Top 200 Franchise by Entrepreneur – Rank no.15 – KFC Corp. – US
Products & Services: Chicken
Number of Locations: 18,198
Total Investment: $1.25M – 2.53M
Began Franchising: 1952
About KFC Corp.
In 1930, Harland Sanders opened Sanders Court & Cafe in the front room of a gas station in Corbin, Kentucky. He was named an honorary Kentucky Colonel in 1936 for his contributions to local cuisine. Colonel Sanders began franchising in 1952 and awarded the first franchise to Pete Harman in Salt Lake City, Utah. Their handshake agreement stipulated that the corporation would receive a royalty of one nickel for each chicken Harman sold.
His recipe is still a secret, but billions of Colonel Sanders’ chicken dinners are served annually in more than 80 countries. KFC is now part of Yum! Brands, which also includes A&W Restaurants, Long John Silver’s, Pizza Hut and Taco Bell.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $45,000
Ongoing Royalty Fee: 5%
Term of Franchise Agreement: 20 years, renewable
Net Worth: $1,500,000
Liquid Cash Available: $750,000
|FINANCING TYPE||IN-HOUSE||THIRD PARTY|
Franchise Ranking History
The logo used since 2006
|Founded||1930 in North Corbin, Kentucky(original)
1952 at 3900 South State St,Salt Lake City, Utah (franchise)
|Headquarters||1441 Gardiner Lane, Louisville, Kentucky, United States(Operational Headquarters)|
|Number of locations||18,000 (2012)|
|Key people||David C. Novak, Chairman andCEO of Yum! Brands
Roger Eaton, Chairman and CEO of KFC
|Products||Fried chicken, chicken burgers,wraps, French fries, soft drinks, salads, desserts,breakfast|
|Revenue||US$15 billion (2011)|
KFC (Kentucky Fried Chicken) is a fast food restaurant chain which specializes in fried chicken and is headquartered in Louisville,Kentucky, United States (US). It is the world’s second largest restaurant chain overall (as measured by sales) after McDonald’s, with over 18,000 outlets in 120 countries and territories as of December 2012. The company is a subsidiary of Yum! Brands, a restaurant company that also owns the Pizza Hut and Taco Bell restaurant chains.
KFC was founded by Harland Sanders, a colorful figure who began selling fried chicken from his roadside restaurant in Corbin, Kentucky, during the Great Depression. Sanders identified the potential of the restaurant franchising concept, and the first “Kentucky Fried Chicken” franchise opened in Utah in 1952. KFC popularized chicken in the fast food industry, diversifying the market by challenging the established dominance of the hamburger. By branding himself as “Colonel Sanders”, Harland became a prominent figure of American cultural history, and his image remains widely used in KFC advertising. However, the company’s rapid expansion saw it overwhelm the ageing Sanders, and in 1964 he sold the company to a group of investors led by John Y. Brown, Jr. and Jack C. Massey.
KFC was one of the first fast food chains to expand internationally, opening outlets in England, Mexico and Jamaica by the mid-1960s. Throughout the 1970s and 1980s, KFC experienced mixed fortunes domestically, as it went through a series of changes in corporate ownership with little or no experience in the restaurant business. In the early 1970s, KFC was sold to the spirits distributor Heublein, who were taken over by the R.J. Reynolds food and tobacco conglomerate, who sold the chain to PepsiCo. The chain continued to expand overseas however, and in 1987 KFC became the first Western restaurant chain to open in China. The chain has since expanded rapidly in China, and the country is now the company’s most profitable market. PepsiCo spun off its restaurants division asTricon Global Restaurants, which later changed its name to Yum! Brands.
KFC’s original product is pressure fried chicken pieces, seasoned with Sanders’ recipe of 11 herbs and spices. The constituents of the recipe represent a notable trade secret. Larger portions of fried chicken are served in a cardboard “bucket”, which has become an icon of the chain since it was first introduced by franchisee Pete Harman in 1957. Since the early 1990s, KFC has expanded its menu to offer other chicken products such as chicken fillet burgers and wraps, as well as salads and side dishes such as French fries andcoleslaw, desserts and soft drinks, the latter often supplied by PepsiCo. KFC is known for the slogan “finger lickin’ good”, which has since been replaced by “Nobody does chicken like KFC” and “So good”.
