The 2006-present logo
|Industry||Fast food restaurant|
|Founded||1930 in North Corbin, Kentucky (original)
1952 at 3900 South State St, Salt Lake City, Utah (franchise)
|Headquarters||1209 North Orange St, Wilmington, Delaware, United States (Incorporation)|
|Number of locations||18,000 (2012)|
|Key people||David C. Novak, Chairman and CEO of Yum! Brands
Roger Eaton, Chairman and CEO of KFC
|Products||Fried chicken, chicken burgers (chicken sandwiches [US]), wraps, French fries, soft drinks, salads, desserts, breakfast|
|Revenue||US$ 15 billion (2011)|
KFC (Kentucky Fried Chicken) is a fast food restaurant chain headquartered in Louisville, Kentucky, United States, which specializes in fried chicken. An "American icon", 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[update]. The company is a subsidiary of Yum! Brands, a restaurant company which also owns Pizza Hut and Taco Bell.
KFC was founded by Harland Sanders, 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 marketing himself as "Colonel Sanders", Harland became a legendary figure of American cultural history, and his image remains prominent in KFC branding. However, the company's rapid expansion saw it grow too large for Sanders to manage, and in 1964 he sold the company to a group of investors led by John Y. Brown, Jr. and Jack Massey.
KFC was one of the first fast food chains to expand internationally, opening outlets in England, Mexico and Puerto Rico by the mid-1960s. Throughout the 1970s and 1980s, KFC experienced mixed fortunes domestically, as it went through a series of corporate owners who had little or no experience in the restaurant business. In the early 1970s, KFC was sold to the spirits firm 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 as Tricon Global Restaurants, which later changed its name to Yum! Brands.
KFC primarily sells fried chicken pieces and variations such as chicken fillet burgers (chicken sandwiches [US]) and wraps, salads and side dishes such as French fries and coleslaw, desserts and soft drinks, often supplied by PepsiCo. Its most famous product is pressure fried chicken pieces, seasoned with Sanders' "Original Recipe" of 11 herbs and spices. The exact nature of these ingredients is unknown, and represents a notable trade secret. Larger portions of fried chicken are served in a distinctive cardboard "bucket", which has become a signature of the chain since being introduced by franchisee Pete Harman. 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 five years old, forcing his mother to work at a canning plant, and leaving her eldest son to care for his two younger siblings. From the age of seven, his mother taught him how to cook. After leaving the family home at the age of 12, 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 city on the edge of the Appalachian Mountains. It was here that he first served to travellers the recipes that he had learned as a boy: fried chicken and other dishes such as steaks, country ham, and pancakes. Originally using his own dining room table, in 1934, he purchased the larger filling station across the street and expanded to six tables. By 1936, this had proved successful enough for Sanders to be given the honorary title of Kentucky 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 30-minute duration it took to prepare his chicken in an iron frying pan, but he refused to sacrifice quality by deep frying the product. 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 production-time-reducing to be comparable with deep frying, the new method produced flakier, moister chicken. In 1940, he finalised what came to be known as his Original Recipe of 11 herbs and spices. Although Sanders 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 market his chicken concept to restaurant owners. Independent restaurants would pay four (later five) cents on 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 chicken recipe to his friend Pete Harman of 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". Harman claimed that in his first year of selling "Kentucky Fried Chicken", his restaurant sales more than tripled, with 75 per cent of the increase coming from sales of fried chicken. For Harman, the addition of KFC was a way of differentiating his restaurant from competitors; a product hailing from Kentucky was exotic, and evoked imagery of Southern hospitality.
As a franchise-led operation, the work of the early franchisees was important to KFC's success, and Pete Harman has been described as the "virtual co-founder" of the chain by Sanders' biographer. Harman trademarked the phrase "It's finger lickin' good" which eventually become the company-wide slogan. It was Harman who in 1957 first bundled 14 pieces of chicken, five bread rolls and a pint of gravy in a cardboard bucket to offer families "a complete meal" for $3.50 ($29 in 2013 dollars). He adopted the buckets as a favor to Sanders, who had called on behalf of a Denver franchisee who didn't know what to do with the 500 buckets he had bought from a traveling salesman. The take-out concept grew as Americans became more prosperous: choosing to buy meals outside the home more frequently, and was complimented by the growing television culture. Also, women increasingly had less time to prepare meals at home, as more joined the workforce. In 1963, Pete Harman's restaurant training manual and product guide was adopted across the entire company.
