They demand more convenience and personalization than ever before, expecting brands to meet – and exceed – their needs online and on the go. With estimates that quick-service restaurants will be 54% digital by 2025, KFC needed an agency partner to help bring their southern hospitality into the digital age.

They tasked us with crafting an industry-leading customer experience, both in-person and online, that would embody the warm, irreverent personality of their brand while pushing them ahead of their quick-service competitors.

From innovative drive-thru experiences to a completely revamped website and mobile app, we aimed to help KFC sell more finger-licking chicken by fusing the charm of the Colonel with the speed that modern consumers crave. We used insights from consumer research to overhaul the brand’s entire digital approach.

This meant developing new strategies for their online menu architecture and photography, elevating their brand with copy in the Colonel’s unique voice, and delivering both creative and technological support for their new best-in-class experience. We also created a dynamic design system for a future-proof platform that could scale their brand consistently across all channels.

Website Experience

Through insight-driven personalization, we created an online and mobile experience that was not only more convenient, but also more fun. We added customization that allowed customers to reorder their go-to favorites again and again, along with a recommendation tool to inspire new cravings based on previous purchases and behaviors.

App Experience

We built KFC's mobile app from the ground up, creating more connectivity between online and in-person experiences. New features include progress bars, which help consumers track the status of their orders, and digital ticketing, which enables more seamless pick-up and drive thru.

Omnichannel

We leveraged the brand’s strong visual identity to build a scalable design system with KFC’s personality infused into every element, from the typography to the overall Americana feel. We also used the brand’s iconic red in tasteful moments that livened up the experience, like key CTAs, and dialed up the deliciousness with close-ups of flavorful food to inspire craving and encourage discovery.

Relationship

As KFC’s creative technology partner since 2019, we’ve created an omnichannel digital transformation for one of the world’s biggest and best-loved restaurant brands. We not only overhauled their digital strategy from a creative perspective, but also helped build out their new technology – earning one of their Yum! STAR Awards for innovative digital experiences along the way.

Our partnership has driven large-scale growth for KFC in the US. By designing a more frictionless online-to-offline experience at drive-thru and pickup, we contributed to a 13% in same-store sales over a two-year period (2019-2021). Meanwhile, by reimagining KFC’s website and app experience we contributed to significant digital sales growth while bringing the unmistakable brand personality and voice of the Colonel into new digital territories.

Increase in same store sales over a two year period

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• KFC Case Study: How KFC is building a winning culture where people grow & thrive

• Anushree Sharma ,
• Updated On Nov 17, 2022 at 02:41 PM IST

• Flexibility at work: Even before the pandemic, when many companies were discussing and exploring mechanisms, we launched a hybrid way of working. We had a structure behind it, we expected our talents to be in the office for only communication, collaboration, celebration, and community days. We have a corporate calendar for this- 2-3 days we are in the office for these moments. During the pandemic, since working from home became a common practice, we added the WFH benefit, which supported them to have better wi-fi, a better headset, and ergonomic chairs. Also, during the pandemic as a distinctive approach, we launched the Work from Anywhere/Everywhere Policy. Our talents could work from “anywhere in the world.” This is a permanent practice now. 4 weeks a year, they can work anywhere in the world. We support them with a unique WFE monetary benefit so that they can ensure they have the appropriate distant working condition.
• Wellness & well-being: During the pandemic, on top of our wellness programs, we launched an advanced 360 Wellness program. We had many virtual sessions about wellness. After the pandemic, we elevated the program and now, we work with a vendor, to give our talents a menu so that they can choose and create their own recipes. From Yoga to Salsa Dances, from Spa to Table tennis they create their own wellness routine. Other than standard wellness programs we work with global experts in finance, and psychology who can take consultation when needed. We updated our benefit structure and fixed all the friction points from a fairness perspective. irrespective of their levels we included all employees in our health and life insurance. Families are included in yearly health check-ups. Families became an integral part of the KFC community. We have family offsites outside Dubai for families.
• Inclusion: We believe in ALL people. Our talents become their best selves when they feel that they are treated fair when they are included. Even during the pandemic, we kept our focus on diversity, inclusion, and belonging layers. We have 19 different nationalities in the office. Our gender parity ratio is 50%/50 same for advancements. Advt
• Employee Resource Group: We have Employee Resource Groups where we aim to have micro communities for a better feeling of belonging. From cooking to outdoor, language learning to photography our talents are sharing their passions. We have Special programs like Shine (globally selected programs) where we focus on underrepresented groups. Shine is a program to: a. S ponsor them to have a fair share in the ladder of opportunities, b. H elp them to equip themselves with the right light skills c. I nspire them to unlock their own potential, d. N arrate their Stories, road blockers, friction points in life and e. E ncourage them to have an impact with their full potential.
• By Anushree Sharma ,
• Published On Nov 14, 2022 at 09:00 AM IST

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Strategy Case Study: Analyzing the Success of KFC in China

Table of Contents

KFC Globalization Strategy

One of the secrets behind KFC’s global success is due to how it adapts its business to different countries and cultures while also standardizing other aspects of its operations at the same time. What this means is that the company standardizes some critical branding and operational aspects of the company, but carefully localizes various other aspects of its business model to adapt to local variables. This is known as a transnational strategy which we have covered in a separate guide .

Adopting such a hybrid strategy often allows companies to bank on advantages from both approaches simultaneously. Localization of strategies can be particularly important for large countries such as China which have a strong culture and local traditions. In fact, China is so large and diverse that there are significant differences in subcultures even within the country. Different regions of China have different local variables that may even be unique to them. We will explore in further detail how KFC has successfully cracked the code while competitors like McDonald’s have struggled.