Harland Sanders was born in 1890 and raised on a farm outside Henryville, Indiana. His father died when he was six years old, forcing his mother to work at a canning plant, and leaving her eldest son to care for his two younger siblings. After he reached seven years of age, his mother taught him how to cook. After leaving the family home at the age of twelve, Sanders passed through several professions, with mixed success. In 1930, he took over a Shell filling station on U.S. Route 25 just outside North Corbin, a small town on the edge of the Appalachian Mountains. It was here that he first served to travelers the recipes that he had learned as a child: fried chicken and other dishes such as steaks, country ham, and pancakes.Originally using his own dining room table, in 1934, Sanders purchased the larger filling station on the other side of the road and expanded to six tables. By 1936, this had proved successful enough for Sanders to be given the honorary title ofKentucky colonel by Governor Ruby Laffoon. The following year he expanded his restaurant to 142 seats, and added a motel he purchased across the street, naming it Sanders Court & Café.
Sanders was dissatisfied with the 35-minute duration it took to prepare his chicken in an iron frying pan, but he refused to deep fry the chicken, which he believed lowered the quality of the product. If he pre-prepared the chicken in advance of an order, there was sometimes wastage at the end of the day. In 1939, the first commercial pressure cookers were released onto the market, predominantly designed for steaming vegetables. Sanders bought one, and modified it into a pressure fryer, which he then used to fry chicken. As well as reducing production time to be comparable with deep frying, he believed that the new method produced flakier, moister chicken.
In July 1940, Sanders finalised what came to be known as his Original Recipe of 11 herbs and spices. Although he never publicly revealed the recipe, he admitted to the use of salt and pepper, and claimed that the ingredients “stand on everybody’s shelf”. After being recommissioned as a Kentucky colonel in 1950 by Governor Lawrence Wetherby, Sanders began to dress the part, growing a goatee and wearing a black frock coat (later switched to a white suit), a string tie, and referring to himself as “Colonel”. His associates went along with the title change, “jokingly at first and then in earnest”, according to biographer Josh Ozersky.
The Sanders Court & Café generally served travelers, so when the route planned in 1955 for Interstate 75 bypassed Corbin, Sanders sold his properties and traveled the U.S. to franchise his chicken recipe to restaurant owners. Independent restaurants would pay four (later five) centson each chicken as a franchise fee, in exchange for Sanders’ “secret blend of herbs and spices” and the right to feature his recipe on their menus and use his name and likeness for promotional purposes. In 1952 he had already successfully franchised his recipe to his friend Pete Harmanof South Salt Lake, Utah, the operator of one of the city’s largest restaurants.
Don Anderson, a sign painter hired by Harman, coined the name “Kentucky Fried Chicken”. For Harman, the addition of KFC was a way of differentiating his restaurant from competitors; a product from Kentucky was exotic, and evoked imagery of Southern hospitality. Harman trademarked the phrase “It’s finger lickin’ good” which eventually become the company-wide slogan. He also introduced the “bucket meal” in 1957 (14 pieces of chicken, five bread rolls and a pint of gravy in a cardboard bucket). Serving their signature meal in a paper bucket was to become an iconic feature of the company.
By 1963 there were 600 KFC restaurants, making the company the largest fast food operation in the United States. KFC popularized chicken in the fast food industry, diversifying the market by challenging the established dominance of the hamburger.
In 1964, Sanders sold the company to a group of investors led by John Y. Brown Jr. and Jack C. Massey for US$2 million (around US$15 million in 2013). The contract included a lifetime salary for Sanders and the agreement that he would be the company’s quality controller and trademark. The chain had reached 3,000 outlets in 48 different countries by 1970. In July 1971, Brown sold the company to theConnecticut-based Heublein, a packaged food and drinks corporation, for US$285 million (around US$1.6 billion in 2013). Sanders died in 1980, his promotional work making him a prominent figure in American cultural history.
In 1982, Heublein was acquired by R. J. Reynolds, the tobacco giant. In July 1986, Reynolds sold KFC to PepsiCo for $850 million (around US$1.8 billion in 2013). PepsiCo made the chain a part of its restaurants division alongside Pizza Hut and Taco Bell. The Chinese market was entered in November 1987, with an outlet in Beijing.
In 1991, the KFC name was officially adopted, although it was already widely known by that initialism. By 1994, KFC had 5,149 outlets in the U.S., and 9,407 overall, with over 100,000 employees. In August 1997, PepsiCo spun off its restaurants division as a public company valued at US$4.5 billion (around US$6.5 billion in 2013). The new company was named Tricon Global Restaurants, and at the time had 30,000 outlets and annual sales of US$10 billion (around US$14 billion in 2013), making it second in the world only to McDonald’s. Tricon was renamed Yum! Brands in May 2002.
KFC is a subsidiary of Yum! Brands, one of the largest restaurant companies in the world. While Yum! Brands does not offer individual figures for its restaurant brands, KFC annual sales revenue was estimated in 2011 at $15 billion. KFC has its headquarters at 1441Gardiner Lane, Louisville, Kentucky, in a building known colloquially as the “White House” due to its resemblance to the Washington, D.C., building. The headquarters contain executive offices and the company’s research and development facilities. KFC isincorporated at 1209 North Orange St, Wilmington, Delaware.