Dave Thomas was a franchisee from the mid-1950s, and he developed the rotating bucket sign that came to be used at many KFC locations. Thomas reported that Sanders' fried chicken was a "sensation" from the first day he offered it in his restaurant, with queues lining outside the door. He was an early advocate of the take-out concept that Pete Harman had pioneered, and introduced a bookkeeping form that Sanders rolled out across the entire KFC chain. Thomas sold his shares in 1968 for $1 million, and became regional manager for all KFC restaurants East of the Mississippi before founding the Wendy's restaurant chain in 1969.
Sale by Sanders
In 1960 the company had some 200 franchised restaurants; by 1963 this had grown to around 600, making it the largest fast food operation in the United States. In 1963, Sanders met John Y. Brown, Jr, the son of his lawyer, at a political breakfast. Brown told Sanders that he was keen to join the company, which had developed a strong reputation in the Kentucky area. Brown later claimed that Sanders had lost interest in the business operations of KFC, and persuaded him to buy the company. Brown and franchisee Dave Thomas agreed that Sanders "wasn't a very good businessman". Jack C. Massey would be majority shareholder with a 60 per cent stake, with a major contribution from Brown, and smaller contributions from Pete Harman, and company officials Lee Cummings and Harlan Adams. Sanders refused to sell the company until a number of franchisees were on board as investors, because he wanted to see the company run in the franchisee's interests. Sanders saw a number of useful qualities in Brown, such as youth, enthusiasm and vision. The group of investors acquired the company from Sanders in 1964 for $2 million ($14,804,721 in 2013 dollars). The contract included a lifetime salary for Sanders and the agreement that he would be the company's quality controller and trademark. According to Massey, when the offer was first touted it was difficult to know how Sanders felt about the deal: he would alternately dismiss it and ask as if it was inevitable. He knew that Sanders placed faith in astrology, and waited until Sanders had a particularly positive and dramatic horoscope before making a definitive offer. When Massey made the written offer, Sanders looked at the figure, opened up his office drawer, read his horoscope, and agreed to sell.
Massey and Brown quickly set about standardizing the fragmented company. After visiting Pete Harman's operations in Utah, they began to roll out the stand-alone take out model across the entire chain. Franchisees were ordered to delist their own menu items in order to concentrate on KFC products. The restaurants were re-branded with a distinctive red-and-white striped color pattern, cupola roofs and the company expanded to 1,500 restaurants in all 50 U.S. states, with several locations overseas. The roll-out of freestanding stores accelerated the company's growth as specialized operations proved easier to sell to potential franchisees. Sanders did not approve of all of the changes to the company however, and became incensed when Massey moved company headquarters out of Kentucky and into Nashville, Tennessee, which was closer to his home. Sanders bellowed, "This ain't no goddam Tennessee Fried Chicken, no matter what some slick, silk-suited sonofabitch says". Sanders also became frustrated with some of the changes to the company, such as introducing an initial franchisee fee of $4,000, and charging franchisees a percentage of total sales rather than a nickel per chicken sold. The company also reneged on their contract with Sanders, which had granted him the exclusive rights to the company's Canadian business, by opening their own operations there. Embarrassingly for the company, Sanders complained to The Washington Post, "I don't like some of the things John Y. done to me. Let the record speak for itself. He over-persuaded me to get out". Brown argued that he brought order and efficiency to a chaotic management structure, and treated the increasingly disgruntled Sanders with tact and patience.