Before delving into the specifics of how KFC won over China, we need to complete the first step in strategy analysis, which is to explore the internal and external factors that influence the success of a business. Most of the facts and figures presented in this case study are taken from the company’s Annual and Sustainability Reports for 2021.

Overview of KFC in China

How did KFC enter China?

KFC entered China in 1987 through a joint venture with two local partners. One of them was Beijing Tourist Bureau, which held 27% of ownership, and the other was Beijing Food Production, which held 13%. The remaining 60% remained under KFC. This was a time when governmental regulation on foreign ownership in China was still quite strict. Hence, the company had no other option but to partner with these local entities. However, this partnership came with the added benefit of allowing the company access to the connections of these entities within the government which made KFC’s entry in China smooth and successful.

There were some changes made to foreign ownership regulations in the 1990’s which allowed the company to dissolve the joint venture structure. The fact that the company had established a good foothold in the market by then, with a strong distribution network, stores, fleet, and flow of operations, helped it set out further on its own.

What is KFC Called in China?

KFC is called ‘Kendeji’ in China and as one may infer, it is an approximate transliteration using a close pronunciation of ‘Kentucky’. The official name of the company is written as 肯德基 in Chinese (Kěn Dé Ji in Pinyin). This isn’t a literal translation since it is more common for foreign companies in China to adopt the closest phonetical words corresponding to the original foreign name of the company. The actual meaning of the Chinese characters in KFC China’s official is as follows.

The choice of Chinese characters by foreign brands is often an effective signal of the company’s values and intended positioning strategy. What we can infer from the meanings of each individual character and their combines meaning is that KFC China aims to invoke a perception of trust and dependability in the minds of local Chinese customers. This is a particularly interesting choice, especially in the light of frequent food safety scandals in the food retailing industry of China, which we shall cover in subsequent sections.

KFC also has an unofficial nickname in China. Some people refer to it as ‘Kai Feng Cai’. This is a play on words as this name is taken from it’s initials, while also represents a popular dish in local cuisine. This another testament to the local association of KFC in China. The company has embraced this nickname in recent times by giving this name to its line of ready-to-cook meals.

Key Facts and Statistics About KFC China

Detailed analysis of various aspects of the company’s strategy, business model and performance in China shall follow in the subsequent sections. However, here’s a quick recap of some interesting facts and statistics about the company’s operations in China.

• KFC’s revenue in China was just over USD$7 billion in 2021
• The company operates 8,500 stores in the country
• It opens around 3 new stores per day on average
• Around 15% of the company’s stores in China are operated by franchisees
• There are 8,500 KFC stores in China, as of 2022
• KFC China sources the materials needed for its operations from 800 suppliers, as of 2022
• Delivery orders typically account for about 20% of total sales
• However, this increased to around 30% as a result of Covid-19

Growth of KFC in China

To say that KFC is ‘popular’ in China would be an understatement. The company has been far ahead of other international fast food retail chains in China since the 1990’s and continues to consolidate its position further. It must be recognized that right from the time of its entry in this market, KFC China successfully positioned its brand as being in tune with Chinese culture. In comparison, the localization efforts of McDonalds’s came a few years after its entry. This was a case of ‘too little, too late’ for McDonald’s as KFC made good use of its 3-year head-start to consolidate its position.

The success of KFC in China is exemplified by the fact that the company opens an astounding average of 3 new stores per day here! What makes this stat even more astonishing is the fact that these numbers are post-Covid!

The exponential growth achieved by the company can be better understood by looking at the number of stores under its banner in China. This is illustrated in the graph below. The company started gradually by establishing only 11 stores in its first 5 years of operations in this market. This was then scaled up to 100 stores within a decade. The next few years saw hundreds of stores being added every single year to reach almost 2,500 stores within a 20-year span.

As shown in the graph, the growth took a small hit during the few years following global financial crisis of 2008. However, it bounced back even stronger and hit a period of its highest growth during the next decade. As of the time of this case study in 2022, the KFC operates 8,500 stores in China. In comparison, McDonald’s only has about 4,000 outlets in China, which is barely half the number of outlets as KFC.

KFC China’s operations and profitability took a fairly big hit starting from the first quarter of 2020 due to the Covid-19 pandemic. This led to temporary store closures in many places and even permanent closures in some. During the peak of the pandemic in 2020, KFC had to close nearly 35% of its stores. However, the company has bounced back from this setback and looks to be back on track with its strategic vision of continuing to expand its presence in China by opening even more stores in 2022 and beyond.

Geographic Spread of KFC in China

When evaluating the growth of KFC in China, a key factor that needs to be taken into consideration is geography. Being a very large country, there is a high level of diversity in demographic variables for different regions of the country. The different cities in the countries are often separated by economists into four tiers based on economic growth, gross domestic product and geographic reach.

The Tier 3 and 4 cities often have a lower economic output, which also means that cost of labor would be less. It is also common to see lower populations and different social classes and levels of employment in these cities when compared to Tier 1 and 2 cities. While other foreign brands like McDonald’s have hesitated and stayed away from establishing outlets in lower tier cities due to lower perceived profitability, KFC has ventured and expanded much further in these areas as well. This distinction is also important to consider in the context of KFC’s success in China. More detailed discussion on this shall follow in subsequent sections.

Who Owns KFC China?

KFC China shares the same brand colors and imagery that all branches under the global fast-food restaurant chain of KFC have. However, it operates independently without direct influence or intervention from the branches in other countries. Unlike in other countries, KFC China’s ownership comes under Yum China which indirectly owns the subsidiaries operating the KFC brand in China.