As of 2012, there were over 18,000 KFC outlets in 120 countries and territories around the world: 4,400 in China, 9,000 internationally and 4,600 in the United States, with China accounting for 49 per cent of revenue. Outlets are either company owned, operated usingjoint ventures with local partners or by franchisees. 11 percent of outlets are company owned, with the rest operated by franchise holders. Company ownership allows for faster expansion of the chain.
Most restaurants are furnished with images of the company founder, Colonel Harland Sanders. As well as dine-in and take-out, many stand-alone KFC outlets offer a drive-through option. KFC offers a limited delivery service in a small number of markets. The worldwide daily average number of food orders at a KFC is 250, with most occurring during a 2 hour peak period.
As chairman and CEO of Yum! Brands, David C. Novak ultimately has foremost responsibility for KFC operations. Sam Su is chairman and CEO of Yum!’s Chinese operations. Richard T. Carucci is President of Yum! Brands. John Cywinski is President of KFC in the United States. Yum! Brands’ COO is Roger Eaton. Muktesh Pantis CEO of Yum! Brands International.
KFC was the first Western fast food company in China with an outlet opening in Qianmen, Beijing in November 1987. It is the largest restaurant chain, with 4,400 outlets, leading Clifford Coonan of The Irish Times to describe KFC as “by far the most pervasive symbol of Western culture in China.” In 1989 KFC had three outlets in Beijing; by 1994 this had risen to 28 across the country, including 7 in Beijing.
KFC believes it has been successful in China because it has adapted its menu to suit local tastes, offering such items as rice congee, eggcustard tarts and tree fungus salad, with an average of 50 different menu items per store. Chinese consumers enjoy spicy chicken, and the Zinger burger is the highest selling menu item. Another item is the Dragon Twister, a wrap that includes fried chicken, cucumbers, scallions, and duck sauce. The chain is aided in that fried chicken has been a staple Chinese dish since antiquity, whereas rival chain offerings such ashamburgers are foreign and relatively unknown. The chain has adapted to a market in which, as of 2010, there were only three restaurants per million of population in contrast to the sixty per million in the United States: stores are two to three times larger than American (and European) outlets; many are open 24 hours a day and provide home delivery; and two new products are released each month. Warren Liu, a former vice-president of Tricon Global Restaurants (the KFC parent company) argued that, “being the first … has continued to provide KFC with a substantial competitive advantage.”
Ninety per cent of Chinese sites are company owned, in contrast to just 11 per cent internationally. The chain immediately set itself apart in the late 1980s when it hired managers from emerging Asian economies rather than importing American managers. KFC also created its own distribution infrastructure, as none existed previously. After this start, the chain’s continued growth in the region can be largely credited to Yum! Brands chief executive David Novak, who expanded 100 stores in 1997 to 4,400 in 2013. Since 2006, Yum! Brands has also operated the East Dawning chain, which incorporates Chinese cuisine alongside the traditional KFC menu items.
In 2008, David Novak said that he envisioned eventually operating more than 20,000 restaurants in China, saying: “We’re in the first innings of a nine-innings ball game in China”.At the start of 2008, the chain added its first Chinese street snack to its menu, the youtiao. The street snack menu was expanded in 2010 with the addition of the shaobing.In August 2010, KFC China had its biggest product launch to date: the Rice Bowl heralded the arrival of rice as an accompaniment across the chain. In December 2012, the chain was hit by allegations that its suppliers injected antiviral drugs and growth hormones into poultry in ways that violated food safety regulations. This resulted in the chain severing its relationship with 100 suppliers, and agreeing to “actively co-operate” with a government investigation into its use of antibiotics. KFC China sales in January 2013 were down 41 per cent against the previous year. In May 2013, Businessweek speculated that KFC may be “losing its touch” in China.
The basic model for KFC in the United States, not necessarily duplicated elsewhere, is a focus on low prices, a limited menu (29 items on average) and an emphasis on takeout. Many KFC locations are co-located with either Taco Bell or Pizza Hut, the other Yum! Brands restaurants. When Yum! Brands owned Long John Silver’s and A&W Restaurants, these brands were often co-branded with KFC as well. Often these locations behave like a single restaurant, offering one menu with food items from both restaurant brands.The concept originated in 1991, with a KFC-Taco Bell combination opening in Virginia. Some locations were also opened as combinations of KFC, Taco Bell and Pizza Hut, but this failed to catch on, and Yum! Brands CEO David Novak blames a lack of franchisee commitment for its lack of success.
