KFC Case Study

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KFC Case Study Introduction

SWOT Analysis provides an organization with the opportunity to recognize its strengths, weaknesses, and internal as well as external threats. PESTEL analysis is a framework used to examine and analyze the macro environmental elements that affect the growth of a company.

Company Name

KFC

Type of Industry

Food and beverage

Headquarters

Kentucky, United States

Sales/ Revenue

$2.64 billion

Area Served

Worldwide

Number of Stores

18,875

Competition

McDonalds, Subway, Burger King, Starbucks, Pizza Hut, Domino’s Pizza and Dunkin Donuts

USP

A variety of Chicken items

Target Group

Chicken lovers

Products

Kentucky Grilled Chicken, Hot Wings Fried Chicken, BBQ Chicken, Fried Gizzards, Burgers, and beverages

Website

https://www.kfc.com/about

KFC SWOT

Strengths

  • KFC is considered to be the 2nd largest restaurant chain and they offer both veg and non-veg menu
  • KFC has unique recipes that are kept secret and they use original and exotic herbs
  • KFC is a subsidiary of a strong company and collaborates with other subsidiary brands of the same company
  • This F&B company succeeded in achieving a strong global presence with services being offered in more than 118 countries

Weaknesses

  • KFC uses unsaturated and unhealthy fats
  • Negative Publicity and rumours over the years have affected their profit besides making it difficult for KFC to manage all the franchisees
  • Lack of support staff and dishonest Suppliers have affected their growth
  • Many franchisees have already been closed and as a consequence brand image has been tarnished

Opportunities

  • There are high chances for KFC to expand by exploring new food items besides maintaining quality of its in-house items
  • Expansion in countries with emerging economies would enable this brand to increase its overall revenue

Threats

  • KFC competes with other established companies like Pizza Hut, McDonalds, Starbucks, Subway and Burger King
  • Awareness among the consumers about the harmful effects of consuming unhealthy fats affect their profit

KFC Analysis

As per the case study of KFC is considered to be the second largest food chain industry in the world with 18,875 outlets in 118 countries (Online.kfc.co.in, 2019). They have expanded their business in foreign countries like China, India, the United Kingdom, and Australia. They attract both the vegetarian and non-vegetarian people with a variety of veg and non-veg food items. Their secret recipes of chicken attract chicken lovers all over the world. Using eleven original and exotic herbs and spices distinguishes them from other rival companies. Based on the case study of KFC a copy of the recipe signed by colonel Sanders is kept safely inside a protected vault in the company’s headquarters at Louisville. KFC being a subsidiary brand of Yum! Brands, gets the opportunity to collaborate with brands like Taco Bell and Pizza Hut since Yum! Brands, one of the largest restaurant companies also owns these two brands. Their partnership strengthens them as they attract more people by offering combination dishes (Bhasin, 2019).

As per the case study of KFC they have several weaknesses as well. Just like any other fast food chains KFC is facing difficulty in selling their products that contain unsaturated fats and other unhealthy calories. In recent years KFC has made the headlines when many consumers raised their voice against their food quality. Conflict between KFC and other franchisees, lack of support staff and dishonest suppliers led to the closing of many outlets of KFC (Wu, and Cheng, 2019). Expensive lawsuits against them have put them into trouble. Competitors like McDonalds, Dunkin Donuts make it difficult for KFC to survive. KFC still have an opportunity to recover the loss by expanding their service in different territories and by they can add more food items that contain healthy ingredients like other rival companies.

KFC PESTLE

Political

  • The Kentucky Government has levied 6% sales tax on food and beverage industry
  • There are a number of US Agriculture Trade programs that make scopes for commodities and agricultural products

Economic

  • Price hike of raw materials has affected the food and beverage industry
  • $20.50 trillion GDP impacts the company’s growth

Social

  • Besides encouraging healthy competition among the employees, they donate to help the people in need and keep a good relationship with other companies around the world as well as some international organisations.

Technological

  • Collaboration with food delivery apps like Swiggy and Zomato would expand their business
  • Use of online platforms to reach more people has widened up scopes for fast food companies to flourish

Legal

  • Food Safety and Inspection Services 1977, Poultry Product Inspection Act 1957 and United States Food And Drug 1938 ensure that F&D companies are serving food that are safe for consumption
  • Fast food companies have reached settlements with the US government in relation to no poach agreements leading to the growth of the industry

Environmental

  • In the US, lawmakers have enacted strict laws to ban plastic bags in many states and the food leaving a great impact on the food and beverage industry.
  • PETA U.S. along with some other animal rights organisations protested against KFC for the slaughtering of animals

Analysis

As per the case study of KFC, the recent price hike of raw materials including poultry products and the high sales tax levied by the federal and state government have a great impact on this F & B industry. As per Long et al. (2018), nutritionists from all over the world have protested against KFC for serving unhealthy food. As per the case study of KFC, official website to keep in touch with customers and a software system to keep track of their profit and loss is beneficial. Based on the case study of KFC, they provide their customers with home delivery service and recent tie ups with food delivery apps like Zomato and Swiggy have helped them reach more people (Online.kfc.co.in, 2019).

As per the case study of KFC in 2016 no-epoch settlement with the US government had a great impact on the F & B industry. United States Food and Drug 1938, Food Safety and Inspection Services 1977,Poultry Product Inspection Act 1957 ensures that the company servers healthy food (hg.org, 2019). In the US organisations like Allfoodbusiness.com, Food Poisoning Prevention and Centre for Disease and Prevention provide the consumers with an opportunity to raise their voices against F & B industry. Strict laws have often put KFC in trouble. Health awareness programmes have also made people aware of harmful ingredients used by KFC. The lawsuits filed by PETA and other animal rights organisations for cruelty against animals has affected their growth (Bestlawyers.com, 2019).

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Reference List

Bestlawyers.com (2019) FOOD AND BEVERAGE LAW DEFINITION. Available at:https://www.bestlawyers.com/methodology/practice-areas/united-states/food-and-beverage-law [Accessed on 28 th August 2019]

Bhasin H. (2019) SWOT analysis of KFC. Available at: https://www.marketing91.com/swot-analysis-of-kfc/ [Accessed on 21 August 2019]

Hg.org (2019). Food and Beverages Law. Available at: https://www.hg.org/food-and-beverages-law.html [Accessed on 30 August 2019]

Long, T.B., Looijen, A. and Blok, V., (2018). Critical success factors for the transition to business models for sustainability in the food and beverage industry in the Netherlands. Journal of cleaner production, 175, pp.82-95.

Online.kfc.co.in (2019). Our Golden Past. Available at: https://online.kfc.co.in/about-kfc/ourgoldenpast [Accessed on 29 August 2019]

Wu, H.C. and Cheng, C.C., (2018). What drives experiential loyalty toward smart restaurants? The case study of KFC in Beijing. Journal of Hospitality Marketing & Management,27(2), pp.151-177.

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