The company had ignored Sanders, but was forced to renegotiate with him regarding the Canadian activities, as he owned $1.5 million worth of stock, and was using it to prevent Massey from listing the company publicly until his qualms were met. Brown and Massey claimed that Sanders only had the rights to process chicken in Canada. After they renegotiated the contract to guarantee Sanders exclusive rights over Canada, he sold his stock to them, and the company went public in 1966. Later that year Massey resigned from day to day management of the company (although he remained as chairman) and Brown announced that headquarters would be moved to Louisville, Kentucky. Massey left the venture with a "sour taste in his mouth", and refused to discuss the former partnership publicly. By 1967, KFC had become the sixth largest restaurant chain in the U.S. by sales volume, and 30 per cent of sales were takeout. The company's growth pushed its stock value to "stratospheric" levels, according to Reuters, and in 1969 it was listed on the New York Stock Exchange. Massey resigned as chairman of the company in March 1970, and Brown took over his role. The chain had reached 3,000 outlets in 48 different countries by 1970, but expansion was often chaotic and poorly executed. Regional manager Dave Thomas complained that the company had become too "corporate", sent him "a lot of Mickey Mouse memos" and that Brown lacked motivational skill. A member of KFC upper management described the international strategy as "throwing some mud against the map on the wall, and hoping some of it would stick." The first Asian outlet was opened in Japan after just two weeks preparation, and proved to be a costly failure, losing $400,000 and wasting more chicken than it sold.
Meanwhile, KFC entered into ventures with other companies. In 1969, KFC entered a joint venture with the California-based fish and chips chain H. Salt Esquire, which was sold off in 1980 as part of a chain-wide decision to focus mainly on the KFC branding. KFC also purchased the Mexican chain Zapata in 1974, renaming it Zantigo in 1976. Following the sale of KFC to PepsiCo in 1986, the Zantigo stores were closed or converted to Taco Bell. In 1969, Brown launched the "Kentucky Roast Beef" restaurant chain, and "Colonel Sanders Inns" motels. Brown believed that the Colonel Sanders brand could be used to market anything, but these two ventures quickly failed.
Sale to Heublein and R.J. Reynolds
Once too large for Harland Sanders to manage, Kentucky Fried Chicken grew to overwhelm John Y. Brown as well. In July 1971 Brown sold the company to the Connecticut-based Heublein, a packaged food and drinks corporation, for $285 million ($1,615,624,486 in 2013 dollars). Brown personally gained around $35 million from the sale. Robert Darden believed that the distributor of Jose Cuervo tequila and Harvey's Bristol Cream sherry was "an odd choice" to purchase the company. Reuters opined that the takeover probably saved the company from disaster. Heublein planned to increase KFC's volume with its sales and marketing expertise. A Texas firm, Church's Chicken, began making inroads into KFC's market share with "Crispy Chicken". KFC responded in 1972 when it introduced "Extra Crispy Chicken". In 1973 Heublein introduced barbecue spare ribs, which sold well, but caused "tremendous" operating problems. After the product was launched there was a shortage of pork, which pushed prices beyond what customers were willing to pay. When management withdrew the product, they realised that fried chicken sales had been decreasing. Meanwhile, relations with Sanders had soured. His standards were high, commenting "perfection is just barely good enough", and he increasingly regretted having had to sell his company. He began to complain of the company's declining food quality to the media:
- My God, that gravy is horrible. They get tap water, mix it with flour and starch and end up with pure wallpaper paste. Another thing. That new crispy recipe is nothing in the world but a damn fried doughball stuck on some chicken.
The outburst prompted a KFC franchisee in Bowling Green, Kentucky to unsuccessfully attempt to sue Sanders for libel. In 1973 Heublein attempted to sue Sanders after he opened a restaurant in Shelbyville, Kentucky under the name of "Claudia Sanders, the Colonel's Lady Dinner House". In retaliation, Sanders attempted to sue Heublein for $122 million ($567,933,873 in 2013 dollars) over the alleged misuse of his image in promoting products he had not helped develop, and for hindering his ability to franchise restaurants. A Heublein spokesman described it as a "nuisance suit". In 1975 Heublein settled out of court with Sanders for $1 million ($4,266,543 in 2013 dollars), allowing Sanders' restaurant venture to go forward as "Claudia Sanders Dinner House" and continued his role as goodwill ambassador. Overconfidence saw KFC fail overseas, with the company withdrawing from Hong Kong in 1975 after just two years in operation. Sanders continued to attack Heublein publicly, and in 1976 complained that the company "doesn't know what it's doing" and that it was "downright embarrassing" to have his image associated with such a poor quality product. Michael Miles was promoted by Heublein to run the chain in 1977 and is credited with turning around the ailing company by instituting a back-to-basics formula. One of Miles' most notable strategies was to lure Sanders back onside, and to listen to his recommendations for the business. Miles also embarked on an extensive store refurbishment program, as outlets had become dated and run-down. Sanders died in 1980 from pneumonia having continued to travel 200,000–250,000 miles a year up to this time, largely by car, promoting his product. Robert Darden writes:
KFC was not a business to Harland Sanders- it was an extended family. His legacy was to treat every store as his own. Its problems were his problems. Its successes were his successes. He remained KFC's greatest goodwill ambassador to his final hours.