Initially, Sanders and KFC used cottonseed or corn oil for frying, but in the 1980s the company began to switch to cheaper oils such aspalm or soybean. In the 2000s it became apparent that these oils contain relatively high levels of trans fat, which increases the risk ofheart disease. By April 2007, trans fat-free soybean oil had been introduced in all United States KFC restaurants.
In 2008, CEO David Novak blamed low U.S. sales on a lack of new ideas and menu items. The Spring 2009 launch of Kentucky Grilled Chicken only resulted in a temporary halt to the sales decline. In 2010 KFC announced a turnaround plan that included improving restaurant operations, introducing value items and providing healthier menu options. In the same year, Advertising Age noted that KFC was losing market share to its smaller chicken restaurant rival, Chick-fil-A. In 2011 Bloomberg referred to KFC USA as “an also-ran to McDonald’s Corp”. In 2012, Forbes magazine described how many of the KFC outlets were “aged and uninviting”, and that the chain “hasn’t introduced an exciting new food item in ages”.
KFC was described in 2012 by Bloomberg Businessweek as a “muscular player” in developing regions, specifically Africa, China and India, while noting its falling market share in the United States to rivals such as Chick-fil-A and Popeyes. Some business analysts have speculated that KFC will spin off its ailing U.S. operations. In the United States, as reported in 2012, the company is divesting control of company-owned restaurants to franchised operations, with the intention of reducing overall company ownership to 5 per cent of sites from the 35 percent of the previous decade.
Japan is the third-largest market for KFC after China and the United States with 1,200 outlets. In Japan, 70 percent of sales are takeout, with customers tending to buy fried chicken for parties and other special occasions and eating it as a side dish.
KFC Japan was originally formed as a joint venture between the American parent and the Japanese Mitsubishi Corporation. After four years of negotiations, Mitsubishi were finally awarded the franchise rights to KFC in Japan, and a test store was opened at the Osaka World Expo in March 1970. After the début proved to be a success, the first store proper was opened in the suburban location of Nagoya in November 1970. The American parent wanted suburban locations, whereas Mitsubishi had argued for city centrelocations, as the car had not been widely adopted in Japan at that time. Two more locations were opened in Osaka, but the stores struggled, and after less than a year operations had lost JP¥ 100 million. As a result of this failure, Mitsubishi’s original plan for urban locations was pursued.
The first new strategy store opened in Kobe in 1972, an upmarket residential area with a large Western expatriate community. The new strategy was a success, and by December 1973, 100 outlets had been opened. In December 1974, KFC Japan began to promote fried chicken as a Christmas meal. Eating KFC as a Christmas time meal has since become a widely practised custom in Japan. In August 1990, KFC Japan was listed on the Tokyo Stock Exchange. KFC had ridden Japan’s economic boom during the 1980s, but a rapid expansion of outlets saw franchisee’s taking market share from each other, and around 100 outlets were closed down in the mid-1990s. In December 2007, Mitsubishi assumed majority control of KFC Japan in a JP¥ 14.83 billion transaction.
United Kingdom & Ireland
As of 2012, there were 840 KFC restaurants in the UK and Ireland, the fourth largest number of KFC outlets in any country.Restaurant ownership is split 40 per cent equity and 60 per cent franchised. Annual sales in the UK amount to 60,000 metric tonnesof chicken, 60 per cent of which is purchased from the four largest suppliers in the UK, including Faccenda Group and 2 Sisters Food Group, and delivered fresh to outlets at least three times a week. The remaining 40 per cent is sourced from Europe, Thailand and Brazil. All of their Original Recipe chicken is sourced within the UK.
England had the first overseas branch of KFC which opened in Preston in the North West in May 1965, and was the first American fast food restaurant chain in the country, pre-dating the arrival of McDonald’s, Burger King and Pizza Hut by almost a decade. The first London branch opened in North Finchley in November 1968. In 1971 there were 31 outlets; by 1975 the chain had grown to 250 outlets. In the late 1970s and throughout the 1980s, KFCs began to introduce seating. KFC opened its first drive through restaurant in the UK in 1984. By 1987 the company had almost 400 outlets.
Australia & New Zealand
There are over 600 KFC outlets in Australia, and around 100 in New Zealand. KFC was the first American style fast food chain to open in both countries. In 2013, KFC reported an annual turnover of almost AU$2 billion for its Australia and New Zealand operations.
Yum! Brands directly operates 160 KFC outlets in Australia. The largest of the 53 independent franchisees in Australia is Collins Foods, which operates 121 stores across Queensland. KFC’s major poultry suppliers in Australia are Inghams, Steggles and Turi Foods.
The first Australian KFC was opened in 1968 in Guildford, a suburb of Sydney. The franchise was owned by a Canadian called Bob Lapointe. The chain rapidly expanded to 75 outlets within twelve months. This had a major impact on Australian chicken production, which increased by 38 percent during the period.
