In-Depth SWOT Analysis of KFC | Strengths Weaknesses Opportunities & Threats

 Analysis of KFC Business

Kentucky Fried Chicken (KFC) is one of the world’s largest fast-food corporations. The center of the Company’s operations is in Louisville, Kentucky. KFC has become widely popular because of its variety of fried chicken products. The chain also serves sandwiches, sides, desserts, drinks, sauces, fill-ups, and buttermilk biscuits. It is the second largest in the global food industry.

Colonel Harland Sanders opened the first KFC restaurant in Utah in 1952. His finely made Original Recipe chicken and its secret recipe of 11 herbs and spices have since become popular all over the world.

The Colonel was persistent in doing things correctly. This ensures that our chicken is shipped fresh from the farm to the restaurant within 48 hours. It is meticulously cooked by hand in-restaurant by qualified chefs, using only the best chicken raised to strict welfare standards. That is what makes our food so delectable.

The proper way often entails serving new, flavorful food. They worked hard to enhance quality across our menu so that their customers have as many options as possible.

The Colonel was also a believer in feeding promise wherever it could be found. As a result, they invest heavily in growth and employment.

Today, the company owns and franchises all Kentucky Fried Chicken (KFC), Pizza Hut, and Taco Bell locations outside of China.

Yum! Brands spun off their Chinese operations in October 2016 to form Yum China, a privately owned business that not only operates all KFC, Pizza Hut, and Taco Bell restaurants in mainland China but also owns the full rights to many other quick-service restaurant chains.

According to Forbes, KFC made a total revenue of US$27.9 billion in 2020  and has a current brand value of US$ 8.3 billion.

SWOT Analysis of KFC

About SWOT Analysis

SWOT Analysis is a systematic method for finding strengths, weaknesses, opportunities, and threats in order to improve an organization’s performance.

KFC Strengths:

#1 Strong global presence. KFC has a strong global presence, with over 24,000 KFC Outlets/restaurants operating in over 145 countries as of 2021. KFC is a franchise-led brand with a broad global brand presence.

#2 Strong brand recognition. KFC is one of the most widely recognized brands in the world. The KFC brand has been around since 1930 and has grown to become a highly recognizable symbol of excellent food quality and value satisfaction.

#3 Well-known market position. KFC’s market position is well known and established; KFC is an iconic US fast-food chain that stands out from competitors with its unique taste, limited menu and high-quality chicken products.

#4 Well-established procedures and efficient supply chain. KFC has a well-established global supply chain and operates to execute efficient operations with high-quality products. KFC continuously improves its services while reducing costs through improved operational effectiveness.

#5 Efficient food production processes: KFC has increased its focus on food quality and production efficiency through continuous productivity improvements in its manufacturing processes.

#6 High-quality, tasty fried chicken products: KFC’s market position is derived from high-quality, tasty fried chicken products. The brand has strong product equity derived from high-quality chicken products with a long-lasting taste appeal.

#7 Customer Loyalty: KFC has a large and dedicated customer base. It is because of their exclusive and high-quality products. KFC’s crunchy chicken is one of its best-selling products. Because of this type of fan base, it is easy to predict KFC’s growth and benefits game.

#8 Automation: Automation of activities improved the consistency of quality in KFC products and allowed the business to scale up and scale down in response to market demand.

KFC Weaknesses:

#1 High costs to operate: Growth in KFC’s operations and supply chain may strain its ability to cover all production costs in a timely manner. This may at times negatively impact KFC’s quick service, satisfying customer experience.

#2 Competitor pressure: Competition from other fast-food chains and franchises may lead to stagnant sales growth and a decline in profitability over time. The company may be unable to effectively compete with competitors on taste, price, and image.

#3 International operations: Negative effects resulting from international operations include high expenses for employee recruitment and training, product advertising, packaging, distribution of products, and high occupancy costs for property and equipment.

