The secret of Kentucky Fried Chicken Holdings (KFC) success

Kentucky Fried Chicken (KFC) is a very well known restaurant in the world. It is rated at
number 60 as the world most well known brand by Business Week.

Its history spans almost 80 years when it started at Corbin (Kentucky-USA), in the 1930s.
During this period the United States was under The Great Depression with almost 25%
unemployment rate. The hard time was probably one of the biggest factor in forcing Harland
Sanders ("The Colonel") to start experimenting with various mix of spices and herbs, trying
to get the best formula for his recipe. (If we still remember the Asian Economic Crash 1997-
2002, one of the last remaining business that kept going during the recession was the food
industry).

By 1939, the recipe was already perfected and the Colonel had expanded his restaurant to
accomodate 142 seats. This was a fairy large restaurant , the size is equivalent to several
tennis courts. However there was one problem. The WAITING time! It took almost 30
minutes for the chicken to properly cooked. Turn the gas bigger and you risk of having the
chicken cooked on the outside but still red with blood inside.

Saved by the Pressure Cooker

Thanks to technology, in 1939 pressure cooker was introduced. Pressure cooker allow liquid
to boils at higher temperature. Water for example normally boils at 100 degree Celcius, but
with a pressure cooker the sealed lid doesn't allow air or liquid to escape and enable water to
boils higher at 125 celcius.

This significantly shortened the time for cooking and as an added advantage, the nutrients
(hence the taste) are retained making the food more delicious. Since the boiling point is much
higher, this would also kill more germs and make the food last longer.

It should be noted that The Colonel spotted the pressure cooking technique just weeks after it
was introduced. This means he was always looking for ways to improve the taste and the time
it takes to cook the famous kentucky fried chicken.
Time means money.

Every minute saved means less time waiting and more satisfaction to the customers. This
would also encourage a first time buyer to become repeat customers.

The Colonel is also a smart guy. He can read the writing on the wall. By early 1950s, he
probably heard rumours that an Interstate Highway is going to be built BYPASSING his
town. This could have a devastating effect on his business. He is now probably under serious
dilemma. When the Interstate was finally opened in 1955, it caused a huge diversion of traffic
away from his town.

Owning a big percentage in a small town VS Owning a small percentage in a large

country.

Seeing an end to his business, the Colonel auctioned off his operations. Confident with the
quality of his fried chicken, the Colonel started travelling from town to town franchising his
recipe. He visited countless restaurants, promoting his recipe by cooking fried chickens for
the owner and the workers.

The first franchise was awarded to Pete Harman of Salt Lake City. A handshake agreement
stipulates a payment of a nickel to the Colonel for each chicken sold. This is one of the real
strength of the franchise system. It provides a stream of money albeit the sum is initially very
small.

Building a franchise network is like building a pipe for money to flow to you. In the
beginning, the cost is huge because you have to set the infrastructure, digging the earth,
linking pipes, bypassing obstacles etc. In the beginning the volume of water flow (money) in
your pipe is also dismal.

After a few years of hard work, the effort will start to bear fruits. A penny here, a penny
there, ten pennies from this town, a hundred pennies from that city, a thousand pennies from
this district, ten thousand pennies from that state and it happen EVERY DAY! Before long it
started to make a huge impact on your income.
The consumer satisfaction under any circumstances

Kfc focus on consumer satisfaction, because we know than nowadays if you want to survive
on a market you have to make your consumer to be loyal to come back time and time and
again. It is not easy to meet exactly consumer need. Kfc try to do this and to offer good
products to them. They want to expand internationally, offer consumers more choices at their
restaurants, and provide good services to their customers. Kfc brand image is also good
because off the efforts made by the company in terms of social responsibility Indeed, they
also say that their meat comes about ethically and through humane treatment. This has not
always proved true in the past. KFC has made statements which say: "We do not tolerate
animal abuse by any of our suppliers, under any circumstance.” KFC also told the company
Pilgrim's Pride that, "unless they can definitively assure us there are absolutely no abuses
taking place, we will not purchase from this Moorefield, West Virginia, facility. to the
patrons of KFC, though, that the chickens will not be treated badly in the progression from
birth to the processing plant.

The KFC secret recipe: Does it matter?

It is an open secret that the KFC is made of a mix of 11 herbs & spices. Using modern
spectrometer, we can blast the Colonel spice with X-ray photoelectron or burn them with a
specially designed gas and study the result.

With a database of results made with similar technique using all spices & herbs known to
mankind, it would take just weeks before we could identified the exact names and percentage
of those 11 spices. However, DOES IT MATTER?? Does it really matter to know the exact
names and compositions of those spices?

An average businessman would think the secret recipe is so valuable and willing to pay
millions for a copy of it.

A genius businessman would not pay even a penny!!

It is the franchise system, not the spice recipe.

Have you been to a night market ("pasar malam") and tried the fried chickens sold by the
hawkers? Have you ever been to a small restaurant or a foodstall and found out that the fried
chicken was so crispy and delicious?

Then you were wondering why this small time businessman did not make a fortune out of his
"secret recipe"!

The next time you visited the restaurant again, did you notice that:-

• sometimes there was nobody to take orders

• sometimes it was closed without properly giving a notice in advance
• sometimes the table was in a mess and nobody to clean even after 5 minutes you were
seated.
• sometimes the sink was dirty and choke full with food residual.
• sometimes the fried chicken was overcooked, and at other times it was undercooked.
• sometimes the fried chicken was too hot and at other times it was not so spicy.

What is the point?

The "secret recipe" represent only a small percentage of the success of the KFC franchise. If I
were to give a percent, it may not represent more than 20% of the total success.

THE SUCCESS IS DUE TO THE FRANCHISE SYSTEM!!

In a franchise system, everything is documented and there are strict rules for running the
business. For example:-

• The chicken must be cooked in a pressure cooker and left for 15 minutes
• The size of each of the chicken parts must at least 8 cm wide and weight 300 grams
• The chicken must be marinated overnight
• The age of the chicken when they were slaughtered must be between 60-70 days
• The minimum size of the restaurant must be 24x60 feet
• The color of the logo, the chair and the table must be yellow and the floor is dark
grey.
• The toilet must be cleaned every 3 hours.
• The sink must be cleaned every 30 minutes
• The windows must be cleaned every morning
• Food left unsold after 15 minutes must be discarded.
• The worker must wear company-shirt and trousers. No jeans, corduroy or leather.
• 5% of gross earning must be used for local advertisement
• 1% of gross earning must be used for national level advertisement
• 3% must be used for R&D to develop new recipes & local brand.
• The food must also be offered in discounted packages (e.g 2 chicken, 1 fries, 1 glass
of pepsi)
• The food can be ordered seperately / "ala carte" but no discount applies.
• The restaurant must have air-condition.
• Etc.. etc..

This long list of standard operating procedures is actually the key to the success of the
franchise. The long list is actually an accumulated wisdom and know-how the franchise
system have developed after a few decades of operation.

THE "SECRET RECIPE" of KFC SUCCESS IS

ACTUALLY THE WHOLE FRANCHISE
SYSTEM!!