This parent company is incorporated in the state of Delaware in the US. In other words, KFC’s operations in China are subject to the income tax regulations of both the US and China. The company effectively pays an income tax rate of 25% to Chinese authorities, plus an extra 10% withholding tax on the earnings which it repatriates out of the country (to its parent company). In contrast, companies which operate mainly in the US are subject to a flat corporate income tax rate of 21%.

However, not all stores in China are owned and operated directly by Yum China. Approximately 15% of the company’s stores in China are operated through franchising agreements with channel partners. KFC makes money from its franchisees by receiving both upfront franchise fees as well as on-going royalties such as a percentage of their sales.

KFC China Food Safety Issues and Scandals

KFC China has had its fair share of food safety issues and scandals over the years. In 2012, the company lost a lot of sales revenues due to a scandal related to claims that it was using antiviral drugs and growth hormones in its chickens. As this was in violation of food safety laws, the government launched a detailed investigation covering the use of antibiotics in food items.

The company had to fight an uphill battle to restore both consumer and government trust in its brand. KFC China also faced some controversy over food safety standards in 2015 when one of its suppliers was shut down due to claims of supplying expired meat. These kinds of issues increase consumer resistance towards the company, especially seeing as it is a foreign brand, a fact which invites additional scrutiny and concerns over trust in China.

SWOT Analysis for KFC in China

Based on our KFC China SWOT analysis, we have identified some key points that play a significant role in the company’s continued success in China.

Due to its adoption of the transnational strategy, the company benefits from using a well-established and recognizable global brand, while also reaping the rewards of adapting various elements of its business to suit local consumption patterns.

Another strength gained by the company solely due to this strategy is the fact that it does not need to look to management of the parent company in the US for decision-making. This allows the company to make quicker adjustments to capitalize on local trends.

The company has a key strength in procurement thanks to its strong presence in the country. Having so many stores in the country gives the company significant buyer power which often provides it the upper hand in negotiations with suppliers. The company has benefited even further in this regard through the central procurement model of its owner Yum China which also had other major restaurant chains such as Pizza Hut and Taco Bell under its banner.

The type of product which the company specializes in also gives it an edge over competitors like McDonald’s or Burger King. Fried chicken is a more generic and relatable product for Chinese customers as compared to hamburgers, which are obviously more alien to Chinese traditional cuisine.

Apart from price negotiation through high volume of purchases, the consolidation of the procurement function also gives the company an easier way to manage its extensive supplier network with better quality control and standardization measures.

The company has also managed to secure strategic locations for its stores which give it access to a greater level of footfall and customer traffic. This strength can also be traced back to the company’s first-mover advantage of being one of the first foreign food retail brands in the country. The company’s early entry to the market allowed it to lock-in prime locations before they competition became too high.

KFC no longer has the novelty factor which it used to have during its initial introduction to the country. Additionally, its excessive focus on localization of menu choices makes it more difficult for the company to stand out amongst a sea of local, home-grown restaurants.

The huge network of stores which the company has in China can be as much of a liability as it is a strength since it needs to invest more time and resources into managing this network. This is especially necessary when overseeing the operations of franchised stores and ensuring that they match the standard brand values of the company.

Opportunities

The changes to the ownership regulations in China in the 1990s was one of the first opportunities that the company immediately capitalized on. While the company had entered the market in a joint venture with local partners, it used this chance to dissolve the joint venture and consolidate ownership. This helped the company with faster and more efficient decision-making.

Another opportunity for the company in this market the relatively lower competition in lower tier cities since other foreign brands were predominantly focused on urban areas. The companies to make effective use of this opportunity to date as evidenced by the exponential increase in the number of stores year after year.

The size of the country and it’s population, combined with the fact that it is a growing economy with increasing disposable wages and less market saturation all provide a good climate for large companies to invest and grow rapidly. KFC has benefited greatly from these trends as part of its market penetration strategy, and the continued increase in its number of stores in the country is further proof of this.

The large size of the population and diversity in cuisines and tastes between different region also provide an obvious opportunity for market expansion through product diversification. KFC China also makes very effective use of this opportunity, as we shall cover in subsequent sections.

Food scandals and claims of contamination, adulteration or even diseases being spread through the operations of food retailers is a fairly common occurrence in China. This poses a major threat which can damage the trust in the brand. An isolated incident in a local area can have a significant negative impact on how the company is perceived across the country. In fact, KFC has already faced issues with foodborne diseases such as E. coli, Hepatitis A and Salmonella in its supply network. Another scandal took place in July 2014. The Chinese authorities closed restaurants in Shanghai following rumors of using expired meat. The brand broke the contract with their current supplier and tried to fix their good reputation.

The spread of diseases such as the Covid-19 pandemic in recent times or the African Swine Flu prior to that all have larger impacts in the food retail industry than in other sectors. The impact may not just be a disruption to operations; it might affect the profit margins directly. An example of this is how the price of protein and poultry went up drastically in China in 2019 due to the spread of the African Swine Flu.

It is important for the company to keep a tight control of its supply chain quality and effectiveness to protect itself against scandals and bad publicity. Negative incidents in the supply chain are especially harmful in the food retailing industry due to the direct impact that it has on health and safety of the consumers. KFC China has had some bad experiences in this regard, such as the failure of some of its upstream poultry suppliers to comply with the company’s established standards.

During the pandemic, many provinces had put tough measures in place to discourage travel. This was especially enforced during period of holidays, such as the Chinese New Year holiday in 2022. This was a tough pill for the company to swallow since holiday season is often the most profitable time of the year for the company. This was set against the backdrop of the fact the company had already suffered significantly due to operational restrictions caused by the pandemic.