The first KFC opened in New Zealand in 1971 at Royal Oak, a suburb of Auckland. By 1980 there were 37 outlets. In 1989, PepsiCo acquired the 50 percent stake in KFC New Zealand that it did not already own from the local Goodman Fielder conglomerate.In 1991 New Zealand turnover topped NZ$100 million for the first time.
In December 2012, there were 280 KFCs in the India. As well as the standard KFC offerings, the chain sells a chickpea burger and hot wings with chilli lemon sprinkles.Major franchise holders include Dodsal Group and QSR Brands (M) Holdings Sdn Bhd, which operated 26 outlets as of 2012.
The first Indian KFC opened in Bangalore in June 1995. This resulted in protests from left wing, anti-globalisation and environmental campaigners, as well as local farmers, who objected to the chain bypassing local producers. Many Indians were concerned about the onslaught of consumerism, the loss of national self-sufficiency, and the disruption of indigenous traditions. The protests came to a head in August 1995, when the Bangalore outlet was repeatedly ransacked. The KFC outlet in Bangalore demanded, and received, a police van permanently parked outside for a year. Rural activist M. D. Nanjundaswamy subsequently claimed KFC would adversely affect the health of the impoverished, by diverting grain from poor people to make the more profitable animal feed. Former environment minister Maneka Gandhi joined the anti-KFC movement.KFC was also accused of using illegally high amounts of monosodium glutamate (MSG) and frying its food in pork fat. A second store opened in Delhi, but was closed by the authorities throughout November, purportedly for health reasons, but more likely to avoid a repetition of the Bangalore incident. The two stores only managed to attract a limited, affluent clientèle, and KFC decided to abandon the Indian market.
In Indonesia KFC is the largest Western restaurant chain, with 439 outlets as of December 2012. The chain has grown to hold an estimated 32 per cent market share, and menu items include spaghetti, wraps and chicken porridge. The master franchisee is PT Fastfood Indonesia.
The first outlet opened in Jakarta in 1979. Salim Group, Indonesia’s largest conglomerate, became a major shareholder in 1990, which provided the company with funds for major expansion. Its master franchisee, PT Fastfood Indonesia, was publicly listed on theIndonesian Stock Exchange in 1993.
The company continues to grow in Asia. QSR Brands (M) Holdings is the franchisee of over 680 KFC outlets in Malaysia, Singapore, Brunei, Cambodia and India. In Malaysia there were 551 KFC outlets as of December 2012.
In 2012, KFC operated 577 restaurants across 36 countries in the Caribbean and Latin America region. The first outlets in the region opened in Puerto Rico and Panama by the late 1960s. KFC has become the largest fast food chain in Ecuador since opening in 1975, and is one of KFC’s largest markets in the region with 95 restaurants.
As of 2013, there are 700 KFC outlets in South Africa, and the company dominates the fast food market. KFC first entered the South African market in 1971. The company was forced to divest its 60 company owned outlets and trademarks to a South African holding company called Devco in 1987 after the U.S. Congress passed a law forbidding American companies from owning South African assets. The company’s 120 franchised outlets were not affected. The company reacquired its former assets when sanctions were lifted in 1994. By 1994 there were around 300 KFC outlets in the country. The company hopes to expand its African operations, where it is already the regional leader among U.S. fast food chains. The company is slowly expanding across the rest of the African continent, opening 70 outlets, but progress has been hampered by sourcing issues, such as a lack of quality suppliers.
KFC’s primary product is pressure fried pieces of chicken made with the “Original Recipe” seasoning mix. This is usually available in two or three piece individual servings, or in a family size cardboard bucket typically holding from 6 to 16 pieces of chicken. At KFC, the chicken is cut into 9 pieces ( 2 drumsticks, 2 thighs, 2 wings, 1 keel, and a backbone based breast cut divided into 2 pieces. The product is hand-breaded at individual KFC outlets with wheat flour mixed with the secret recipe seasoning before being fried. The breading process typically takes between 2 and 4 minutes. Cooking time is for a maximum of 7 minutes. Following this, the chicken is left to stand for 5 minutes before it is sufficiently cooled to be placed in the warming oven. To ensure freshness, the product must be discarded if it has not been sold within 90 minutes. The frying oil varies regionally, including sunflower, rapeseed orpalm oil. A KFC executive stated that the oil variety used, as well as whether the chicken has been corn-fed or wheat-fed, will affect the taste of the chicken from region to region.
