NATURE OF THE BUSINESS

KFC is a fast food brand (also called a QSR, or quick serve restaurant) specializing in chicken.
With more than 19,500 units in more than 115 countries and territories, KFC (formerly Kentucky
Fried Chicken) is the world’s second largest restaurant chain after McDonald’s measured by
sales, and the world’s most popular chicken brand. KFC’s menu has evolved from its legendary
Original Recipe pressure fried chicken (“11 herbs and spices”) and side dishes to include grilled
chicken, chicken strips, chicken sandwiches, hot wings, and desserts.
HISTORY
KFC Corporation is the largest fast-food chicken operator, developer, and franchiser in the
world. KFC, a wholly owned subsidiary of PepsiCo, Inc. until late 1997, operates over 5,000
units in the United States, approximately 60 percent of which are franchises. Internationally,
KFC has more than 3,700 units, of which two-thirds are also franchised. In addition to
direct franchisingand wholly owned operations, the company participates in joint ventures, and
continues investigating alternative venues to gain market share in the increasingly competitive
fast-food market. In late 1997 the company expected to become a wholly owned subsidiary
of Tricon Global Restaurants, Inc., to be formed from the spin off of PepsiCo's restaurant
holdings.

For the man world-famous for his fried chicken, Harland David Sanders or Colonel Sanders,
began his life far from the kitchen. Born in Henryville, Indiana USA, Colonel Sanders spent 65
years of his life doing everything but cook.

But come 1950, Sanders went on to take the biggest leap of his professional career — when he
finalized the original recipe of 11 secret herbs and spices, to create the Kentucky Fried Chicken®
that we’ve come to know and love today.

A decade later, Sanders’ success in the food business flocked all over the United States and
Canada with over 600 franchise outlets. And 7 years after, KFC found a home in the Philippines.

Perhaps the first world-famous chef, Colonel Sanders proved that fame could go hand-in-hand
with a big heart. The Colonel donated millions to charity, schools and hospitals. And even before
his passing, he says, “I never had any desire to be the richest man in the cemetery.”

Today, as the Colonel’s legacy continues to grow, we are constantly reminded of his journey— a
man who found his passion at his 60s, to becoming a world renowned chef who humbly
introduced his recipe in all corners of the globe.
Segmentation, targeting, positioning in the Marketing strategy of KFC

KFC (Kentucky Fried chicken) uses demographic segmentation to serve the market as per the
customer needs & wants. The consumers of KFC are the young as well as young adults.
It used to serve the same menu all around the world which means that it was using
undifferentiated targeting strategy. However, in recent times, following McDonalds example,
KFC has started localizing its menu, giving it better acceptability in the market. Moreover it has
transformed its positioning strategy from product based to value based in recent times.

KFC is strongly positioned in the minds of consumers for its Chicken menu. There are very few
outlets which serve anything in vegetarian. But when it comes to non vegetarian, KFC is just
superb. Its chicken wings, and chicken bucket is a favourite with everyone. This excellent
targeting technique is the reason that most non vegetarian lovers flock at KFC.

Competitive advantage in the Marketing strategy of KFC

Original recipe of fried chicken with secret blend of 11 herbs & spices have been the driving
force for KFC from last 75 years. KFC has a broad menu with many options for customers and
now even Vegetarian food items have been added by KFC which has helped KFC in increasing
its customer base and sales volume.

Presence in developed & developing nations is helping the company in strategizing its future
growth plans as it is giving them exposure & experience which is essential element in and fast
food industry’s success.

BCG Matrix in the Marketing strategy of KFC

Its Hot wings, Sandwiches and Grilled chicken are stars since majority of its sales comes from
these menu items.

their menu items those in veg, desserts & in chicken (even burgers) are question marks since
KFC is not able to differentiate itself on these menu items from others like McDonalds or local
fast food joints.
Distribution strategy in the Marketing strategy of KFC

With 18000 restaurants delivering finger licking delicious fast food across the world, KFC has
evolved itself through the years and having strong tie-ups or strategic partnership with
the supply chain partners is helping them in serving its customers in a better way.