The fact that the company leases nearly 8,500 properties in China opens the door to a lot of uncertainty. This includes various factors such as swings in the real-estate market and disputes over property ownership and inheritance which could disrupt store operations. Additionally, the company faces a huge risk since the Chinese government has the authority to obtain ownership and control of any land plots and the buildings which it considers to be in the interest of the public. There is usually no legal provision which the tenant can use to even claim compensation.

Another operational risk faced by the company arises from the fact that it deals with a large amount of cash as a part of its day-to-day operations. This opens the company to instances of fraud, theft and other forms of misconduct which are often difficult to detect and prevent.

PESTLE Analysis of KFC in China

Here’s our summary of the key points of external environment of KFC in China, using the PESTLE analysis tool. Detailed discussion of these points can be seen in the relevant subsections below.

The internal political environment of China is quite stable in terms of the party in power making the legislations. However, the government in known for making new sweeping changes on short notice. Often, the interpretation and application of new regulations is not clearly set out and there could be differences in enactment at local government levels. This element of uncertainty has a strong impact on KFC’s revenue in China. As we’ve mentioned before has spread out and expanded to the various tier levels in China which means that the company also has to deal with different local jurisdictions and administrative departments as well. Exposure to this level of uncertainty poses some difficulty to the vision of standardization which companies like KFC aim to achieve for better efficiency in operations.

On an international level, the situation becomes more difficult as the country often has soft escalations with both neighboring countries and those in the West, especially the US. For instance, the political tensions between China and US in 2020 led to various new policies being enacted by the Trump administration which affected businesses operating in China. Some specific examples include the Clean Network program which was launched with an aim of protecting U.S. telecommunication and technology infrastructure and the banning of transactions through certain software and applications which were associated with China. The list of banned applications included popular payment gateways such as Alipay, QQ Wallet and WeChat Pay. This was detrimental to operations of companies offering these payment options, including KFC for which sees a significant portion of digital orders and digital payments. In 2021, digital orders accounted for around 86% of total sales, and digital payments and mobile payments contributed to about 98% of total sales.

Despite all its efforts to come across as a brand which is well in-tune with local customs and traditions, there is no escaping the fact that the company is a well-recognized global brand originating in the West, and US specifically. This has created problems for the company in the past, such regional protests and boycotts from some segment of customers in China in the aftermath of political disputes regarding the claims of territories in the South China Sea.

Historically, the culture and traditions of Chinese consumers has encouraged them to pursue to long-term savings and makes them sensitive to price. Often, this mindset also leads them to seek out the best deals and promotions. More recently though, Chinese consumers are starting to show higher levels of individualism in their buying choices and are less price-sensitive compared to before. However, they are still more price conscious when compared to their counterparts in Western countries.

The tier system discussed in previous sections also points to an economic disparity across the country. Different regions are characterized by different levels of income and standard of living. Such differences in socio-economic backgrounds of consumers have implications on the type of products and price points that appeal to them. At the same time, it also represents differences for KFC in terms of the labor market which they can draw talent from.

Chinese consumers are found to be more willing to pay a higher price point for products that are perceived to be novel and foreign. This may have been the factor which guided the strategy of McDonald’s and other similar foreign brands to not localize their business as much as KFC did. The mistake in calculation of these other companies, and where KFC has done well, is that the novelty factor wears off soon unless products are being constantly innovated. In fact, the company is so good at keeping this novelty factor that it has invested resources in remodeling its stores regularly. In 2022, the company reported that nearly 78% of its outlets in China were remodeled or built in just the previous five years.

In terms of demographics, it is safe to conclude that the younger generation of customers often find fast-food brands such as KFC more appealing than older age groups. KFC has done well to make itself especially appealing to different target segments such as youth, rising middle class, teenagers, and college students. It has achieved this by choosing its marketing and advertising strategy carefully. Often, the company’s commercials show KFC products being shared in social settings and depicting KFC Stores as places where people can gather socially. The impact of this positioning strategy is noticeable in the fact that many Chinese eat KFC for Christmas as a social tradition, although perhaps not to the extent that this practice is common in Japan.

In recent times, the age structure of consumers in China has changed significantly. The one-child policy has led to a significant decrease in the fertility rate of the country. This has led to an increase in proportion of the older population segment. When combining this factor with the previous identified one about stronger preference for KFC from younger customers, the implication is obvious.

KFC can expect to see a proportion decline in its revenue as the average age of customers in the country increases further. However, against this background, the company has also done well to diversify its customer base through increased menu options and this another factor we shall touch upon in subsequent sections of this case study.

Technological

Technology has become increasingly accessible in recent times, and this is no different for the Chinese market. Many consumers in China are starting to show a preference for enhanced shopping experiences through greater digital interaction. The broader access to technology and the increasing trend of online shopping also contributed to this. This factor is noticeable through the fact that nearly 86% of the company’s total sales in China in 2021 were through digital orders. KFC China also relies on digital R&D centers to support its technological capabilities and capture customer value better. Three new R&D centers were established in 2021 alone.

The digital presence of KFC China is strong enough that it can run a massive loyalty program with 330 million members (this user base is shared with other brands under the Owner Yum China). This allows the company to reap the rewards in the form of higher order frequency and customer loyalty.

KFC China also uses a sophisticated artificial intelligence algorithm called the “Super Brain,” which combines and integrates data gathered through everyday store operations. This data is analyzed to improve the decision-making capability of the restaurant managers. The company has even experimented with proprietary smart watches and smart glasses to closely monitor the real-time operations and process flows. This is supposedly for the purpose of making suitable adjustments to staff schedules and improve management efficiency.

