BUILDING OPERATION STRATEGY OF KFC COMPANY
I. DEFINE TARGET MARKET AND COMPETING PRIORITIES
1. Introduction of KFC
- Kentucky fried chicken (KFC), brand was pioneered by Mr. Harland Sanders, has
grown and become one of the world's largest fast food serving systems, with more than 1
billion KFC dinners served annually in more than 90 different countries, with over 10,000
restaurants and has created more than 200,000 labors.
2. Select target market and competing priorities
- Currently, KFC has become a popular fast-food brand developed in many
countries. KFC has been known much in Ho Chi Minh City, Hanoi in particular and in
Vietnam in general - this is a new market with around 170 stores, more and more the
number of customers are familiar and accept food. KFC targets to the youth market, the
Vietnamese market is considered as a promising market. Half of Vietnam's population is
under the age of 30, meaning that young people will easily accept KFC's fast food than
adults. With the goal of building trust in customers through quality, reputation and food
safety, KFC Vietnam just selects the material reputation and quality assurance supplier,
such as CP Vietnam. KFC selects to develop in major cities such as Ho Chi Minh City,
* Competing priorities and define competitors: As penetrating into the market,
KFC will face traditional products such as Pho 24, different fast food products (BBQ,
Chicken, Lotteria, Macdonald ...). KFC determined its opponents from then making brand
development strategy gradually, slowly to create the trust from its customers through
special quality of the products.
- Awareness of consumers about the competitors: Assessing consumer awareness
about the major competitors is to assess the understanding of the information of
- Evaluation of the position of the competitors: The information research from the
market helps KFC determine its market share as well as existing competitors; Lotteria is a
typical competitor threatening the market share of KFC. Besides Vietnamese brands (Pho
24) are also competitors of KFC.
- Analysis of consumer preferences: Through research data (collected), KFC is the
product which is used most by groups of students, 78% and those with incomes of less
than 1 million dong is 49%. It shows that young people are the main consumers of KFC
products and those with un-high income are main customers of KFC. Also, through the
obtained results, it people do not buy KFC products, Lotteria accounts for 45% of
customers trust. It can be seen that Lotteria is the main rival of KFC.
- Making Decision: KFC has chosen for its own direction in accordance with the
Vietnamese cuisine as for new products such as soft bread, cabbage jumbo ... KFC
confirms the quality of its products by the quarantine certificates. Moreover, KFC
products also make a difference with other products in the mix 11 different spices that
make the difference for the KFC products….
- Monitoring implementation of the strategy: The process is to ensure the
positioning strategy of KFC is always in the right direction, goals. Simultaneously, detect
errors or mistakes to have immediate corrective measures…
2.1. Objectives of KFC in Viet Nam:
- Building an organization with dominant dedication.
- Always bring quality and value in products and services.
- Maintaining a commitment to continuous improvement and innovation for
development, always strive to be the leader in the constantly changing market.
- Create financial resources and strong profits for investors as well as employees of
2.2. Competing priorities of KFC in Vietnam.
- Health Priority: Today's customers not only need eye-catching food they are but
also interested in health issues. Especially in the current period, the rate of obese
children is increasing. The main thing is that health is a top concern in the dish selection
criteria of the customer. Many customers tend to go back to nature, enjoy the food and
herbal flavors with bold local culture.
-Price priority: The life of Vietnamese has been higher, people pay more attention
to food safety issues, especially after the bird flu, the more people have a lot more
cautious when eating the dishes of chicken, and KFC is one of the trusted addresses. It is
said that "On average, each meal from 60,000-80,000 dong, prices are so reasonable,
inexpensive compared to office rice.
2. SERVICE DESIGN & SELECTION OF PRODUCTION PROCESS AND
2.1 Service design:
Product service design consultancy is one of the important issues, how to be beautiful,
satisfy customer needs.
For specific product, groups selected KFC fast food as one particular product that
includes two factors: manufacturing and services
In store chef will create the right product and also provide goods and sell products to
Thus, service design process is presented via 2 following diagrams by our group:
Production and service supply system
Diagram 2 -1
The specific type both of production and sales, quality and service factors are chosen
and put on top. Therefore, the human factor is also our interest because people will serve,
contact with customers, the basic requirement is communication skills, 2nd is
understanding products to better sales.
