Beruflich Dokumente
Kultur Dokumente
Globalization re-examined
By Francesca Filipet & Giulia Azzi
Agenda
Introduction
The Fats Food Industry
- Supply side
-Demand side
Key Food Categories and Competitors
Tricon Global Restaurants and Tricon
Restaurants International: what they did
Tricon Restaurants International
Name: Tricon Global Restaurants
Headquarter: Kentucky
Brands: Taco Bell, Pizza Hut and KFC
Birth: 1997 spun off from PepsiCo
Organization: 4 divisions, 3 domestic ones built
around each of the 3 brands + 1 to manage
international operations
… after the spin-off, there was the need to change
Tricon’s culture, improve unit economics and
refranchise some of the units the company owned.
FOCUS
Burgers!
Biggest single category in fast food industry.
The leader was McDonald’s Corporation with $ 36 billion sales from 25,000 units
spread across 115 countries.
80% of McDonald’s capital expenditures were directed outside US, and its
international operations accounted for 49% of company’s revenues and 57% of its
profit saturation of the US market growth was expected to come from outside!
McDonald’s Strategy
Leader: Pizza Hut (1958 Kansas) with 3,200 units, more than 100 outside US in
1977.
1998: 35% of units in US were company-owned vs 26% overseas
Several challenges: Domino’s (second largest competitor) innovation.
Pizza Hut responded spending millions of dollars on a quality initiative
“totally new pizzas” to maintein the 15%-20% price premium.
1997: Telepizza had 399 units in Spain and 68 overseas. Pizza Hut had 150 in
Spain in 1995 and 123 in 1997!
Chicken
Accounted for 15% of the fast food market (as pizza).
But less US-dominated: more internationalized!
Leader: KFC – 55% of US market
Competitors: Popeye’s 8%
Church’s 6%
Overseas market was growing more rapidly.
KFC – Kentucky Fried Chicken sold to PepsiCo in 1986 made PepsiCo the largest fast
food competitor in the world in terms of units and second-largest in terms of scale
with 6,500 units and more than 1,500 units outside US.
High profitability: it was the inventor of this fast food category and claimed a
larger share of it!
Outside US, KFC accounted for 62% of Tricon’s sales, compared to 36% for
Pizza Hut and 2% for Taco Bell.
…. But….
Taco Bell expanded access points in the 1990s, and promoted a tiered
menu strategy to continue to be a mid-tier family food provider while also
selling cheaper fare focused on teens.
europe, south
africa
americas
greater china
Operations
• CHAMPS= main operational improvement and standard for a
common operating platform among all franchisees
(Cleanliness, Hospitality, Accuracy, Maintenance, Product Quality, Speed of Service)
• Emphasis of ownership
(encouragement managers to own company stock)
• Recognition
Pace “people are so appreciative of getting recognition, as long as it’s sincere, people just want to be told ‘thank you’”
• Lowering turnover
Difficoulties of internationalization:
• Currency fluctations
• Determination of country risk premia
• Financial intermediaries for transactions
• Taxation issues, very different across countries
Franchising
Franchise was increasingly important:
more and more sections of the globe were served
through the franchise business model
DIFFICULTIES:
• Operational and marketing changes in expanding to fuller
dining experience
• Investment in building up local product development
capabilities
Thank you!