The early 1980s saw impressive international growth for the company, particularly in the Pacific Rim: Japan grew to 400 stores. Despite this, in 1982, McDonald's dedicated eight times as much capital as Heublein did for expanding its number of restaurants. With its spirits division flagging, Heublein feared it would be subject to a hostile takeover, and in 1982 found a white knight to acquire the company: R. J. Reynolds, the tobacco giant. Reynolds had to contend with the introduction of Chicken McNuggets across the McDonald's chain in 1983; KFC did not introduce its own brand of chicken nuggets, called "Kentucky Nuggets" until 1985. In 1984, Reynolds dedicated $168 million in sorely needed capital for the expansion of KFC.
Sale to PepsiCo
In July 1986, Reynolds divested KFC to PepsiCo for a book value of $850 million ($1,780,251,973 in 2013 dollars). Reynolds sold the chain to pay off debt related to its recent purchase of Nabisco and in order to concentrate on its tobacco and packaged food business. Dan Koeppel of ADWEEK believed that the chain had been suffering from corporate neglect, menu stagnation and mixed marketing messages, while Nancy Giges of Advertising Age felt that the chain had been "smartly revived" by R. J. Reynolds. KFC chairman Richard Mayer felt that Reynolds had treated their restaurants division as a "hobby". PepsiCo made the chain a part of its PepsiCo Worldwide Restaurants division alongside Pizza Hut and Taco Bell, and it was anticipated that they would bring their merchandising expertise to the firm. At the time of the takeover, 1,000 of 6,500 total KFC stores sold Pepsi. PepsiCo was able to switch 1,650 company owned stores to Pepsi products with immediate effect. Whereas KFC management had previously allowed franchisees to serve any soft drink they wished, PepsiCo stated that it hoped it would be able to convince franchisees to stock Pepsi products. Despite this, PepsiCo chairman D. Wayne Calloway stressed that soft drink preference was not a factor in the company's takeover of KFC.
By July 1987, the "Chicken Little", an inexpensive chicken slider made from dark meat, was introduced across KFC's U.S. stores, aimed at capturing the lunchtime market. Sales were reportedly disappointing, despite a $31 million advertising campaign. The Chinese market was entered in November 1987, with an outlet in Beijing. In July 1989, new management was installed, with John Cranor III replacing the outgoing Richard Mayer as division chairman. In August, Cranor announced a new contract for franchisees: PepsiCo could takeover weak franchises, existing restaurants would not be safeguarded against competition from new outlets, and PepsiCo would have the right to increase royalty fees. There was an uproar from franchisees, who fought against the contract, and the issue was not resolved until 1996. PepsiCo was accused of behaving in an imperious manner towards franchisees, who it believed were holding back the firm's progression, while the franchisees believed they had been the backbone of the company during a succession of indifferent corporate owners. KFC sales internationally were booming, particularly in Japan, while in the U.S. sales were struggling, where the chain was the weakest link in PepsiCo's restaurants division. Overseas operations often flourished while ignoring or even defying orders from Louisville headquarters: management attempted to force KFC Japan to switch from corn and cottonseed oil to cheaper palm or soybean, but local management refused to compromise the quality of their product with a lesser quality oil.