We would like to make the comparison table and supply of ordinary goods
Goods production and supply Service
People who create demand for people who directly involve
The stability of the More stable
to in system
Lack of stability
product in the system
The distribution intermediaries Customers who want to use
sell goods directly.
intermediaries only sell the
right of using products and
Hence need the choice of
distribution more closely
a. Basic products of KFC: Buckets, Burgers and Colonel Crispy Strips
There are also other products such as traditional fried chicken, boneless crisp
chicken rice; Shrimp Burgers Combo, Spicy Crispy Chicken Combo, Seafood Combo
b. Select product designs
When entering Vietnam market, KFC has changed the taste, size to suit the
Vietnamese consumers, make a difference for other products. In addition to traditional
dishes such as fried chicken in general when entering Vietnam market, KFC has created
few dishes to serve the food taste of Vietnamese people such as boneless chicken crisp,
soft bread, carry chicken rice, cabbage mixed Jumbo
Expand products into shrimp, fish materials, and some beverages to replace
As we all know KFC is one restaurant chain offering fast food to its customers.
The system creates KFC as well as other systems, but has been designed to save time for
Be described by the following diagram:
Customers go to the store
Order fast food, drinks
For service, KFC selects methods: improving staff capacity to satisfy customer
needs and increase profits. Besides KFC always commits to diversity and creates the best
working environment for employees, also KFC not only pays attention to its staff but also
running a restaurant system chain to bring the most convenience for customers.
Product standard now used in KFC is ISO -9000 to control the quality of dishes
here. Fast food service is associated with physical products: foods, beverages, invisible
part is the service attitude of contact staff, reliable feeling of quality, products.
2.2 Selection of production process and capacity
Types of product process
• Sort by the number of produced products and repeated nature:
• Sort by production organization form
Continuous manufacturing process,
Interruption manufacturing process
Production under project
• Sort by relationship with customers
Produce to reserves (production on demand)
Production of the request (order)
• Sort by structure of products: the convergence process (assembly process) and
divergent production process (The process)
Decision on capacity
Types of capacity
- The maximum capacity could be achieved under theoretical conditions that
machinery, equipment can operate 24 hours a day and 365 days/ year.
- This capacity only counts the maximum limit that can not be achieved.
The expected capacity - also called the effective capacity
- The capacity of the enterprise is seeking to achieve compliance with the
standards, processes and technology, operating production capacity, maintenance
planning, maintenance and balance activities
- Efficiency capacity is often taken up by 90% because machinery is generally
impacted by outside factors.
Level uses the effective
- is capacity that we gain in fact conditions
= Gained real output
Factors affects to capacity:
- Product demand,
- Nature of products
Output to the expected output
- Technology level
- The human factor,
- Production plan,
- External factors: The standards and regulations
Three types of decision models are:
+ Decision-making in certain conditions: in which the decision maker knows for
sure consequences or outcomes of any decision to be selected.
+ Decision-making in uncertain conditions: in which decision maker does not
know what will happen to the results of each of their choices
+ Decision-making under conditions of risk: in which the decision maker knows
the probability for the result of the chosen method.
- The goal of breakeven analysis is to find cash point at which expression cost and
income are the same. To analyze breakeven, it is needed to assess the fixed costs and
- Fixed costs are costs that continue to exist even if no product is produced.
- Variable costs are costs that vary with the number of products made.
Hence choosing the production process and capacity for production KFC only upon
request of customers, and products can be processed pre-order after having serving staff
orders, chef has just introduced finished product to the consumers so that capacity
depends on having customers or not.
3. SELECT LOCATION AND BUILD SUPPLY CHAIN
Location is the most important factor in the field of food and drinks business,
especially fast food. The location selection is not only prerequisite "golden key" to
determine the success of the brand but also the premise and foundation for the brand to
provide simple and professional standard services.
First, KFC will be more flexible in opening restaurants in big cities like Ho Chi
Minh, Hanoi ... to choose the time and place of opening. This creates a competitive
advantage of KFC over itsrivals.
About distribution locations, KFC selects distribution locations to open stores as
buildings, supermarkets, bookstores, commercial centers such as Parkson, Diamond
Plaza, Maximark Supermarket, Mark Coop, Big C.
The landmark of restaurant first developed in the provinces: July 1997 - HCM
City, June 2006 - Hanoi, August 2006 – Hai Phong and Can Tho, July 2007 - Dong Nai Bien Hoa, Jannuary 2008 - Vung Tau, May 2008 – Hue, December 2008 - Buon Ma
Thuot, November 2009 - Da Nang...
