KFC SWOT Analysis
Kentucky Fried Chicken is a very famous chain of fast food outlets that started from Louisville, Kentucky. The company is became a sub-brand of Yum Brands in the year 2002 and benefitted greatly from the position and brand value of Yum foods. In the past the KFC chain of restaurants grew at a very fast pace and has become today one of the largest chicken restaurants chain in the world.
KFC has been known to be a leader in the chicken restaurant segment with an annual sale of more than a billion dollars. The KFC as a brand is well established in the dining out as well as delivery service provider in the fast food industry.
Despite the entrance and presence of many competitors in the fast food industry the company was able to retain its large loyal customer base because of its unique offering. Due to this reason the KFC ranks highest when it comes to chicken restaurant chains, convenience restaurants and variety food provider.
KFC currently has more than fifty percent of the market share in fast food industry and the new entrants are finding it very difficult to capture any of its share.
Over the years KFC has gained enormous recognition as a reputable brand for fast food and has globally positioned itself well in the industry.
When other companies in the chicken industry were trying to increase its market share and were not able to compete well in the market or retain its customers.
Also the special paper buckets that is now used by the KFC for delivering large sized orders was originally introduced by Wendy’s restaurant
The company has entered so many markets in the past in the United States that its growth rate was about only one percent an year.
The company is said to not to pay attention to its resource and development.
KFC has been trying to enter new markets and position itself in some of the hard to enter markets like the South America. With more investments the company can definitely make its position stronger in the food industry.
More spending on the resources and development as well as introducing new food items and products the company can increase its market share and profits.
KFC is known to be a favorite of meat and chicken lovers, and this segmentation is the main success factor of KFC. However, due to its franchise business model, the firm faces a lot of competition from other franchise’s like McDonalds and Burger kind. Besides burgers, indirect competition in the form of Italian and fast food is ever present. Some of these competitors are Pizza hut and Domino’s. Let us have an internal analysis of KFC to know what strategic initiatives can be taken by the company.
Strength in the SWOT analysis of KFC
- Global Presence: KFC is the world’s 2nd largest restaurant chain with more than 18,000 KFC outlets in 120 countries and territories around the world. It is market leader in Non-veg food joints categories in majority of countries it is in.
- Strong parent company: It is the subsidiary of Yum! Brands, a restaurant company that also owns the Pizza Hut and Taco Bell . Yum! Brands, the fortune 500 company, is one of the world’s largest fast food restaurant companies in terms of system units—more than 41,000 restaurants around the world in over 125 countries & it help individual brands in optimizing its resource usage.
- Veg & Non veg offerings: Although KFC is known for its finger licking Chickens menu but recently they ventured out in Vegetarian category which is helping them in increasing their business & attracting both veg & non-veg preferred customers.
- Secret Recipe: Sanders’ Original Recipe of “11 herbs and spices” is one of the most famous trade secrets in the catering industry. 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.
Weaknesses in the SWOT analysis of KFC
- Unhealthy fats: Use of unhealthy fats & unhygienic calories is creating problem for the fast food chains to which KFC is not an exception.
- Managing franchisees: Franchisee management is one of the critical issues in the success of the fast food chains and due to conflicting operational issues between KFC and its franchisees many of its outlets got closed since its inception.
Opportunities in the SWOT analysis of KFC
- Market expansion: Emerging economies and their changing lifestyle resulting into more of outings with family/friends, corporate parties will result in the high growth of the industry. Furthermore, the presence and popularity of McDonalds is anytime more daunting for KFC.
- Specializing into vegetarian Menu: Although KFC recently entered in vegetarian fast food category but they have limited menu items as compared to other chains like subway, Pizza-hut, Mac Donald’s, who are already an established player in the segment. So specializing into Veg. items like they have in Non-Veg will help the company in its overall global growth.
- Rise in health conscious population: Designing its menu for the health conscious population will be the driving force for the whole industry in the future because due to changing lifestyle people are getting less time for themselves due to which health issues are raising.
- Penetration: Strengthening its outlet network by further penetrating the current market will help KFC in increasing its revenues & become no.1 player in fast food chain market given that now they have presence in both Veg. & Non-Veg. menu in the selected market.
Threats in the SWOT analysis of KFC
- Competition: KFC is not a leader in the fast food chain industry so it has to compete with all other well established fast food companies who all are flourishing in the market.
- Changing Consumer Eating habits: With government & NGO’s health awareness campaigns people are becoming more aware of what to consume & what to not which is affecting the business of fast food Industry as a whole.
- Raw Material prices: Rise in the raw material prices may affect the industry, of which KFC business is not an exception.
- Closure of current Franchisees: Rise in channel conflict resulting into closing of the franchisees is affecting its brand image & resulting into negative word of mouth.