On the flip side, such an approach does pose various questions in terms of data privacy and excessive monitoring of personnel. One might expect similar resistance to the use of facial recognition data by business to provide new services. China is one of the early adopters of the application of facial recognition technology for mobile payments and it has since become commonplace. While acceptance of this technology was rapid in the early stages, consumer resistance has been growing in recent years . Such kinds of reactions by customers affects how well KFC China can undertake digital transformation efforts in the country.

In China, there are several food-safety laws which lay down detailed guidelines and rules for food safety assessment, standards, production, inspection, and distribution. In the wake of several scandals in the supply chains of different players in the food industry, violations of established regulations often draw financial, administrative, or even criminal penalties. KFC has been on the receiving end of such sanctions on multiple occasions. However, it is a testament to the popularity of KFC in China that such scandals have failed to make a significant negative dent on the company’s presence in the country.

While we touched upon increasing adoption and advancements in terms of technology in the previous section, this is accompanied in parallel by an increase in regulatory measures in the areas of information security and protection. The laws and requirements covering data privacy and cybersecurity have been tightened in recent times.

It is also worth noting that the laws in China do not always offer the same type or extent of protection which is expected and even taken for granted in the US. This is particularly true in the field of intellectual property rights. Apart from vagueness in the coverage of these rights, there is also a noticeable inconsistency in the enforcement of these laws at different levels of government and across different regions of the country. In fact, there many restaurants in the country which use imagery imitating established brands such as KFC and McDonald’s, seemingly without legal repercussions.

Environmental

A key environmental factor of importance in China is the increasing awareness about the negative impact of non-sustainable and single-use packaging. Going back to the point of long-term orientation, which is emphasized in traditional Chinese culture, generation of unwanted wastes is highly discouraged. KFC China has tried to overcome this by gradually replacing some of its plastic packaging with paper-based and biodegradable alternatives.

The company claims that it reduced nearly 9,300 tons of plastic waste and 4,320 tons of paper waste in 2021. However, this is a measure that nearly every other competitor has also announced as taking, so it does not distinguish the company from others. There is definite room for innovation in this regard which can further cement the company’s popularity in the country.

There is also an increasing awareness of and demand for better nutrition and healthier product choices from consumers in China. To cater to this trend, KFC China opened some specialty stores promising to deliver on a healthy concept model. This was done under the ‘K Pro’ brand, which was launched in 2017. In place of items which used fried chicken, healthier alternatives such as salads, paninis, and juices.

Porter’s Five Forces Industry Analysis of KFC in China

We have analyzed the food retailing industry in China based on Porter’s five forces model and summarized it in the figure below. Please read the detailed discussion of each of the factors to better understand the logic behind our assessment.

Industry Rivalry (High)

The main foreign brands which represent a higher level of industry rivalry for KFC China are McDonald’s, Burger King and Domino’s Pizza. Pizza Hut and Taco Bell are other foreign brand competitors, but they do come under the same parent company as KFC China (Yum China).

Some local Chinese fast-food competitors include chains such as Daniang Dumpling, Kungfu, Zhen Kong Fu and Malan Ramen. These have seen an increase in popularity in recent years. However, a factor that works against these local chains is that they do not often gave the benefit of standardized cooking methods and ingredients that KFC China does due to the incredible efficiency of its operations. There are also Asian brands like Home Original Chicken, Hua Lai Shi and Dicos which offer American-style dishes such as burgers and chicken nuggets, often at cheaper prices.

Apart from strong competition from these large foreign and local chains, the rivalry in the industry is further intensified by the convergence in grocery, convenience, deli, and restaurant services. As such, industry rivalry in fast food retailing in China is considered to be high.

Bargaining Power of Buyers (Very High)

With fast food restaurants, the obvious factor which gives more power to the buyers is the lack of any effective switching costs. In recent times, companies have tried to increase their bargaining power by offering membership and loyalty programs. In fact, KFC China’s loyalty program is quite large with nearly 330 million members, as we have covered previously. There is also a significant overlap between the menus and specific food items between the different options in the market. This also results in better bargaining power for the buyers. As such, we consider the bargaining power of buyers in fast food retail in China to be quite high.

Bargaining Power of Suppliers (Low)

The SWOT analysis of KFC in China in the earlier section established the fact that company enjoys a stronger hand in price negotiations with its suppliers due to its high-volume purchases and centralized procurement model. While the growth of the company’s scale of operations and number of stores is accompanied by a similar increase in the number of local suppliers, the proportion for the two increases has not been the same.

While the number of stores nearly tripled in the decade between 2010 to 2020, the increase in the number of suppliers was less than double (from around 500 in 2010 to about 750 in 2020). This comparatively lower increase in the number of suppliers can be taken to imply a much stronger position for the company during negotiations with suppliers. As such, the bargaining power of suppliers is evaluated as being low.

Threat of Substitutes (High)

As identified in the PESTLE analysis of KFC China in the earlier section, there is a growing trend of health-consciousness among consumers in China. This drives up the demand for substitutes which are healthier food choices for the customers. KFC seems to be fighting this threat by offering healthy seasonal vegetables in its menu. It’s K Pro is also an attempt to directly tackle this threat.

While the ‘fast-food’ concept does stay true to its name and offer a quick turnaround between making an order and getting the food, there is an even faster substitute that fast-food companies need to be weary of. In China, many convenience stores and even groceries have a section of food products which were pre-packaged earlier in the day or just the previous day. This represents a good substitute option for the working population seeking to get a quick lunch while avoiding the queues at restaurants. KFC China’s launch of KaiFengCai series of ready-to-cook meals can be seen as a way for the company to expand further into what were previously substitutes. Overall, the threat of substitutes is considered to be moderate to high.