The company also sells chicken burgers (including the Zinger and the Tower burgers); wraps (“Twisters” and “Boxmasters”); and a variety of finger foods, including crispy chicken strips and hot wings. “Popcorn Chicken” is one of the most widely available KFC products, and consists of small pieces of fried chicken. A number of locations sell grilled chicken, often under the “Brazer” line. In some locations, chicken nuggets are sold, sometimes using the “Kentucky Nuggets” trademark. Some locations sell fried chicken livers and gizzards. Value dishes are sold under the “Streetwise” name. Some U.S outlets offer an “All You Can Eat” buffet option with a limited menu.
KFC adapts its menu internationally to suit regional tastes, and there are over three hundred KFC menu items worldwide. In predominantly Islamic countries, the chicken served is halal. In Asia there is a preference for spicy foods, such as the Zinger chicken burger. A number of territories, such as Japan, Jamaica, Ecuador and Singapore, sell friedseafood products under the “Colonel’s Catch” banner.
Side dishes often include French fries, coleslaw, barbecue baked beans, corn on the cob, mashed potato, bread rolls and Americanbiscuits. Salads include the bean salad, the Caesar salad and the garden salad. In a number of territories, KFC sell onion rings.In Asia, rice based side dishes such as kanji are often sold. In South Africa, the regional pap dish is sold. In Malaysia, chicken meatball soup is sold. In the U.S. and Greece, potato wedges are sold instead of French fries.
Due to the company’s previous relationship with PepsiCo, most territories supply PepsiCo products, but exceptional territories include South Africa, the Philippines, South Korea, Turkey, Romania, Greece, Israel, Barbados, St Kitts & Nevis and Sri Lanka, which stock drinks supplied by The Coca-Cola Company, and Aruba, which stocks RC Cola from the Cott Corporation. In Peru, the locally popular Inca Kola is sold. In a number of Eastern European locations and Portugal, beer is offered, in addition to soft drinks.
Launched in 2009, the Krusher/Krushem range of frozen beverages containing “real bits” such as Kit Kat, Oreo and strawberry shortcake, is available in over 2,000 outlets.Apple pie is a popular dessert worldwide, but other items include sundaes, tres leches cake in Peru, and Ben & Jerry’s ice cream in Germany and the Netherlands.
Sanders’ Original Recipe of “11 herbs and spices” is one of the most famous trade secrets in the catering industry. Franchisee Dave Thomas argued that the secret recipe concept was successful because “everybody wants in on a secret” and John Y. Brown called it “a brilliant marketing ploy”. It allows KFC to differentiate its product from its competitors.
Early franchisee Pete Harman credited the chain’s popularity to the recipe and the product, and John Y. Brown cites the “incredibly tasty, almost addictive” product as the basis of KFC’s staying power. On the other hand, Allen Adamson, managing director of brand consultancy Landor, remains unconvinced about the contribution of the secret formula aspect. He argues: “The story may still be part of these companies’ folklore, but I’d be surprised if more than two per cent buy the brand because of it”.
The New York Times described the recipe as one of the company’s most valuable assets. The recipe is not patented, because patents eventually expire, whereas trade secrets can remain the intellectual property of their holders in perpetuity.
A copy of the recipe, signed by Sanders, is held inside a safe inside a vault in KFC’s Louisville headquarters, along with eleven vials containing the herbs and spices. To maintain the secrecy of the recipe, half of it is produced by Griffith Laboratories before it is given to McCormick, who add the second half.
In his 1983 book Big Secrets, William Poundstone carried out research into the coating mix, and claimed that a sample he examined contained only flour, salt, monosodium glutamate and black pepper. KFC maintains that is still adheres to Sanders’ original 1940 recipe. In Todd Wilbur‘s television program Top Secret Recipe, the Colonel’s former secretary, Shirley Topmiller, revealed that Sanders learned from his mother that sage and savory go well with poultry. Also, Winston Shelton, a former friend of the Colonel’s, revealed that the secret recipe contains Tellicherry black pepper.
It is well attested that Harland Sanders asked Bill Summers of Marion-Kay Spices in Brownstown, Indiana, US to recreate his secret blend of 11 herbs and spices. While alive, Sanders recommended the Marion-Kay seasoning to franchisees over the corporate version, as he believed the latter had been made inferior by its owners. In 1982, after Sanders’ death, KFC brought a lawsuit against Marion-Kay and the latter was barred from selling its mixture to KFC franchises. The Marion-Kay seasoning is still sold under the name “99-X”, and according to Sanders biographer Josh Ozersky, it is indistinguishable from the original KFC recipe.