* Develop distribution strategy:
- Closely manage its distribution systems from the selection of the personnel,
facilities, location, purchasing, warehousing, sales ... ensure consistency in the quality of
stores over the country.
- A reality of Vietnam market today is there are not many enterprises with strong
brand in the field of fast food, so KFC need to further standardize its store system.
- Create different spaces to suit each object in stores: bustling, vibrant spaces suit
- The waiters at the KFC restaurants should be trained and keep good service
attitude even when the restaurant is crowded.
4. GENERAL PLAN
4.1 General plan
Diagram: General Plan
4.1.1 Demand Forecast
- Demand forecast is set out from survey of market needs specifically according to criteria
such as the appeal of the brand, consumer culture of the client, the population pyramid.
- Demand forecast will be made according to the season. As in the north, there are 4
seasons in which in summer and winter there are more customers than in spring and
autumn. As in the south there are more customers in the dry season than in rainy season.
- KFC develops strategy to hit consumers under the age of 35 that accounting the majority
population of 65%, so the demand will be so great.
4.1.2 Process and capacity
- KFC products in Viet Nam are processed according to common standards worldwide.
However, KFC Vietnam is also working to change the size and design, taste to suit for
consumers in Vietnam such as crispy boneless fried chicken, crispy chicken salad, mixed
cabbage, soft bread, chicken soup, chicken pasta …
4.1.3 Labor force
- Significant impact to the General Plan: In addition to serving employees with overall
style of the KFC brand, there are employees who directly create products such as the role
of the restaurant's chef.
- This force will be trained carefully to make products with the best quality and the most
professional service style.
- These forces in Vietnam are relatively various and cheap
- Quite diversify with our main economy of primarily livestock and planting in rural
- Can be purchased at the farm and households, however quality is uneven and quarantine
procedures as well as safety of livestock is also very difficult to control.
4.1.5 Reserves production
- In Vietnam, the holidays or festive occasions, the consumer demand will surge so plan to
have reserves to avoid out of products.
4.2 Strategies of general plan
4.2.1 Strategy to change inventory / storage
- According to this strategy, managers can increase inventory levels in low demand
periods to provide and enhance for the increased demand period in the future. If we
choose this strategy, we will be subject to an increase in the cost of storage, insurance,
maintenance, and damaged level and the investment capital. We will increase the level of
reserves in the timing of events such as festivals, Independence, 30/04 and 01/5 ... when
people have days off and take their family to eat and drink out leading the increase of
demand. When we have this strategy, we will not affect: The production process and
timely satisfaction of customer needs;
Strategy to change labor forces
- Increase or decrease according to changes in labor demand: Based on the level of
production of each stage, managers decided to hire additional workers as needed and
ready to let them stop working if unnecessary. This strategy avoids risk due to the erratic
fluctuations in demand; reduce the cost of some of the other options such as goods storage
cost ... But it will take more costs to training service staff. For big brand as KFC, this
strategy will sometimes lose the image of the professional staff.
4.2.3 Strategy to use of part-time employees, increase shifts, reduce overtime hours
- Use of part-time workers: To reduce the onerous administrative procedures and to
take advantage of human resources without highly skills, restaurants can use workers
work part-time. With abundant force of students who wish to work part time to increase
the income, KFC is not difficult to implement this strategy.
- Increase shifts, reduce overtime hours: In this strategy, KFC can be fixed its
number of workers but change the number of working hours. When demand increases, it
can organize overtime, during low demand periods; it can allow employees to relax and
not have to resign. This strategy helps to stabilize the workforce in each store.
4.2.4 Price changes or other measures affecting market demand
- When market demand is low, KFC restaurants can affect demand by advertising,
promotions, discounts, expanding sales form ... for example, the KFC promotion for
summer: when coming any KFC restaurants, you just need to buy a combo of KFC and
change normal Pepsi to get 2 big Pepsi for 2,000dong and get lucky scratch card
immediately. Scratch card includes 2 pieces associated with two very attractive winning
scratch opportunities. There are 5,000 prizes that are vouchers of VND 50,000 you can
change for silver layer upon rake in piece 1. At piece 2, you will receive one code to join
electronic dial program. If you are lucky, you will become the owner of the car Ford
Fiesta 1.6AT, or iPhone 5 - 16GB, or Canon SX240HS camera.
4.3 Management of service demand and supply
4.3.1 Impact on demand
- Managed by demand classification: the demand on forecast / established:
Customers had appointment; unusual demand, current customers. Encourage customers to
make an appointment first: At the busy time of serving, the customers who books first will
be given priority. The service is done via internet and fixed line of KFC restaurants. It
helps us to manage the demand and the number to prepare.