Threat of New Entrants (Low)

The cost of entering this market in China is fairly high with significant investments being required to establish the necessary infrastructure, stores, distribution network, food safety certifications etc. This makes it difficult for new entrants to come and challenge the major established market players. Having said that, the threat of new entrants for food retailers in China mainly comes from new forms of product distribution and delivery.

In recent times, China has seen an increase in the number of food delivery aggregators, and new forms of food retail and delivery services such as ghost kitchens, cloud kitchens and shared kitchens. These new entrants often hold a high novelty factor and try to offer a wider range of cuisines and novelty dishes which can pull customers away, especially in urban areas. As we have covered in previous sections though, the novelty factor is one that often wears away quickly, and this has been observed in the food retail sector in China in the past. Hence, the threat of new entrants is considered to be somewhere between low to medium.

KFC China Localization Strategy

General overview of kfc china vs us.

The most important feature of KFC’s localization strategy in China is its significant commitment to embracing the local culture through targeted adaptation efforts. This is most noticeable in terms of the menu options offered in its outlets in China as compared to the US.

It works in the company’s favor that Chinese customers perceive the company as being better than the average fast-food store. It is not considered a ‘cheap’ dining option, which is often the association that most fast-food chains including KFC have in other markets. Instead, the customers place it somewhere in between casual dining and fine dining. This is entirely down to the company’s transnational strategy of combining its globally recognizable branding with localization at nearly point possible.

Another difference between the two countries is in the style of cooking. In China, boiling is the more preferred technique of cooking rather than deep frying. There are also differences in Chinese table manners compared to the US, ranging from obvious aspects such as the usage of chopsticks to more obscure differences such as the general approach to consumption of food. Chinese consumers frequently gather to sit together and eat in comparatively larger groups than in America. KFC China offers a greater variety of choices in its menu as compared to KFC in America and this is better suited to the local trend of eating food in larger groups because these customers like to order and share several dishes with each other.

Whereas consumers in the US may hesitate in consenting to the use of facial recognition technology, Consumers in China area already used to this, as identified in our PESTLE analysis. Despite some resistance to the use of such technology emerging in recent times, this application of technology does not appear to be going out of trend in China in the near future. This is another difference in the digital presence and user interaction aspects of KFC in China vs America.

Another distinction is that the company focuses mainly on chicken-based products in North American markets. In China (and several other markets) the company also offers beef and pork products. However, it is worth nothing that the company’s focus on chicken gives it another edge over McDonald’s because Chinese consumers show a greater preference for chicken compared to beef (which McDonald’s has a greater focus on).

Localization of Menu Options

As we touched upon several times in earlier parts of this case study, localization of the menu and available items to suit local tastes and preferences is the cornerstone of KFC’s strategy in China. The staple food items consumed by a lot of people in China are rice, porridge, and noodles. In comparison, consumers in the US and other Western cultures show a greater preference of bread and wheat-based items as their main source of nutrition. KFC China has paid attention to this factor and various other local tastes and preferences and carefully adapted a localized menu which must be recognized as a critical success factor for the company. Here are some localized items which are available in KFC China but in the US and most other markets.

• Matcha Ice Cream
• Soy Sauce Chicken
• Sandwiches With Prawns
• Soymilk Drinks
• Chicken Tendon Skewers
• Fried Dough Savories
• Rice-Based Meals
• Fried Dough Sticks
• Egg & Vegetable Soup
• Chilli Beef Pancake
• Dragon Twister
• Grass Jelly Milk Tea
• Shrimp Burgers
• Egg Custard Tarts
• Fish Ball Soup
• Soup Dumplings (Xiao Long Bao)
• Fried Donut Stick (Youtiao)
• Beef Noodles
• Seasonal Vegetables
• Bamboo Shoots
• Lotus Roots
• Tree Fungus Salad
• Pickled Chinese Cabbage
• Smelly Tofu
• Skewered Meat
• Preserved Eggs (Cantonese-style Pidan)

However, the company has not abandoned its conventional Western-style products altogether. It does offer them in parallel since the perception of a certain level of foreignness is what allows the company to charge a higher price point than local competitors. This is also part of the hybrid transnational strategy that we explained at the beginning of this case study.

KFC China even localizes products for different regions and provinces within the country based on local tastes. For instance, its products in Shanghai are less spicy compared to its menu in Sichuan and Hunan to better suit local preferences in each of these regions. Similarly, the company also added Wong Lo Kat herbal tea to its menu only in the Guangdong provide as this is one of the oldest brands of herbal tea which is widely popular in this region.

The company’s commitment to localization of its menu items runs so deep that the company has even established its own seasoning facilities. To ensure the authenticity of its flavors, the company also makes use of traditional Chinese spices including aniseed, Chinese cinnamon and sesame oil.

The company has also set up a massive 27,000 square-foot ‘innovation center’ in Shanghai which focuses on coming up with new recipes, cooking methods and menu items. The company has also set up a food advisory committee to lobby for support in its favor. KFC China also began selling a range of products branded as ‘local street food’ in 2019. This included options like chuan, boiled skewers.

Apart from introducing local menu items, the company also fuses some dishes together to introduce more innovative and partly localized products. One of its new additions is prepared similar to the traditional dish known as Peking Duck with chicken being substituted instead. This dish also makes use of sweet sauce that is made using fermented flour as this is the condiment used in Peking Duck.

It is worth noting that KFC China has made a conscious decision to not completely localize its menu options and give up its foreign brand status completely. Instead, the parent company of KFC China spun off a completely new brand known as Dongfang Jibai (which means East Dawning) based on the business model of KFC to exclusively serve Chinese Food.

