KFC Corporation History – The Making of a Global Business from the ground Floor

By | March 8, 11
KFC Business Strategies

KFC History. Image source: logos.wikia.com

KFC Corporation History – The Making of a Global Company from the ground Floor

Defying Age and Absence of Money: How Colonel Harland Sanders Rose From Penury At 65 To Create The World’s Most Popular Chicken Restaurant Chain Serving Over 12 Million Customers Daily Around The World

At sixty-five and broke, it is difficult for most people to believe they can still succeed in life. They would probably resign their fate to the circumstances around their lives and hope that the government, family or friends will help them live through the rest of their lives.

But this was not about Colonel Harland Sanders, who, having found himself without a business and completely broke at the age of sixty-five, recharged his inner batteries and created the Kentucky Fried Chicken fast food business, which is today, known as KFC Corporation is the world’s largest chicken restaurant chain, with operations in 109 countries.

Born September 9, 1890 in Indiana, Harland Sanders’ childhood was tough as he struggled by himself to make ends meet. From the age of ten he held a number of jobs, including farm hand, streetcar conductor, army private in cuba, blacksmith’s helper, sales and service station operator.

In 1929, Sanders opened a gas station in Corbin, Kentucky. He cooked for his family and sometimes a customer in the back room. He loved cooking the food his mother taught him, which included pan-fried chicken, country ham, fresh vegetables, and homemade biscuits. Due to increase in the demand for his cooking, Sanders opened his first restaurant in the small front room of his gas station the following year. He served as station operator, chief cook, and cashier, and named the dinning area “Sanders Court & Café.”

In recognition of his contributions to the state’s cuisine, Kentucky Governor Ruby Laffoon gave Sanders an honorary Kentucky Colonel title in 1936, and in 1937, Sanders added a motel to his restaurant, becoming the first motel owner in Kentucky, and expanding the restaurant to 142 seats.

With the invention of the pressure cooker inn the late 1930s, Sanders developed a unique and fast method of spicing and pressure-frying chickens, thereby giving his customers fresh chicken meals. Harland Sanders’ Court & Café became so popular that it was endorsed in 1939 by Duncan Hines’s Adventures in Good Eating.

Sanders business was growing fast in response to his great culinary skill, just as he was perfecting his Secret Recipe, and improving on his cooking skill. However, in 1955 an interstate highway was built to bypass Corbin. This left Sanders without any customer to patronize his restaurant any more. He was totally out of business, and he was 65!

After selling the service station and paying off his debts, he was flat broke. But his resolve to succeed in life wasn’t. Sanders decided to get on the road to sell his Secret recipe to restaurants.

He completely devoted himself to selling his chicken franchise business, and within ten years he had over 600 franchises in the U.S. and Canada. With 17 employees, Sanders had traveled over 200,000 miles in one year promoting Kentucky Fried Chicken, and was making $300,000 before taxes.

In 1964, Kentucky Fried Chicken was getting too big for Sanders to handle. Having reached an agreement with a team of investors led by John Y. Brown, Jr., and John (Jack) Massey, Sanders sold Kentucky Fried Chicken for $2 million dollars. He was to receive a yearly salary of $40,000, which later increased to $200,000, for public appearances.

In three years of take over, Kentucky Fried Chicken had been transformed from a one-man business into a smoothly run corporation with all the trappings of modern management. The company had extended its retail outlets to all 50 states, in addition to extending to Puerto Rico, Mexico, Japan, Jamaica, and the Bahamas.

Massey and Brown changed Sanders concept of a sit-down Kentucky Fried Chicken dinner to a stand-up, take-out store, with focus on providing fast service at low labour costs. This made Kentucky Fried Chicken very successful, with 130 of its franchisees becoming millionaires simply from selling Sanders famous pressure-cooked chickens.

By September, 1970, Kentucky Fried Chicken ran 3,400 fast-food outlets with 823 owned by the company. The following year, with sales reaching $700 million, Kentucky Fried Chicken merged with Heublein Inc., a specialty food and alcoholic beverage corporation.

On December 16, 1980, after seven months of fighting leukemia, Colonel Harland Sanders died. He was not only Kentucky Fried Chicken founder, but its biggest publicist, traveling 250,000 miles a year visiting Kentucky Fried Chicken restaurants around the world. An independent survey ranked him the world’s second most recognized celebrity by 1976.

In 1982, now under the management of R.J. Reynolds, which acquired Heublein the previous year, Kentucky Fried Chicken’s sales climbed $2.4 billion. The huge sales can be attributed to the success of its 1981 ad campaign, “We Do Chicken Right”. By 1983, Kentucky Fried Chicken could boast of 4,500 stores in the U.S. and 1,400 units in 54 foreign countries with no other fast-food chain able to compete with it beside McDonald’s.

In 1986, Kentucky Fried Chicken opened its $23 million 2,000,000-square-foot Technical Center to enable the company to keep developing and launching new products into the market. The company also started testing oven-roasted chicken using Collins Foods, one of its multiple franchisees. It also experimented with home delivery service using PepsiCo’s successful Pizza Hut delivery system.

In response to consumers’ growing concerns about the health risk in eating fried foods in the early 1990s, Kentucky Fried Chicken changed its name to KFC in 1991. The company suspended new product launches to focus on fine-tuning its stores operations and modernization. A $20 million computer system was installed to control fryer coking times, and which also linked front counters with kitchen, drive-thru window, manager’s office, and company headquarters.

KFC’s international business prospered even more than it did in the U.S. The company’s 1992 pretax profits from its international operations stood at $92 million, as opposed to $86 million recorded by its U.S. units. To exploit the opportunities in the foreign market deeper, KFC embarked on an aggressive campaign to increase its international units.

In 1997, PepsiCo, Inc., which bought KFC in 1986 announced the spin-off of its quick service restaurants, including KFC, Taco Bell, and Pizza Hut into Tricon Global Restaurants, Inc., with Tricon Global changing its name to YUM! Brands, Inc. in 2002.

By 2006, KFC was serving more than a billion “finger lickin’ good” chicken dinners yearly in over 80 countries and territories across the globe. And in 2009, KFC introduced Kentucky Grilled Chicken, which is a better-for-you option for health conscious consumers who love the flavour of KFC. The new product had less calories, fat and sodium than KFC’S Original Recipe chicken, without sacrificing the great KFC taste.

Although Colonel Harland Sanders is no more, KFC has continued to keep his unique ‘finger lickin’ chicken taste alive for millions of customers worldwide.

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