The chain had to contend with the rise of grilled chicken as Americans became increasingly health conscious, through the growing El Pollo Loco restaurant chain, and also with the introduction of Burger King's BK Broiler, a grilled chicken burger, both of which were poaching sales from the company. Delays in product development, cramped kitchens and the ongoing franchisee contract dispute prevented the chain from rolling out a grilled product of its own. Franchisee relations became tenser still, when, in August 1990, PepsiCo announced plans to roll out a home delivery service at all 5,000 U.S. outlets by January 1991, without informing franchisees beforehand. In 1991 the KFC name was officially adopted, although it was already widely known by that initialism. Kyle Craig, president of KFC U.S, admitted the change was an attempt to distance the chain from the unhealthy connotations of "fried". An editorial in Advertising Age stated, "the chain's jettisoning of a venerable name—and distancing from the word fried—was ill-conceived and damaging. It made a clear brand fuzzy." The early 1990s saw a number of successful major products launched throughout the chain, including spicy "Hot Wings", popcorn chicken, and internationally, the "Zinger", a spicy chicken fillet burger. In 1993, rotisserie style chicken, under the name "Colonel's Rotisserie Gold", was introduced at over 30 per cent of U.S. outlets. It proved to be a costly failure: a $100 million investment was undermined by faulty ovens. Despite new developments, the chain's sales stagnated between 1988 and 1994. The launch of skinless chicken, designed to appeal to health-conscious customers, was an outright failure, increasing overheads and helping operating profits decline by 37 per cent in 1991, after customers failed to accept the unfamiliar texture. Meanwhile, KFC had increasing interests overseas: by 1992, slightly under half of all sales came from international markets.
By 1994, KFC had 5,149 outlets in the U.S., and 9,407 worldwide, with over 100,000 employees. That year, the chain began to struggle after competitors such as McDonald's introduced value menu offerings. Two executives with marketing backgrounds were charged with the task of turning around the ailing company that PepsiCo regarded as their "ugly duckling". Roger Enrico was appointed as the CEO of PepsiCo Worldwide Restaurants, and David C. Novak was appointed President of KFC. After repairing the company's relationship with its franchisees by immediately dropping the most objectionable of the contract terms that had been proposed by divisional chairman John Cranor five years ago, Novak oversaw ten fiscal quarters of consecutive growth at KFC. He introduced two successful new products: the chicken pot pie and Crispy Strips (breaded strips of chicken), the chain's first major new product launches for almost two years. Novak credits an improved, more "open" relationship with franchisees for the introduction of the two new items: Crispy Strips were invented by an Arkansas franchisee and the pot pie was also developed alongside franchisees. Meanwhile, weaker selling items, such as corn muffins, were removed from the menu. At the same time, Enrico scaled back the increasing competition between KFC and it sister companies Taco Bell, which had begun offering its own chicken products, and Pizza Hut, which KFC had attacked in its marketing.
In August 1997, PepsiCo spun off its restaurants division as a public company valued at $4.5 billion ($6,435,634,328 in 2013 dollars) in order to pay off short-term debt and because, as one PepsiCo executive admitted, "restaurants weren't our schtick". Jeffrey Krug, an employee, argued that an important reason why the PepsiCo takeover of KFC struggled was due to cultural differences between its New York executives and KFC's Louisville employees. The new company was named Tricon Global Restaurants, and at the time had 30,000 outlets and annual sales of $10 billion ($14,301,409,619 in 2013 dollars), making it second in the world only to McDonald's. In May 1997, the "Tower Burger", a fried chicken fillet burger with the addition of a hash brown, was first launched in the United Kingdom. In July 1997, the Twister wrap was launched in most KFC U.S. stores. It was the first KFC chicken item to be served cold, and it used fried chicken that would otherwise have been thrown away by stores. It failed to take off in the U.S., and was withdrawn by May 1998. After a revamped Twister wrap became a success in Australia, the product began to be rolled out internationally. The new Twister was served hot, and used the "Crispy Strip" chicken strips, peppery mayonnaise, lettuce and tomato. By 1998, the majority of KFC franchisees had agreed to stock PepsiCo soft drink products. In September 1999, the chain launched a $75 million advertising campaign for its new range of chicken burgers, which was aimed at capturing the lunchtime market. The Triple Crunch, Triple Crunch Zinger and Original Recipe were fried, while the Tender Roast and Honey BBQ were not. The campaign was KFC's most expensive to date.