Initially KFC used stove-top covered cooking pots to fry its chicken. In the 1960s, the officially recommended model was the L S Hartzog developed “KFC 20-Head Cooker”, a large device that cost $16,000. The Hartzog model had no oil filtration system, meaning that filtering had to be done manually, and the pressure fryers occasionally exploded. An engineer called Winston Shelton developed a pressure fryer that would self-filter the oil. It also used precision timers and temperature controls. Called the “Collectramatic 519”, it was completed in 1969. Fred Jeffries, then vice president of purchasing at KFC, claimed that the invention helped fuel the company’s rapid expansion and success: “There’’s no way it could have grown like it did without the Collectramatic. Stores were doing about $200,000 a year in sales on average with the pots but they could never have done the $900,000 a year it became without Win’s fryer.” Although a number of franchisees bought the Collectramatic, which had the support of Colonel Sanders from 1970 onwards, John Y. Brown had already signed an exclusive contract to only use the L S Hartzog fryer. Brown warned franchisees that they were in violation of their contract if they used the Collectramatic. Brown held his ground on the issue until he learned that his father, John Y. Brown, Sr., who was a KFC franchisee himself, was also using the Collectramatic. The issue was eventually resolved after Heublein purchased KFC, who acquired Hartzog in order to invalidate the contract. The Collectramatic then became the official pressure fryer for KFC from 1972. Shelton’s company, Winston Industries, continue to supply KFC with pressure fryers.
Colonel Sanders was a key component of KFC advertising until his death in 1980. He made several appearances in various B movies and television programs of the period, such as What’s My Line? and I’ve Got a Secret. Despite his death, Sanders remains a key symbol of the company. Jack Massey described him as “the greatest PR man I have ever known”. Franchisee Dave Thomas argued that Sanders’ popularity with the public was due to the fact that he “stood for values that people understood and liked”. In July 1994, KFC hired actor Henderson Forsythe to portray the Colonel in a television campaign entitled “The Colonel’s Way”. However, consumers failed to embrace the look-alike and the tactic was abandoned.
From May 1998, an animated version of the Colonel, “boisterously” voiced by Randy Quaid, was used for television advertisements.KFC chief concept officer Jeff Moody said they “provide a fresh way to communicate our relevance for today’s consumers”. The animated Colonel was dropped in 2001 in the U.S., and in 2002 in the UK. In 2012, a UK advertisement entitled “4000 cooks” featured an actor made up to look like Sanders.
The ubiquity of Sanders has not prevented KFC from introducing a mascot aimed at children. “Chicky”, a young animated chicken, was first introduced in Thailand in the 1990s, and has since been rolled out across a number of markets worldwide, mostly in Asia and South America.
The company is famous for the “finger lickin’ good” slogan, which originated in the 1950s. After a local KFC television advertisement featured Dave Harman (brother of Pete) in the background licking his fingers, a viewer phoned the station to complain. The main actor in the advertisement, a KFC manager named Ken Harbough, upon hearing of this, retorted: “Well, it’s finger lickin’ good”. The phrase was adopted nationally by the company by the 1960s, and went on to become one of the best-known slogans of the twentieth century. The trademark expired in the United States in 2006, and was replaced in that market with “Follow your taste” until 2010. In 2011, the “finger lickin’ good” slogan was dropped in favor of “So good”, to be rolled out worldwide. A Yum! Brands executive explained that the new slogan was more holistic, applying to staff and service, as well as food.
The first KFC logo was introduced in 1952 and featured a “Kentucky Fried Chicken” typeface and a logo of the Colonel. It was replaced in 1978 with a similar logo, albeit with a similar typeface and a slightly different Sanders logo. The “KFC” initialism logo was introduced in 1991, and the Colonel’s face logo was switched from brown to blue ink. A change in 1997 added a smiling Colonel prominently to advertising. The new Colonel image was different, being a more thinly lined, less cartoonish and more realistic representation of Sanders. In 2006, the Colonel logo was updated, replacing his white suit with an apron, bolder colors and a better defined visage. According to Gregg Dedrick, president of KFC’s U.S. division, the change, “communicates to customers the realness of Colonel Sanders and the fact that he was a chef”.
Advertising played a key role at KFC after it was sold by Sanders, and the company began to advertise on television nationally, with a budget of US$4 million from 1966. In 1968, the budget was increased to US$9 million (around US$60 million in 2013). In 1969, KFC hired its first national advertising agency, Leo Burnett. John Hughes, later to become a filmmaker, worked as a copywriter on the account. A notable Burnett campaign in 1972 was the “Get a bucket of chicken, have a barrel of fun” jingle, performed by Barry Manilow. By 1976 KFC was one of the largest advertisers in the United States. Young & Rubicam was KFC’s agency of record in the United States from 1976 until December 2000. From 1978 to 1980 “It’s nice to feel so good about a meal” was the slogan.The slogan was chosen because KFC had identified consumer guilt as its core marketing obstacle. Meanwhile, KFC hired Mingo-Jones to reach African American audiences. Mingo-Jones coined the “We do chicken right” slogan, which was later adopted across the whole chain from 1981 until the early 1990s.
