KFC Presentation
KFC Presentation
KFC Presentation
Ricardo:
Company Profile Mission Statement Ownership & Organization
Vania:
Alliances Products & Technology Market Trends & Growth Key Players
Presentation Overview
Andrew:
SWOT Analysis
Talib:
Financial Overview
Past and Present
Financial Ratio Analysis Probable Outcomes and Predictable Crises Critical Success Factors
Founded in 1952 Operates in more than 108 countries globally Parent company YUM Brands Serves approximately 12 million customers in more than 5,200 restaurants globally
YUM BRANDS: Build their brands in China Aggressive international expansion Improve U.S. brand position Drive long term Shareholder and franchisee value
David Novak, CEO of YUM Brands Roger Eaton CEO of KFC KFC Franchise breakdown: Restaurant General Manager Assistant Managers Average of 20-35 employees per store
Franchisee
4,210
Total
5,166
74 None
80
Pizza Hut & Taco Bell Yum Brands: Worlds largest proprietor of multi-branded fast-food locations KFC holds 69% of Yum Brands market share
Market Overview
Market Trends & Growth
Global Recession = Increase in consumption of cheaper foods 73% of Americans eat fast food out of convenience 33% of Americans and 30% of the Asia Pacific Market eat fast-food at least once a week
Market Overview
Market Trends & Growth
KFCs usually clustered in urban centres Soaring food prices notably wheat, health and diet concerns have slowed growth of fast food chains since 2006 in U.S. Emerging Markets: Prefer international brands
Market Overview
Key Players
International:
McDonald's
Domestic:
Wendys Burger King Sonic Jack in the Box
Strategic Analysis
Strengths: Market Share
KFC has roughly 42% of the global chicken on the bone market share
Nearly 3 times as much as their nearest competitor China 2009, 16% increase in market share Aided KFC in declining U.S. Market growth
Strategic Analysis
Strengths
Differentiation: Trademarked items and Recipes International Presence: Global Diversification and ability to expand rapidly (i.e. China)
Strategic Analysis
Strengths
USA 5,166
Mainland China 2,497
Japan
1,150
Great Britain
689
Canada
780
Australia
572
Indonesia
336
Malaysia
431
Strategic Analysis
Weaknesses
Systemic: Integrity of Supplier & Distributors Decentralization of OwnershipFranchisee model (i.e. quality,service,cleaniness, etc.) Branding: Mom and Family values: Health and weight issues
Strategic Analysis
Opportunities
Stability In Commodity Pricing: Analysts indicate that chicken prices should stay stable in short term Beneficial in further maintaining costs to provide better margins
Strategic Analysis
U.S Chicken Price per lbs. (cents)
Month Feb 2009 Mar 2009 Value 86.70 85.73
Apr 2009
May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009
85.38
86.96 88.17 88.56 86.77 84.88 82.85 82.13
Dec 2009
Jan 2010
82.15
83.00
Strategic Analysis
Opportunities
Emerging Markets: Estimated 5% growth rate in emerging economies Perceive brands as superior to local Asia Pacific region rates high globally in fast food frequency visits Low Labour Costs
Strategic Analysis
Opportunities
Diversification in Mature Markets: Develop Incremental sales layers (i.e. Breakfast, new beverages, expanded protein options, etc.) Expansion of Multibranding: Single store location pairings with Pizza Hut and Taco Bell
Strategic Analysis
Threats
Mature Market Diet and Health concerns (75% of Americans eat less fried chicken due to health concerns) Foreign Currency Fluctuations Animal Welfare Activists (i.e. PETA) Emerging Competition in Mature Markets (i.e. Chicken Fil A) Avian Flue
Financial Overview
Past/Present
Past: Steady share price increase over past ten years KFC U.S. Sales per unit have grown by 2% over last 4 years Present: Yum Brands achieved 6.9% growth in 2009 compared to 2008 Annual Sales per restaurant in U.S. are around 1.3 million, on par with industry
Financial Overview
Past/Present
2008
2007
2006
2005
2004
% growth
KFC US
$967
$994
$977
$954
$896
2%
Financial Overview
Past/Present
KFC International
$1.3 $6.7
$1.1 $5.7
$1.1 $5.2
$1.0 $4.7
9% 13%
KFC China
$1.7 $1.1
$1.3 $0.8
$1.0 $0.7
$0.9 $0.6
28% 18%
Financial Overview
Financial Ratio Analysis
Debt/Equity: Yum Brands: 3.28 McDonalds: 0.75 Industry: 2.00 Gross Profit Margin: Yum Brands: 20.6% McDonalds: 44.0% Industry: 35.2% Return on Assets: Yum Brands: 15% McDonalds: 15.1% Industry: 12.5%
Financial Overview
Financial Ratio Analysis
Earnings Per Share: Yum Brands: 2.22 McDonalds: 4.11 Current Ratio: Yum Brands: 0.7 McDonalds: 1.1 Industry: 1.0 Inventory Turnover: Yum Brands: 56.4 McDonalds: 117 Industry: 97.8
Financial Overview
Financial Ratio Analysis
Quick Ratio: Yum Brands: 0.4 McDonalds: 1.0 Industry: 1.0 Asset Turnover: Yum Brands: 1.14 McDonalds: 0.8 Industry: 1.1