Tricon was renamed Yum! Brands in 2002. In 2002, the chain had to contend with Burger King's launch of the Chicken Whopper. In just three months, the Chicken Whopper became Burger King's most successful launch of all time, with sales of 50 million. From 2002 to 2005, KFC experienced three years of weak sales, when underinvestment in product development left the brand looking "tired and poorly positioned", according to Restaurant Research, an independent consultancy. The worldwide avian flu scare of 2005 temporarily decreased sales by as much as 40 per cent. KFC responded in March 2005 by adding a cheap, small chicken burger to the menu called a "Snacker", which is easier to eat than chicken on the bone. It proved to be one of the chain's most successful product launches to date, with over 100 million in sales. In international markets, KFC introduced the "Boxmaster", a meal sized wrap in a box. KFC also began a back to basics makeover of the brand image, bringing back the full "Kentucky Fried Chicken" name at some outlets, returning portraits of Colonel Sanders to prominence, and once more promoting the cardboard buckets of chicken it had briefly abandoned in the 1990s. In 2009, KFC International launched the Krusher (Krushem in some markets) line of frozen beverages. The idea was to fill a gap in the product portfolio for snacks between meals, and was aimed at teenagers. In April 2010, the Double Down sandwich was launched. Criticised as an unhealthy product, it featured two pieces of fried chicken in lieu of a conventional bread bun. In September 2012, the Chicken Little sandwich returned in the U.S.
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 animal rights group People for the Ethical Treatment of Animals (PETA), have been protesting KFC's treatment of the animals used for its products with the Kentucky Fried Cruelty campaign. PETA states that they have held more than 12,000 demonstrations at KFC outlets since 2003 because of alleged mistreatment of chickens by KFC suppliers. In 2004 an employee at a Pilgrim's Pride KFC supplier in West Virginia filmed chickens being kicked, stamped on and thrown against a wall by workers. On one day he filmed workers making a game of throwing chickens against a wall; 114 were thrown in seven minutes. A supervisor walking past said, "Hold your fire", and, once out of the way, told the crew to "carry on". The employee also saw workers "ripping birds' beaks off, spray painting their faces, twisting their heads off, spitting tobacco into their mouths and eyes and tying their legs together for 'laughs'". The plant had won KFC's "Supplier of the Year" award in 1997. After officials at KFC saw the videotape they said they would seek dismissal of the workers, inspect the slaughterhouse more often and end their relationship if the cruelty was repeated. Pilgrim's Pride said it was "appalled" by the tape, and the video resulted in three managers and eight hourly workers being fired and KFC suspending their business with the plant. KFC responded by issuing a press statement arguing that the PETA campaign mischaracterised the company as being responsible for raising and processing its chickens and questioning why PETA singled out KFC amongst fast food chains when 85 per cent of the facility's output went to competitors. In 2006 Greenpeace accused KFC Europe of sourcing the soya bean for its chicken feed from Cargill, who had been accused of clearing large swathes of the Amazon rainforest in 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. More than 60 companies have ended their contracts with APP, including Nestlé, Unilever, Danone, Xerox and HarperCollins. 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 fibre
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 struck 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! 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!, which earns almost half of its profits from China, largely through the KFC brand. In March 2013, Yum! 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 April 2013, KFC announced the roll out of boneless Original Recipe across all of its United States outlets. Josh Sanburn commented in TIME that "this modest innovation may not be just another new offering in a long line of new offerings".
KFC is a subsidiary of Yum! Brands, one of the largest restaurant companies in the world. While Yum! does not offer individual figures for its restaurant brands, KFC's 2011 sales revenue was estimated at $15 billion. KFC has its headquarters in Louisville, Kentucky, United States, in a building on 1441 Gardiner Lane known colloquially as "The White House" due to its resemblance to the Washington, D.C. building. Headquarters include executive offices and the company's research & development facilities. KFC is incorporated in the U.S. state of Delaware.
As of 2012, there were over 18,000 KFC outlets in 120 countries and territories around the world: 4,200 in China, 9,000 internationally and 4,600 in the United States, with China accounting for 49 per cent of revenue. All restaurants are furnished with images of Colonel Sanders. As well as dine-in and take-out, many KFCs offer a drive-through option. KFC offers a limited delivery service in a small number of markets, mostly in densely populated areas such as Singapore. 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.
KFC pioneered Western-style fast food in mainland China when it opened its first outlet in Beijing in November 1987. It is the largest restaurant chain, with 4,260 branches, and China is one of the only countries in the world where McDonald's is not the dominant fast food chain. Clifford Coonan of The Irish Times described the chain as "by far the most pervasive symbol of Western culture in China."
