KFC Corporation (“KFC”) seeks to offer customers around the world efficient and high quality fast food products, both at its restaurants and at home, and to ensure that its products are produced sustainably.
KFC was founded in 1930 by Colonel Harland Sanders (“Sanders”) in North Corbin, Kentucky, initially operating under the name Sanders Court and Café. Sanders identified the opportunity for franchising and opened the first Kentucky Fried Chicken franchise in Salt Lake City, Utah in 1952.
Sanders is credited with developing KFC’s original fried chicken recipe upon which the chain is built.
KFC expanded its operations rapidly. By 1963 there were 600 KFC restaurants, making the company the largest fast food operation in the United States.
This increased to around 3,000 by 1970, and 6,000 at the time of Sanders’ death in 1980.
The Company has undergone a number of ownership changes since its establishment, notably being acquired in 1964 by a group of investors led by John Y. Brown Jr. and Jack C. Massey, in 1971 by packaged goods company Hublein, and in 1986 by PepsiCo.
KFC currently operates as a unit of Yum Brands, which acquired the Company in 2002.
KFC has continued to expand its global presence, and today it is among the largest fast food chains in the world.
The Company currently operates more than 21,000 KFC outlets in more than 130 countries and territories around the world, and is one of the world’s most recognisable brands.
Business model of KFC Corporation
Customer Segments
KFC serves an extensive and broad customer base around the world, principally comprising members of the general consumer population. The company’s principal customers are:
- Individual Consumers, including consumers across a range of demographics and income levels who require convenient and quick food offerings;
- Groups and Families, comprising young families with children and larger groups of consumers across a wide range of ages and demographics; and
- Event Organisers, comprising consumers organising events for private occasions or businesses who require specific requirements for large groups of people.
KFC remains headquartered in the US, but serves a global customer base. The Company operates restaurants or delivery services in more than 130 countries and territories across the Americas, Asia Pacific, Europe, Africa, and the Middle East.
Value Propositions
KFC provides value to its clients in the following ways:
- Reputation and Brand – KFC is one of the most well-known and recognisable fast food brands in the world, with a reputation for providing high quality products and services to customers that dates back to its establishment in the late 1930s;
- Affordability – KFC offers products to consumers that are affordable for a broad spectrum of customers, ensuring that it is accessible to a wide range of demographics across its global markets;
- Convenience and Accessibility – KFC seeks to serve its in-restaurant customers quickly and efficiently, and offers home delivery and online ordering services to customers to ensure that its offerings are accessible to customers at any time;
- Quality and Reliability – KFC is known for providing high quality fried chicken dishes using a patented original recipe, as well as for developing unique and innovative offerings and region-food offerings, ensuring that it is able to serve the tastes of a large, international customer base; and
- Sales and Marketing Reach – KFC operates an extensive network of restaurants, comprising more than 21,000 individual outlets across more than 130 countries and territories in the Americas, Asia Pacific, Europe, the Middle East, and Africa.
Channels
KFC primarily serves its customers directly via its network of more than 21,000 owned and franchised restaurants worldwide.
This network spans around 130 countries and territories across the Americas, Asia Pacific, Europe, the Middle East, and Africa. These restaurants are staffed by sales and service personnel who are on hand to serve customers directly and in-person.
KFC additionally offers products to customers on a self-service basis through its online ordering portals that are available in certain markets.
Through these channels, customers are able to browse products, place orders, and schedule deliveries online.
Deliveries are completed by the Company’s in-house team of delivery drivers.
Customer Relationships
KFC aims to secure recurring business from its customers by providing high quality products and an efficient, enjoyable dining experience.
The Company’s principal point of contact for its customers is its in-restaurant personnel, who are on hand to take orders, respond to queries and complaints, and offer advice on menu items.
KFC also operates a membership and rewards program for its regular guests as a means of encouraging repeat business.
Through this program the Company offers its frequent customers a range of deals and disoc*nts. The Company also offers a range of information to customers through its website, which can be accessed on a self-service basis. This includes store location services and online menus.
KFC operates a website at www.kfc.com, through which it provides a range of information. The Company is additionally able to communicate directly with its customers through its various social media accounts, including with Facebook, Twitter, Instagram, and YouTube.
Key Activities
KFC, also known as Kentucky Fried Chicken, operates a popular chain of fried chicken fast food restaurants in its domestic market of the US as well as across the Americas, Asia Pacific, Europe, the Middle East, and Africa.
The Company currently operates a network of more than 21,000 restaurants across more than 130 countries and territories worldwide.
KFC offers a large menu, including sandwiches, sides, desserts, drinks, sauces, fill ups, buttermilk biscuits, and other products.
In addition to its restaurants, the Company operates an online ordering system and home delivery service in certain markets.
KFC additionally also franchises its restaurants. KFC operates as a unit of Yum Brands since 2002.
Key Partners
KFC works closely with a wide network of partner companies and organisations that support the Company’s operation of fast food restaurants.
These partners can be organised broadly into the following categories:
- Supplier and Vendor Partners, including suppliers of equipment, ingredients, and supplies that are used in the Company’s core restaurant operations, as well as providers of other third party services that support the Company’s corporate activities more broadly;
- Franchise Partners, comprising a range of independent business owners, food service companies, and individuals that operate KFC-branded restaurants around the world on the Company’s behalf;
- Delivery and Distribution Partners, comprising a range of logistics companies, distribution specialists, and delivery companies that support the Company’s storage and distribution activities, or its home delivery services;
- Marketing and Sponsorship Partners, comprising a range of commercial brands, sports teams, and other organisations with which the Company collaborates on joint sponsorship and marketing projects; and
- Strategic and Alliance Partners, comprising various other companies and organisations, with which the Company collaborates on other projects, including on business development, community support, and other projects.
KFC has a number of partnerships in place around the world. This includes partnerships with well-known brands and organisations such as World Food Programme, ESPN, Grubhub, Menulog, and Barnardo’s.
Key Resources
KFC’s business model depends on its ability to provide high quality products to customers quickly and efficiently.
As such, its key resources are its brand name and intellectual properties, its network of restaurants and franchise partners, its online ordering platforms and IT infrastructure, its supplies and supply chain, its network of partners, and its personnel.
Cost Structure
KFC incurs costs in relation to the procurement of ingredients and equipment, the operation of restaurants and outlets – including utility and occupancy costs, the management of its partnerships, the procurement of third party services, the implementation of marketing and sponsorship campaigns, the development and maintenance of its IT and communications infrastructure, and the payment of salaries and benefits to its personnel.
In 2018, KFC recorded general and administrative expenses in the amount of USD 350 million, franchise and property expenses in the amount of USD 107 million, and franchise advertising and other expenses in the amount of USD 452 million.
Revenue Streams
KFC generates revenue via the operation of restaurants and the sale of food and drinks directly to customers.
The Company generates the bulk of its revenue in the form of sales fees collected directly from customers at point of sale, including sales across its network of restaurants and its via its online ordering platforms.
The Company also generates a portion of its revenue in the form of franchise and property revenues, generated under franchise agreements with third parties.
In 2018, KFC recorded total system sales in the amount of USD 26.24 billion, up on the USD 24.52 billion recorded by the Company in 2017.
The Company’s total revenue for the year was USD 2.64 billion, down on the USD 3.11 billion recorded by the Company in 2017.