- Preferential policies on low demand: In addition to programs for customers with
VIP card and special Tuesday program, in May, 2011, KFC also introduces the new EZ
Menu with prices reduced up to 40% , only 35,000 instead of 65.000d as normal.
4.3.2 Impact on supply
- Schedule shifts: Statistics and forecast accurately customer demand (during the day - by
the hour) to plan staffing accordingly. This helps KFC have staffing plans accordingly. It's
always just enough without wasting excess manpower.
- Increase customer engagement: In the KFC restaurants customers have to go get the
spicy food and clean up after eating.
- Flexibility to adjust supply ability: At KFC restaurants, there maybe have 3 chicken
roasted ovens, at conventional time, use only 2, but at the peak time, they can use the
third oven. This flexibility helps the KFC have a better service at rush hour to minimize
customer’s waiting time.
- Crossed staff training: At KFC restaurants, if the area does not have many customers,
sales staff needs to go into the kitchen to help employees in the area to prepare materials,
at rush hour, the kitchen staff can go to the counter to help sales staff. This makes staff
less disturbed when one person has days off, it’s ready for other people to replace.
5 .1 Planning of human resources
- More than 15 years creating and developing Kentucky Fried Chicken restaurant
chain in domestic under the international standards of Yum! International Group, KFC
Vietnam is growing constantly, keeping conquering potential markets across the province
and cities of the country. Specific culture of Yum! International group is to recognize
merit and reward efforts of individuals, groups more than 4,000 employees of KFC
Vietnam who live and work in the spirit of "How We Win Together." With specific job is
to serve products, need the service attitude of the staff is the most important factor, so the
human resources strategy of KFC is given as recruitment without evaluation of education
but to assess the awareness, attitudes each of staff. Thus, people working in KFC are
invested in training soft skills; service attitude during recruitment time to process working
at KFC. With the kind of service work, KFC has strategy to recruit part-time and full-time
employees divided into shifts to ensure customer service in rush hour of the day: eating
lunch, dinner, in the week: the weekend and the occasions of holiday. KFC has calculated
the peak time and low time in recruitment for manpower planning timely. At peak time:
May to September, this is the stage of students preparing to graduate or school leaver
looking for internship opportunities and new jobs. KFC takes this opportunity to plan the
expansion of the sales points. Therefore, KFC has maintained the strategy by choosing
this moment to consider salary increase, bonus, promotion for that year as well as
building the emulation program to raise awareness of working associated with the benefits
From the first day to Vietnam in 1997 with the first restaurant in Saigon Superbowl with
only 70 employees, so far, KFC Vietnam is one of the leading fast food brand with chain
stores available all provinces and cities of Vietnam.
The success of KFC Vietnam today is built and developed from global brand, excellent
product quality, and most importantly is dedicated service attitude, professional young,
dynamic staff. It’s the enthusiasm, the spirit of collective solidarity over 2500 employees
that have distilled, formed and developed culture "How We Win Together" - "Consensus for
success, concentricity to take the range"
KFC in Viet Nam
Believe in human: We believe that each member of the team always has the potential to
make a difference: We actively listen to opinions of the individual to make the right
decision for collective. We always guide and support individuals to showing their
Wish to serve: We love serving customer work and always serve with “Yes” spirit for
customers to feel the taste and satisfaction each time they go to any restaurants of KFC
Create outstanding results: At KFC Viet Nam, each work is started with the question
“How should we do to get the outstanding results?” It's the determination that is the
beginning for bold, creative ideas so that each individual performs work with all
dedication, ability, responsibility.
Build basic knowledge: We develop with the desire to explore, to seek knowledge, to
learn from the experience in every step of the way that has gone through and applied best
what we learned. We executed a perfect stability through the establishment of the tool and
efficient workflow. The outstanding results will come until we promote creative thinking
Promote teamwork: We discuss the plans of the action plan for each job objective. We
candidly discuss all issues. No matter what can not be discussed with the motto always
appreciated the value of the positive argument to make good, valuable decisions, closely
Recognizing merit: We attract and retain talents and transmit work momentum, striving by
recognizing merit respectfully. Joy is to be congratulated as the result of individual /
collective and we're always happy to perform recognizing merit.
5.2 Planning resource materials
- KFC has selected solutions to authorize most decisions of the supply of raw materials to
the factories of the company separately but under the supervision of a nerve center, KFC
always checks regularly.