Localization Aspects in the Supply Chain

As we had covered in our earlier KFC China SWOT analysis, a key strength of the company is its central procurement system through which group sales are centralized. This provides several benefits such as better management and control of the supply chain, while also putting the company in a better position to protect against food safety issues and scandals which were a key threat identified for this market.

For the most part, KFC China sources its chicken and other necessary materials locally. Its network of nearly 800 local independent suppliers account for almost 90% of the requirements of the company. Due to the large scale of the company’s operations, it has a dedicated team of almost 1,400 employees who are focused solely on supply chain management activities. However, their roles within the supply chain system range from safety, quality assurance, and procurement management to delivery, logistics, and even engineering.

The company has also invested heavily in integrating its logistics in China, which is evidenced by ongoing acquisition of properties to establish new logistics centers, with 3 new hubs being set up just in 2021. The company also relies on its network of 32 logistics centers which it operates in close coordination with independent distributors to move material and products around the country.

The company has also put in place agreements with local delivery aggregators to have their products listed on and ordered through their respective platforms. This further expands the sales network and reach of the company.

Localization of Store Design

The company also localizes its store design and undertakes frequent remodeling to ensure that it is staying in tune with customer expectations and local trends or preferences. As we mentioned earlier, almost 78% of KFC China stores have been remodeled or built between 2017-2022. Other examples of the company’s localization in terms of store design include themed restaurants which focus on certain specific aspects of Chinese culture.

As part of localization of store designs, KFC China set up some themed restaurants in partnership with the National Museum of China and the Palace Museum. This collaboration granted KFC the rights for usage of imagery and interactive displays of historical and traditional Chinese culture and artefacts in selected stores. Another example is a restaurant in Chengdu which has a distinct theme which recognizes the contributions of the poet Du Fu who was a native of this city.

Apart from localization of aesthetic elements in its stores, some other store design choices of the company also seemed to be well-suited to this market. For instance, we identified in the PESTLE analysis that Chinese consumers are increasingly technology-savvy and are also becoming more conscious of environmental impacts. The company’s decision to trial some pilot projects in which photovoltaic panels were installed in its stores to generate solar energy also capitalizes on these trends.

Some other distinct store decorations used by the company include placement of Cantonese-style redwood palace lanterns in its stores. The company also updates the theme and design of its stores with special decorations for certain occasions, such as the Chinese New Year and other traditional festivals.

Having covered localization of store design, it is also worth pointing that KFC brought over something from other markets, which was new to China. This was the inclusion of toilets in its facilities, which were also air conditioned. During the early years of the company’s operation in the country, such kinds of amenities were not common in public spaces and definitely not within local restaurants. This helped the company cultivate an image of luxury during its early days, although it has repositioned as a value-for-money option in recent times.

Variation in Pricing

As we identified earlier, Chinese consumers are typically more willing to pay a higher price for the products which they perceive as novel and foreign. This has allowed the company to charge a higher price in China as compared to other markets.

Overcoming Consumer Resistance

It was identified in our PESTLE analysis of KFC China that Chinese consumers are more sensitive to price. Compared to the US where KFC and other fast-food chains are already considered good ‘value-for-money’ options, KFC China charges a higher price point, as we have also mentioned earlier in this case study. Comparing these two points, it can be inferred that KFC China faced a greater value barrier of convincing consumers in China that its products still represent better ‘value-for-money’ for them when compared to other foreign and local brands.

Overcoming consumer resistance often requires educating consumers. In this regard, KFC is often quick to act on issues related to food safety standards and denounce outlandish claims such as the rumor that it was using ‘mutated’ chickens. In the wake of an earlier scandal, the company even put out a message on the paper placemats in its stores highlighting the steps that it was taking to ensure food safety in its supply chain. This proactiveness has allowed the company to weather the storm and recover fairly quickly from temporary drops in market value when such scandals come up.

Another strategy which the company uses to overcome consumer resistance is to focus on community development as part of its corporate social responsibility efforts. It seems to be picking and choosing specific initiatives which paint is as a part of the local community, instead of being just another foreign brand.

The KFC SWOT analysis in an earlier section of this case study revealed that Chinese consumers are becoming more wary about the incursion of technology such as facial recognition. Since the company makes use of this technology at the moment in many of its stores (even claiming that due to ‘positive feedback’, they have expanded this option to 1,600 KFC restaurants across China in 2021), it would do well to pay heed to changing trends and make adjustments to its services accordingly.

Concluding Remarks

This case study of KFC China’s success shows how the company has adapted its overall strategic outlook with locally driven tactics to consolidate its position in the market.

KFC China’s localization strategy has been comprehensive, starting from tangible elements like products (in the form of a locally driven menu) and store design (such as its themed restaurants and frequent remodeling), and extending to intangible elements such as payment systems (through the support of various local payment providers and facial recognition for payments) and advertisements.

Another thing that stands out is that KFC China expanded rapidly, yet organically to ‘lower tier’ cities, whereas competitors like McDonald’s hesitated, perhaps due to the perception of lower economic value. The fact that KFC expanded to the lowest tier of cities often means that it is the first foreign brand that residents of those localities experience. This continues to provide first mover advantage to the company, even to this day.

The market share of KFC China has remained high over the years. It is clear that China loves KFC, and that the company’s unassailable lead will hold strong for many more years to come. Even various food scandals over the years have failed to put a dent in the reputation and population of KFC in China.

In conclusion, the company’s strategy in China is an exemplary case study on the benefits of transnational strategy and how to execute it well.

