Presented by Doug Smart, MD: KFC South Africa
Doug was born in South Africa but began his career with Yum in Australia. He was subsequently appointed CEO of KFC Canada before returning to South Africa where he holds the role of General Manager of southern and emerging African Business for Yum International.
KFC is an iconic global brand with extremely strong South African roots. The brand is owned by Yum, a Fortune 500 company that also owns the Pizza Hut and Taco Bell brands. Doug provided some fascinating insights into the workings of a large franchisor: Internationally, KFC have currently more than 15,000 outlets spread over 105 countries. They are well aware that unless their franchisees remain profitable, their future as a franchisor would be bleak. For this reason, they focus on the continued development of the brand in the widest sense of the word and expect franchisees to represent the brand with pride and take care of operations.
Policies surrounding the brand
The KFC brand and image have undergone several updates over the years but the basics remain the same the world over. The only exception is a chain of 10 outlets in Quebec, Canada where the local licensee replaced the letters KFC with PFK. It means Fried Chicken From Kentucky in French and somehow he got away with it.
- The core menu offering is the same the world over but local tastes are taken into account. The aim is to balance consistency with local taste preferences.
- The creation of new menu items is the responsibility of a central development team based in Kentucky, USA. It typically takes 18 months from the approval of a menu item in principle to its availability in the stores.
- Before a new product is introduced, the following questions will be asked and must be satisfactorily answered:
- Can the store handle the product (facilities and equipment)?
- Can the store’s staff handle the product (training)?
- What will the demand be like and can the supply chain cope (market testing)?
Transfer of ideas
Ideas are exchanged throughout the KFC community worldwide. Inside KFC, this is jokingly known as “stealing with pride” or, on more formal occasions, is described as “standing on the shoulders of giants.”
KFC in South Africa
KFC arrived in South Africa in 1971. The brand has currently a local presence of over 700 outlets, about 10% of them company-owned. As a rule, the company prefers to work with multi-unit franchisees. To be approved as a franchisee, a newcomer would have to be an exceptional individual and able to convince KFC’s development panel that he/she has what it takes to set up at least five stores over time. It currently costs about R6 million to set up one new store.
In line with global KFC policy, CSR is taken seriously by the South African KFC family. The KFC Add Hope Programme currently feeds 40,000 hungry children a month.
KFC in Africa
Brand awareness is currently strongest in the SADC countries but it is KFC’s intention to paint the entire continent of Africa red. The brand is already represented in 15 countries outside South Africa; by the end of this year, this figure will have risen to 18 countries. Expansion into African countries is done in co-operation with local master licensees because local knowledge is considered to be an essential success factor.
In KFC’s experience, difficulties arising during a push into Africa revolve around the lack of available infrastructure and supply chain problems. KFC will not set up in a new country unless the continuity of supplies of approved quality is assured. This results in a run-up time of up to two years before the first store in a new country is ready to trade. From then onwards, the pace of store openings tends to pick up.
ãKurt Illetschko 2013. Published with permission.