- KFC products are the main ingredients (chicken, mashed potatoes, spices) determined
by the headquarter vendor, raw materials are usually materials (bread, beverage puree,
vegetable, packing, etc.). Furthermore, KFC uses top-quality materials from reputable
suppliers such as Nestle, UBF, Kerry that has made the main strengths for the company.
6. PLANNING PRODUCTION MODERATION
- The administrators of KFC in particular and other companies and businesses in
general are often deployed to the production moderation of each particular stage to
evaluate the results achieved and detect the shortcomings. In the process of building
service supply that has affected the business performance of the company. Through the
moderation of the production, leaders and the departments will draw experience and find
solutions to improve the manufacturing process to reduce the supply of services at the
lowest cost consistent with existing technology and managing quality products well,
satisfying customer demand, inspiring for workers to make tireless efforts and dedicate to
a. Specific moderation plans
- Pursuant to the company's strategy-through market research, the advantage of the
company’s competition, under the operational strategy and implementation of long-term
short-term decisions of the company, considered based on the fact through business
results of each service area, each store we planned it this way:
- For the market forecast production,
- Inventory level
-Work time adjustment
- Some other solutions
7: Planning for Quality Management
7.1. The nature of service quality
Excellent customer service is the lifeblood of any business. You can make promotion or
lower the price to acquire new customers as you want, but ff you do not keep customer
then your business will not make long-term profits
Excellent customer service is all what can bring your customers back your business and
now sending out funny messages –funny enough to communicate a clear feedback about
your business to the customers that then try the product and services you offer
If you are a good salesperson, you can sell any item for anyone. But the poll to your
customer service will determine whether you can sell for that person any other product or
not. The essence of perfect customer service is to establish a relationship with a customerrelationship that customers feel special and want to pursue.
How will you establish a relationship? By remembering an authentication secret in
excellent customer service and follow it. You will be highly appreciated for what you do,
not what you say.
7.2. Plan for service quality management in restaurants
Based on the Rater model about measurement of service quality, service management
quality planning includes general requirements:
- Reliability: good food, regular supply, long-term, full-on brand spices, food hygiene and
- Guarantee: Experience in skilled, friendly and polite chefs.
- For facilities: tidy kitchen, ensuring fresh ingredients, clean furniture, reasonable dining
room layout under brand identity standard, polite neatly dressed staff.
- Standards for customer service for staff at the counter: at 1 store with 2 major salesmen,
serving fast, precise and dedicated, in particular:
+ Proactively inform customers at the end of the transaction and ask the customer's needs, at
the end of transaction thank customers and express their desire to serve the customers;
+ Actively ask for the name, remember the name and call clients’ name during the
+ Initiatively suggest, consult more services and products to the relevant cross-sell products
and help customers choose products that can bring benefit for customers.
- For standard for waiters parts: in the shop at least 4 waiters and hygiene staff and 4
delivery staff upon request:
+ Fast serve the food that customers expect, professional in the eyes of clients.
+ When problems arise, not proactive to make suggestions to serve the needs
+ Ensure delivery time as agreement
Specify the implementation plan:
- Security officers need to
- Work with
wear uniform neatly, rightly.
- Always have an attitude of
company and with
respect for the customers,
guide customers graciously
- Fresh raw materials, ensure
- Regularly check
food hygiene requirements
- Work and require
es in the
s for the
offer, there is a
- purchase inputs
vendors to have
more choices and
Impleme+ Refer to the standards of KFC -
- Head of the store,
quality service standards and
practical needs of clients and
give situations for
proactively notify customers
practice at the end
g) for 02
when finishing transaction
of morning on
and ask customer needs, after
finishing transaction, thank
- On the basis of
customers and express the
customer segments, level of
desire to serve customers;
+ Initiatively suggest, consult
for salespeople to
more services and products to
n, if any,
the relevant cross-sell
package to cross-
products and help customers
sell products for
choose products that can
r to gain
bring benefit for customers.
+ Captures the food, the
prices and the services
- Dress neatly polite KFC
- Sales controllers,
There is a
head of the store
- Ensure quick, clean after
on to be
- Quick-serve speed, accurate
troubleshooting as arising
or at the
- Regular monitor
consult the opinion
Planning steps above are also applied parallel with 5S model to improve the work
environment to increase productivity, including:
Seiketsu: take care (daily remain)
Sitsuke: ready (rush hours)