KFC always believes in keeping its outlet in premium areas as well as in malls and shopping
complexes. These KFC outlets can also carry out delivery for online orders of KFC. As a result,
KFC covers both – online and offline deliveries.
 Inventory management
The restaurant follows Just In Time (JIT) and First In First Out (FIFO) to manage inventory.
Inventory, is divided into three types consisting of Daily, Weekly and Monthly inventory. The
daily inventory consists fast moving products like krushers, non-veg items, ice creams. Orders
are placed by the inventory department every night after the restaurant closes for customers. The
requirement sheets are filled in order to place the order and products are moved from inventory.
The weekly inventory consists of Dry storage items like disposal plates, equipments and recipe
needed to cook. The requirement sheet is filled while placing order which is placed every
Thursday and the products reach the outlet to the max by Monday or Tuesday.
The monthly inventory consists of detailed stock verification of the items present in the store and
the products disposed off due to non consumption on reaching the standard time are also
recorded. The update of stock verification is done via website and once updated its final and no
changes can be done by the staff, if in case there are changes they call up the head quarters and
make necessary changes.

Accounts Receivable and Cash Management

The Accounts Receivable Manager will manage the daily operations and strategic objectives of
accounts receivable and equity sales cycles, through design, implementation, maintenance and
management of all franchisee, non-franchise, bank and cash receivables:

 Overseeing all franchisee & customer billing and cash receipting (including African
markets);
 Recording and application of cash, management of overdue receivables and interfacing
with customers on collection matters & dispute resolution (including compliance with Yum!
AFDA (Allowance for doubtful accounts) policy;
 To manage company owned restaurant cash & card transactions through the sales
reporting process, including bank reconciliation

Management of KFC periodic billing and collection of franchisee and non-franchisee

receivables

 Franchisee billing includes initial & renewal fees, continuing fees, advertising
contributions, supply chain management fees, Add Hope & ad-hoc trade & other cost recoveries
 This also includes maintenance of the financial application (JD Edwards Oracle) and
internal business intelligence tool
 Ensure compliance of Allowance for Doubtful Accounts Policy and proactively manage
the credit risk of the business

Manage the company’s restaurant sales reporting processes:

 Ensure accuracy of reported company sales on a timely basis
 Review of all bank reconciliations associated with restaurant card & cash sales
 Minimize cash & card losses by maintaining and elevating restaurant controls

Own & continuously enhance the weekly franchise & equity sales reporting requirements
(including associated systems and processes)

Effectively partner and build meaningful relationships with various functions (Operations,
Business Intelligence, Point-of-Sale service providers, Loss/Prevention & IT) and company
bankers

Lead projects impacting company sales and franchise fee processes in line with company
objectives and evolving technologies

NET WORKING CAPITAL

Analysis shows that the net working capital reduces 13 units in 2010from the year 2009.
Since the working capital of the company is positive, the company is able to pay off its short-
term liabilities. The company is operating in most efficient manner.

ACCOUNTS RECEIVABLE TURNOVER

Analysis shows that the account receivable turnover increase 11.557units in 2010 from the year
2009. Since there is an increase, the company operates in a cash basis and that its extension of
credit and collection of accounts receivable is efficient.
AVERAGE COLLECTION PERIOD

Analysis shows that there is reduction of 1.242 units in the average collection period in2010
from the year 2009. Therefore, possessing a lower average collection period is seen as optimal,
because this means that it does not take a company very long to turn its receivables into cash.
INVENTORY TURNOVER

Analysis shows that there is a reduction of 0.439 units in inventory turnover in 2010from the
year 2009. Since there is a reduction, the company faces poor sales and therefore excess
inventory. High inventory levels are unhealthy because they represent an investment with a rate
of return of zero. It also opens the company up to trouble should prices begin to fall.

Franchise Description: The franchisor is KFC Corporation (KFCLLC) whose parent is YUM!

Brands, Inc. KFC Outlets prepare and sell chicken, snackables and other approved menu items
using the certain trademarks and trade secrets owned by KFC Corporation. The Franchise
Agreement grants franchisees a license to use (i) certain KFC trademarks, trade names, service
marks, logos and commercial symbols the franchisor periodically authorizes, including the
“KFC” and “Kentucky Fried Chicken” marks; and (ii) the proprietary business formats, methods,
procedures, designs, layouts, standards and specifications the franchisor authorizes, solely in
connection with the operation of the Outlet.
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