#4 Seasonality of sales: KFC’s business in some countries is seasonal in nature, with sales revenues in the second half of the year usually being twice those in the first half. This means higher expenses during the second half of the year, which affect results.

#5 Foreign exchange risks: The weakening of foreign currencies against the US dollar may increase foreign currency transaction risks in countries where KFC has overseas branches. This, in turn, may negatively affect future revenue growth.

#6 Intense competition from other fast-food chains and franchises: Increased competition may have an adverse effect on KFC’s growth prospects. Additionally, such competition may lead to a decline in sales for KFC.

KFC Opportunities:

#1 Positive impact of globalization: Globalization has positively affected KFC’s growth, with KFC gaining a larger market share in overseas markets. Competitors are present in most overseas markets that KFC operates in; however, global expansion and regulatory policies are expected to be favorable for KFC’s expansion prospects.

#2 Increase in disposable income: Disposable income is expected to increase over the next several years and will likely positively impact consumers’ purchasing capacity for KFC products.

#3 Expansion of the emerging middle class in emerging countries: The emergence of a significant segment of the population in developing countries from low- to middle-income households will increase demand for fast food, including KFC products.

#4 Expansion of foodservice establishments: Increasing trends for dining outside the home are expected to positively impact KFC’s growth prospects, as they will provide more opportunities for foodservice establishments like KFC.

KFC Threats:

#1 Costs of operations: Rising operations costs may negatively affect KFC’s quick service, satisfying customer experience. Additionally, increased costs may adversely affect the company’s profitability over time.

#2 Negative impact from foreign currency exchange rate fluctuations: The exchange rate between the US dollar and foreign currencies may have a negative effect on KFC results due to a greater proportion of sales being made in foreign currencies. This may lead to higher operating expenses, which in turn will affect profits.

#3 Negative effect of tax policy: Government-imposed regulations on KFC’s international distribution may lead to a decline in sales and therefore adversely affect the company’s growth prospects.

#4 Consumer preference for other fast-food chains: Competition from other fast-food chains and franchises may lead to stagnant sales growth and a decline in profitability over time.

#5 Competitor-induced price cuts: Reduced margins due to competitive pressure may negatively impact KFC’s results.

#6 Seasonality of sales: KFC’s business in some regions is seasonal in nature, with sales revenues in the second half of the year usually being twice those in the first half. This means higher expenses during the second half of the year, which affect results.

KFC Business Strategy Analysis

Many things contributed to KFC becoming successful and expanding at a great rate since its inception.

First, the company had a phenomenal product. Colonel Sanders – the founder – created a secret recipe for making fried chicken with his 11 herbs and spices. The famous recipe is still used today to make those tasty chicken biscuits and crispy chicken strips.

Second, the management at KFC has been able to sustain great growth over the years by creating new products, such as sandwiches and desserts.

Besides, the management has also been able to adapt to the changing market by changing its business strategy and moving into new markets. For example, since KFC’s fried chicken is not very healthy, the company started introducing salads and bread to make its food healthier.

Additionally, KFC also entered markets with a high Muslim population and introduced halal-certified products.

The fourth reason why KFC has been successful is that it has an international presence in more than 145 countries all over the world. The company has grown at a faster rate in developed markets than in developing markets, but it has made significant progress in growing its business overseas.

One of the main strengths of KFC is its focus on its employees. Many companies forget about taking care of their employees, but KFC doesn’t forget about them. The company provides a lot for its employees, like employee discounts, free chicken biscuits, and drinks for life.

KFC is trying to make good relationships with the local communities and environment. KFC has more than 1.5 million employees, and they all have a good relationship with each other. The company provides social services such as taking care of homeless people, donating to healthcare charities, and keeping the environment clean.

KFC’s success is not only limited to its business strategy but also by its service concept. All KFC restaurants have the same color scheme with red and silver colors in them. The company wanted to give customers a unified experience and keep its name recognizable worldwide.