<Disclaimer: The company logos used in this case study are registered to KFC>

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Case Study: How KFC India leveraged Fried Chicken Day with an engagement campaign

In a bid to create conversations, KFC India Fried Chicken Day Campaign took the contest route, while trying to work in the quirk factor. We take a look at the execution & results.

KFC India Fried Chicken Day Campaign case study explores how the brand leveraged Fried Chicken day to generate conversations & help the consumers to bring out their love for chicken in quirky & creative manner.

Category Introduction

The Indian QSR industry is a thriving industry with many key players and brands promoting similar product portfolios, targeting essentially the same set of consumers - millennials. With affordable prices, value offer meals, and quick service, several brands in the industry have established their strong foothold and expanded their presence across the country.

Brand Introduction 

When KFC entered India in 1995 with its restaurant in Bangalore, it was one of the first global QSR brands to enter India. The brand had to make its way through Indian audiences, who were new to the concept of fried chicken. But over the years, through efforts into innovative and indulgent offerings, people seemed to not only like KFC but also relish and crave for it.

The target audience for the brand, mainly the age group of 18-24, spends a considerable amount of time on social media. They expect brands to be stimulating and intriguing, especially in recent times where online content consumption has understandably increased. Keeping up with changing trends and consumer preferences, the brand attempts to drive consumer engagement and participation.

Fried Chicken Day has always been a day that the brand's consumers look forward to. This year, with the extended lockdown periods, KFC presented the consumers with an opportunity to come forth and profess their love for Fried Chicken in a quirky and interesting manner on this day through social media platforms.

View this post on Instagram HAPPY FRIED CHICKEN DAY!!! You know how to celebrate it with us.....with BUCKET LOADS of ??????? #FriedChickenDay #FriedChickenLove A post shared by KFC India (@kfcindia_official) on Jul 6, 2020 at 2:16am PDT

The week-long revelry started on Fried Chicken Day (6th July), with a contest on social media inviting posts and stories of chicken love. The contest witnessed entries from across the country with love notes colored with emojis, stickers, GIFs, poems, memes, and more.

Quotes such as "Fried chicken is the answer, no matter what the question is", "Money can’t buy you happiness but fried chicken can", etc. went on to reinforce that indeed there is ‘no love like fried chicken love’.

The task was to reinforce the connect with the brand on Fried Chicken Day and remind consumers about their love for the same

Creative Idea 

The idea was to rekindle the love for fried chicken on 6th July during Fried Chicken Day aimed at allowing the consumers to express themselves in their way. The brand decided to continue the celebrations for a week.

With the concept of ‘No love like Fried Chicken love’ at its core, the campaign was rolled out on social media, giving consumers a canvas to paint with their chicken love.

Challenges 

With the extended lockdown periods and limited movement of people outside of their homes, the task was to make the campaign accessible in a convenient manner by leveraging social media for the engagement activity.

Also read: Case Study: How Slice India summer campaign redefined Indian phenomenon of ‘Aam ki Peti’

The celebrations kickstarted for Fried Chicken Day with a contest on the brand's social media platforms like Twitter, Facebook, and Instagram, where it called upon chicken lovers to show their unconditional love for fried chicken.

View this post on Instagram It’s Fried Chicken Day!!! Tell us in comments how there's no love like fried chicken love and WIN delicious vouchers!!! More details ? Use words, quotes, song lyrics, emojis, stickers - get creative! - Comment and tag us @kfcindia_official with #FriedChickenDay #FriedChickenLove - WIN vouchers for delicious fried chicken, OF COURSE! A post shared by KFC India (@kfcindia_official) on Jul 6, 2020 at 6:04am PDT

The contest witnessed entries from across the country as fans professed their love through creative memes, songs, quotes, poems, stickers, etc. all with Fried Chicken at the heart of it.

View this post on Instagram Sab mein tu dikhta hai, yaara main kya karu? #FriedChickenLove A post shared by KFC India (@kfcindia_official) on Jul 6, 2020 at 11:12pm PDT

View this post on Instagram True fried chicken love is… Savouring every moment together. Go all out with your ?love! Order online or head to a KFC near you. #KFCContaclessDelivery #KFCContaclessTakeaway #FriedChickenLove A post shared by KFC India (@kfcindia_official) on Jul 7, 2020 at 1:37am PDT

The fried chicken obsession did not stop there. The brand also leveraged the concept of long video calls during such times that people were often a part of. The brand attempted to add zing & crispiness to such conversations through KFC chicken leg emojis or a chicken leg piece dream on the video calls.

View this post on Instagram Got fried chicken on your mind? Tell us about your chicken daydreams! A post shared by KFC India (@kfcindia_official) on Jul 9, 2020 at 7:08am PDT

Quantitative :

• Over 1.5 million impressions
• Reached more than 1.3 million fried chicken fans
• Engagement of more than 225K
• More than 700 love confessions (entries) across Facebook, Instagram, and Twitter

Qualitative 

The brand was successful to establish the connect between the topical and its core offering of fried chicken & associated love.

The response to the campaign was noteworthy as the consumers organically started creating content in addition to entries for the contest. 

"Nobody makes chicken as we do. What better way to celebrate something so core to us, and our consumers, than on Fried Chicken Day? This is one occasion when KFC fans across come together to celebrate their love for fried chicken. The extended lockdown periods had our consumers turn to social and digital media in search of interesting & engaging content. And we gave them just that, in true KFC-style," said, Moksh Chopra , Chief Marketing Officer, KFC India

"We presented our fans an opportunity to unabashedly display their love for fried chicken. The responses were both immensely creative and fun - with love confessions in form of memes, songs, poems, stickers and more, to quirky chicken-themed wallpapers to make your video calls more interesting - it was a fun week indeed,” she added.

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