KFC believes it has been successful in China because it has adapted its menu to suit local tastes, offering such items as rice congee, egg custard 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 as hamburgers 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! chief executive David Novak, who expanded 100 stores in 1997 to 4,800 in 2013. Since 2006, Yum! 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 inning of a nine-inning 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.
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! 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; this experiment has been described as a "failure" and was satirized in the film Young Adult (2011) as a "Kentacohut". Yum! CEO David Novak blames franchisees not having their hearts in the venture as the reason for its failure.
Since its founding, Sanders and KFC used cottonseed or corn oil for frying, but in the 1980s the company began to switch to cheaper oils such as palm or soybean. In the 2000s it became apparent that these oils contain relatively high levels of trans fat, which increases the risk of heart disease. In October 2006, KFC said that, in the United States, it would begin frying its chicken in trans fat-free oil. This would also apply to their potato wedges and other fried foods, however, the biscuits, macaroni and cheese, and mashed potatoes would still contain trans fat. By April 2007 trans fat-free soybean oil had been introduced in all United States KFC restaurants.
Low U.S. sales in 2008 were blamed 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".
Some 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.
United Kingdom and Ireland
As of 2012 there are 840 KFC restaurants in the UK and Ireland, making it one of the largest international KFC operations. Restaurant ownership is split 40 per cent equity and 60 per cent franchised. The company has over 8,000 employees in the UK. The majority of KFC products, including bread, beans, and sauces, and salads when seasonally available, are sourced from the UK. Annual sales in the UK amount to 60,000 metric tonnes of chicken. 60 per cent of chicken is purchased from the four largest suppliers in the UK, including 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. KFC claim their Original Recipe chicken is no different from a chicken that can be bought in the supermarket. Frying oil is sourced from an AarhusKarlshamn facility in Hull. The most popular menu item in Britain is the mini fillet burger with annual sales of more than 19 million, followed by snack box popcorn chicken (14 million) and the boneless meal for one (12 million sales plus). The chain has sold Lavazza coffee since 2009.
England had the first overseas franchise for Kentucky Fried Chicken in 1964. England also had the first overseas branch, 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. In the early days most business was done after 8pm, when the primary customers were young men arriving from the pub. Non-essential trans fats were removed by 2007. System sales were over $1 billion in the UK and Ireland in 2009, having more than doubled in the past 5 years, and representing over 100 million meals served per year. In 2011, chains across the UK and Ireland stopped using palm oil and switched to rapeseed oil in order to reduce saturated fats across its range by 25 per cent. Food miles have also been reduced as this oil is sourced from Kent instead of Asia.
In May 2007, KFC UK requested that the Tan Hill Inn in North Yorkshire refrain from describing its Christmas menu using the trademarked term "Family Feast". KFC quickly backed down after the story received national press attention and negative publicity. A similar occasion in 2009 involved a small takeaway in Scotland using the "Family Feast" term. The takeaway refused to cease using the term, and KFC backed down after the story attracted widespread media attention.
The first Indian KFC opened in the city of Bangalore in June 1995. Protests ensued 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. KFC 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 store in Delhi was closed by the authorities, 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 clientele, and KFC decided to abandon the Indian market.
KFC returned to India in 1999, with a new Bangalore outlet. This was the sole KFC in India until 2004, when the chain began to expand, albeit with a makeover and a range of new vegetarian dishes. As of December 2012, there were 280 KFCs in the Indian market. As well as the standard KFC offerings, the chain sells a chickpea burger and hot wings with chilli lemon sprinkles.
The company continues to grow in Asia. KFC Holdings is the franchisee of over 640 KFC restaurants in Malaysia, Singapore, Brunei, Cambodia and India and is publicly quoted on the Bursa Malaysia. In Indonesia it is the largest Western restaurant chain, with over 420 branches, and one of the few countries where McDonald's is not the dominant chain. The first outlet opened in Jalan Melawai, Jakarta, in 1979. Since then, the chain has grown to hold an estimated 32 per cent market share, and product items include spaghetti, wraps and chicken porridge. The master franchisee is PT Fastfood Indonesia, which is listed on the Jakarta Stock Exchange.