BBDO took over the KFC US account in December 2000. Their first campaign, featuring Jason Alexander, debuted on television in July 2001. The tagline was “There’s fast food. Then there’s KFC.” and the campaign ran until May 2003. In September 2003, BBDO were replaced by Foote, Cone & Belding. Their first campaign aired in November, but was pulled after less than a month following complaints from the National Advertising Division and the Center for Science in the Public Interest after it advertised the health benefits of eating fried chicken.
In 1994, Ogilvy & Mather became KFC’s international agency of record. From 1997 to 1999, Ogilvy & Mather used celebrities to endorse KFC products in television advertisements in the UK, such as Ivana Trump, Tara Palmer-Tomkinson and Ulrika Jonsson. After this campaign, the agency began to simply adapt Y&R’s American campaigns for a British audience. In late 2002, BBH was appointed KFC’s UK agency. In 2003, the “Soul Food” campaign was launched, aiming to capture the young urban market with music from 1960s and 70s black America. By 2005, this believed to have been a failure, and KFC UK’s marketing director left the company amid speculation that the U.S. head office was unhappy with the campaign. Marketing subsequently moved towards a more family orientated line.
Controversies and criticism
Since the turn of the twenty first century, fast food has been extensively criticised for its animal welfare record, its links to obesity and its environmental consequences. Eric Schlosser‘s book Fast Food Nation (2002) and Morgan Spurlock‘s film Super Size Me (2004) reflected these concerns. Since 2003, the PETA animal rights group in the USA has been protesting against KFC’s choice of poultry suppliers. KFC President Gregg Dedrick criticized PETA for mischaracterizing KFC as a poultry producer rather than a purchaser of chickens. In 2008, Yum! Brands stated: “as a major purchaser of food products, [Yum!] has the opportunity and responsibility to influence the way animals supplied to us are treated. We take that responsibility very seriously, and we are monitoring our suppliers on an ongoing basis”.
In 2006, Greenpeace accused KFC Europe of sourcing the soya bean for its chicken feed from Cargill, which had been accused of clearing large swathes of the Amazon rainforestin order to grow the crop.
In May 2012, Greenpeace accused KFC of sourcing paper pulp for its food packaging from Indonesian rainforest wood. Independent forensic tests showed that some packaging contained more than 50 percent mixed tropical hardwood fiber, sourced from Asia Pulp & Paper. KFC claimed: “From a global perspective, 60 per cent of the paper products that Yum! (our parent company) sources are from sustainable sources. Our suppliers are working towards making it 100 per cent”. APP argued that mixed tropical hardwood fiber
“can be found easily in recycled paper, or it can come from the legal and sustainable harvesting of trees in primary rainforest. It can also come from tree residues that are cleared, after a forest area has become degraded, logged-over or burned, as part of a sustainable development plan. APP has strict policies and practices in place to ensure that only residues from legal plantation development on degraded or logged-over forest areas and sustainable wood fiber enters the production supply chain.”
In December 2012, the chain was criticised in China when it was discovered that a number of KFC suppliers had been using growth hormones and an excessive amount of antibiotics on its poultry in ways that violated Chinese law. In February 2013, Yum! Brands CEO David Novak admitted that the scandal had been “longer lasting and more impactful than we ever imagined”. The issue is of major concern to Yum! Brands, which earns almost half of its profits from China, largely through the KFC brand. In March 2013, Yum! Brands reported that sales had rebounded in February, but that reduced December and January sales would result in a decline in same store sales of 20 percent in the first quarter.
In September 2013, in New Zealand, the local KFC franchise chain was publicly criticized by unions, and disability advocacy and support groups, for enforcing a policy which saw many disabled KFC employees sacked, due to their inability to perform all duties in their branch. Representatives of the fast food chain did not refute the allegations, instead citing health and safety legislation compliance as the reason for having to sack disabled staff who had not completed the required “cross-training” due to their disabilities. In an open letter to the Human Rights Commission, the Unite Union announced that this issue first came to their attention a year earlier, in September 2012. The letter called on the Commission to intervene, claiming that KFC’s policy is not only discriminatory and a breach of the Human Rights Act, but also violates the company’s own disability policy, which says the company is “committed to achieving equality for people with a disability within our work team by creating an accessible and inclusive workplace which is free from discrimination and harassment.” The company has since backed down on its stance, under pressure from the union, politicians, and the threat on KFC’s Facebook page of a boycott by concerned consumers. Labour MP Jacinda Ardern said “It shows the power of people sharing their views and making them known. Organisations like this can’t afford to ignore them anymore.”