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Kentucky Fried Chicken

Article in British Food Journal · June 1999

DOI: 10.1108/00070709910278505

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 Kentucky Fried Chicken Kentucky Fried
Chicken
Leo Paul Dana
Nanyang Technological University, Singapore
Keywords China, Fast food, Product quality, Customer satisfaction, Market research,
National cultures 493
Abstract Kentucky Fried Chicken has made a very successful entry into China. This case is
about the KFC outlet at the Dong Fong Hotel, in Shanghai. The hotel was recently closed for
renovations.

Situational summary
The Kentucky Fried Chicken (KFC) restaurant, located in the Dong Fong Hotel,
offered a most pleasant location, along the waterfront in Shanghai. The outlet
was doing well, but as the twenty-first century was rapidly approaching, it was
important to ensure its continued success.

Colonel Harland D. Sanders

Harland D. Sanders was born in Indiana, on September 9, 1890. When Harland
was six years old, his father died, so his mother went out to work, and he had to
take care of his two siblings. Hence, young Harland learned to cook, and he
spent much time cooking, until he found a job ± at the age of ten ± working on a
farm, for $2 a month.
When Harland was 15, he became a streetcar conductor, and at the age of 16,
he went to Cuba as a soldier. Upon his return to the USA, he obtained
employment as a fireman for a railway company. He also studied law by
correspondence, and he sold insurance. For a while, he operated a steam-
powered ferry-boat along the Ohio River. Later, he sold tires and operated a
service station.
In 1930, Sanders found himself cooking for travellers who stopped at his gas
station in Corbin, a small town in the state of Kentucky. There, he served meals
on his own dining table, as he had no restaurant at the time. Eventually, people
came to him just for meals, and he moved across the street to a motel with a
restaurant seating 142 clients.
In 1935, Governor Ruby Laffoon of Kentucky declared him a Kentucky
Colonel, in recognition of his contributions to the state's cuisine. In 1939, the
colonel's restaurant was listed in Duncan Hines' Adventures in Good Eating.
Already in his 60s, the colonel learned that a new interstate highway was
planned. It would cause traffic to bypass the town of Corbin, and the colonel felt
that this would be a serious threat to his business. In 1956, he sold his assets,
paid his debts, and found himself living on $105 Social Security cheques.
At the age of 66, the colonel decided to travel across the USA by car, cooking
chicken and proposing franchises. The deal was that he would be entitled to British Food Journal,
Vol. 101 No. 5/6, 1999, pp. 493-495.
five cents for each chicken sold. # MCB University Press, 0007-070X
BFJ In 1964, the 74-year old colonel sold his company, with 600 franchised
101,5/6 outlets, to John Y. Brown Jr and a group of investors for $2 million. In 1969, the
Kentucky Fried Chicken Corporation was listed on the New York Stock
Exchange, and the colonel purchased the first 100 shares.
In July 1971, Hublein Inc. of Hartford, Connecticut acquired the company,
and a few years later, John Y. Brown Jr became the governor of Kentucky.
494 Meanwhile, the colonel travelled 250,000 miles annually ± almost the
equivalent of once around the world each month ± visiting the different
restaurants. Colonel Sanders died in 1980.

Changes
In 1982, R.J. Reynolds Industries, Inc. acquired Hublein Inc., thus making
Kentucky Fried Chicken its own subsidiary. This enterprise evolved into RJR
Nabisco; it sold Kentucky Fried Chicken in 1986 to PepsiCo Inc. for about $840
million.
In 1991, a new logo replaced the name Kentucky Fried Chicken with the
acronym KFC. Soon, KFC expanded to 82 countries, serving a total of two
billion dinners annually. The highest sales volume was recorded in Beijing.
During the mid-1990s, KFC refocused its advertising strategy, with an
emphasis on a complete meal, including roast chicken as well as fried chicken.
In some markets, KFC teamed up with another PepsiCo operation, Taco Bell,
offering diverse menus at one location. Also, KFC launched home delivery.

Kentucky Fried Chicken in Asia

In 1967, when Kentucky Fried Chicken was approached to expand to Japan,
executives were preoccupied with domestic expansion in the USA. When the
enterprise did invest in Japan, the venture proved highly profitable, as it
corresponded to a period of rapid growth in Japan ± a time during which the
standard of living was rapidly increasing, along with disposable income. The
years from 1985 to 1992 came to be known as the ``Bubble Years''.

China
In China, crickets, fried in oil, are said to be rich in amino acids. Abalone, duck
feet, goose testicles, roasted silk worms, sea slugs and Tong Xin river eel are
also popular. In Guizhou Province, a favourite meal is known as ``the three
squeals''. It consists of a rat embryo, and its name comes from how it is eaten.
The first squeal occurs when it is picked up with chopsticks; the second, when
it is dipped in sauce; and finally the live embryo squeals a third time when it is
crunched in one's mouth.
Some meals in China may seem unusual to Westerners. In a similar fashion,
some Western habits may seem foreign to the Chinese. This makes marketing
in China quite a challenge. Some Western products succeed in China, while
others do not. Strawberry-flavoured Chicklets became bestsellers. In contrast,
an attempt during the 1980s to sell Kraft macaroni and cheese in China had
limited success. Dairy products lack popularity in China.
 Certain norms can be quite confusing in China. Coconut juice, in cans, is Kentucky Fried
normally sold by volume, e.g. 250ml. In contrast, a can of almond juice is sold Chicken
by weight, e.g. 250 grams.
Unavoidably, foreign firms have often encountered language problems in
China. When Coca-Cola was first introduced in China, an attempt was made to
write its name phonetically in Chinese. The pronunciation Keh-kou-keh-la was
adopted. It sounded adequate, and billboards were made. To the Chinese, 495
however, Keh-kou-keh-la literally means, ``Bite the wax tadpole'', or ``Female
horse stuffed with wax'', depending on the dialect. Later, the name was
changed to Ko-kou-ko-le, literally ``Happiness in the mouth''.
In 1987, Kentucky Fried Chicken opened its first outlet in China. The
colonel's slogan ``Finger-lickin' good'' was translated as ``Eat your fingers off''.
In 1992, the year during which KFC opened its first restaurant in Greece, it
launched its 11th in China; by the end of the year, KFC had 1,000 restaurants in
Japan alone. In 1994, KFC opened its 9,000th restaurant in the world, in
Shanghai. The corporation also announced a $200 million investment to open
200 additional restaurants in 48 cities across China before the end of 1998.

KFC at Dong Fong Hotel

The KFC restaurant at the ornate Dong Fong Hotel offered an elaborate menu,
including coconut juice, mango juice, and Tsingtao beer, as well as Mirinda
orange-flavoured soft drink. In 1997, the question arose as to whether pear juice
and/or rice beer would be successful items on the menu. Marketers of Lotte
brand ``cafe coffee'' and ``banana'' flavoured chewing gum were also interested
in expanding the distribution of their products.

Application question
(1) As an international marketing consultant, design a customer satisfaction survey card
which can be used to obtain valuable information about the market. Conduct the survey.
Then, prepare a report for KFC, focusing on service as well as on product quality.

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