KFC operates in the Caribbean and Latin America region, as well as Africa. In 2012, KFC operated 577 restaurants across 36 countries in the Caribbean and Latin America region. As of 2013, there are almost 900 KFCs in Africa, with 660 of these located in South Africa. Egypt and Morocco also have long-established markets. Ghana, Kenya and Nigeria have recently experienced their first KFC openings. The company hopes to expand its African operations, where it is already the regional leader among U.S. fast food chains.
KFC's primary product is pressure-fried pieces of chicken made with the "Original Recipe" seasoning mix. It is marinated, dipped in a flour and egg based mixture, and breaded with flour before being fried. 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. Chicken pieces include drumstick, thigh and keel, and a backbone based breast cut. The chicken is not cooked to order, and is instead kept warm in ovens until sold. If it is not sold within 90 minutes, it is discarded, under KFC's "hot & fresh" policy.
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 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 Asia there is a preference for spicy foods, such as the Zinger chicken burger. A number of territories, such as Ecuador and Singapore, sell fried seafood products.
Side dishes often include French fries, coleslaw, barbecue baked beans, corn on the cob, mashed potato, bread rolls and American biscuits. 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 are sold. In Malaysia, chicken meatball soup is sold. In the U.S., potato wedges are sold instead of French fries.
Because of the company's previous relationship with PepsiCo, Yum! Brands had a contract to supply Pepsi soft drinks until the end of 2012. Most territories still supply PepsiCo products, but exceptional territories include South Africa, the Philippines, Malaysia, Turkey, Romania, Greece, Israel and Sri Lanka, which stock drinks supplied by The Coca-Cola Company. In Peru, the locally popular Inca Kola is sold. In a number of Eastern European locations, beer is offered, in addition to soft drinks.
An own brand dessert is the soft serve ice cream product known as "Avalanche", which contains chocolate bits. 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 world's most famous trade secrets. It is critical to the company as a benchmark by which KFC differentiates its product from those of its competitors. Franchisee Dave Thomas argued that the recipe was a success because "everybody wants in on a secret" and John Y. Brown called it "a brilliant marketing ploy". The recipe is not patented, because patents eventually expire, whereas trade secrets can remain the intellectual property of their holders in perpetuity. The New York Times described the recipe as one of the company's most valuable assets. 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. Allen Adamson, managing director of brand consultancy Landor's New York practice, 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".
A copy of the recipe, signed by Sanders, is kept in a safe inside a vault in KFC's Louisville headquarters, along with 11 vials containing the recipe's herbs and spices. According to Yum! Brands, portions of the secret recipe are known by some of its executives, but only two people in the entire organization know it in its entirety, while a third executive knows the combination to the safe. A limited number of KFC employees know the identities of the three executives, that latter of whom are not allowed to travel together on the same plane or in the same car for security reasons. One of the two executives said that no one had come close to guessing the contents of the secret recipe, and added that the actual recipe would include some surprises. To maintain the secrecy of the recipe, half of it is produced by one KFC supplier before it is given to McCormick, who add the second half. A computerized process is then used to blend the mixture.
Colonel Sanders was a key component of KFC advertising until his death in 1980. Franchisee Dave Thomas argues that Sanders "stood for values that people understood and liked", and was the logical next step for the food industry after the success of such figures as Uncle Ben. 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. In 1994, KFC hired Henderson Forsythe to portray the Colonel in a television campaign called "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 China in the early 2000s, and has since been rolled out across a number of markets worldwide.
The company is famous for the "It's finger lickin' good" slogan, which originated in the 1950s. After a 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 stuck 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! executive explained that the new slogan was more holistic, applying to staff and service, as well as food. The company used the phrase from early on, but official slogans from 1956 included "North America's Hospitality Dish" and from 1957, "We fix Sunday dinner seven nights a week".
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. Since 2005, an updated version of the original 1950s logo has been used at some outlets. 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. In 1968, the company had an advertising budget of over $9 million ($59,417,225 in 2013 dollars). In 1969, KFC hired its first national advertising agency, Leo Burnett. A notable Burnett campaign in 1972 was the "Get a bucket of chicken, have a barrel of fun" jingle, performed by Barry Manilow. Young & Rubicam was KFC's agency of record in the United States from 1976 until the end of 2000. In 1979 "It's nice to feel so good about a meal" was the slogan. 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. 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.
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