KFC is the largest fried chicken fast food seller globally, having built its success on a secret recipe, franchising, and global expansion.
However, if you wish to understand why KFC is a market leader in its sphere, then read below for a detailed KFC SWOT analysis!
What is KFC’s SWOT Analysis In [currentyear]?
KFC’s SWOT analysis details its strengths, especially how brand recognizability helps drive growth. But, on the other hand, it also highlights how it suffers from structural weaknesses such as high operational costs in [currentyear]. Moreover, it identifies changes in the fast-food industry that have uncovered several opportunities for KFC amidst threats such as foreign exchange risks.
Read on if you want to gain greater insight into KFC, particularly the strengths, weaknesses, opportunities, and threats!
What Strengths Does KFC Have?
KFC is a market leader in the fast-food industry, with a global presence in about 105 countries.
To get there, it built internal structures, formulated the right policies, and effectively deployed strategy.
The following factors comprise KFC’s strengths:
- KFC’s top-secret 11 spices and herbs recipe
- Strong brand recognition
- Widespread global presence
- Experience penetrating emerging markets
- Efficient food production processes
- Customer loyalty
1. KFC’s Top Secret 11 Spices and Herbs Recipe
KFC’s biggest claim to fame and prosperity is its “finger-licking good” fried chicken.
At the heart of that delicacy was a blend of 11 spices and herbs that the company has kept top secret for decades.
KFC plays on this mystery by making a show of a recipe kept in a vault whose ingredients are sourced from different suppliers to protect the secret.
There is no doubt that the recipe yields fried chicken customers love, but it’s an enduring debate on whether the recipe is truly secret.
Secret or not, the mystery generated is a great marketing gimmick. The foremost impression is that KFC chicken can only be found at KFC and nowhere else.
It has also offered massive marketing capital. The debate has sustained interest in the KFC brand for decades and can be counted on to go on doing so.
2. Strong Brand Recognition
The KFC brand is one of the best known worldwide, even in the affluent parts of the urban centers of third-world countries.
KFC is also one of the most valuable brands, pegged at $5.4 billion. This makes it easy to acquire and get favorable credit and investment capital terms.
A brand with excellent value finds it easy to acquire and keep its customers, more so if it is the first to introduce a product to them. As well, KFC is also popular with franchisees.
3. Widespread Global Presence
KFC has over 23,000 fast food joints in about 140 countries in almost every region on the planet.
The company is placed second after McDonald’s that has 38,000 restaurants around the world.
Such a widespread global presence assures KFC a share of the global market for fried chicken, expected to grow at 5.7% by 2025.
KFC has also leveraged its global presence to innovate menus from different cultures.
Its Chizza pizza variation with chicken crust has been successful in over 15 markets though it originated from the Philippines.
4. Experience Penetrating Emerging Markets
KFC has over 23,000 outlets worldwide, with many of them in emerging markets. The company expanded its presence in China while closing down some restaurants at home.
This expansion process has earned it some experience penetrating non-western markets, some of which are organized differently ideologically and economically.
Most emerging markets are in nations with weak structural and institutional organizations politically, economically, and socially.
As such, they are vulnerable to upheavals which can be upsetting to investment. At the same time, disposable income is increasing in these nations, and they provide opportunities that cannot be ignored.
Overall, the sort of experience KFC has built puts it in a solid position to compete favorably for slices of these markets.
5. Efficient Food Production Process
KFC is an industry leader in the effective and efficient production of food.
Its production processes are designed to produce quality fast foods. The chicken, for instance, is brought in already cut to the correct size and washed.
Afterward, in the restaurant kitchens, employees follow a ritualized process intended to produce quality standardized products in the shortest time.
Since it’s cooked on-site, the meat is fresher than what competitors offer, and KFC makes sure to point this out.
The efficient food production process allows KFC to utilize its factors of production in an optimum manner and helps maintain affordable prices.
6. Customer Loyalty
KFC’s score on the American Customer Satisfaction Index (ACSI) in 2021 was 79, the fourth-highest among fast-food restaurants, and has maintained both the score and position over the past few years.
KFC achieves this through total satisfaction on pricing and quality, the convenience of acquisition, and employee experience.
This loyalty assures KFC a market based on which it can build and expand.
What are KFC’s Weaknesses?
KFC appears well placed in the market, but a SWOT analysis of its offering, strategies, and structures reveal certain weaknesses that may hamper growth.
These weaknesses include the following:
- An unhealthy food menu
- Negative publicity
- Foreign exchange risks
- Untrustworthy suppliers
1. An Unhealthy Food Menu
Most of KFC’s top ten popular items have inordinately high amounts of sodium, saturated fat, and calories.
Additionally, the food is delicious, such that it tempts even health-conscious eaters to gouge on it regularly.
KFC itself has tried to expand its menu to include healthy options, some of which have been very popular. However, it asserts that its future is with fried chicken.
Founding a business on an offering whose healthiness is questionable is risky, especially to an increasingly health-aware customer.
Therefore, KFC has to spend more on marketing to overcome negative publicity and run the risk of lawsuits.
2. Negative Publicity
Every significant business has received its fair share of scandal and negative publicity, and KFC is no exception.
In fact, the sheer number of scandals and negative publicity KFC has faced recently and how it has been dealt with is rather intense.
These scandals have ranged from dangerous food handling, unethical treatment of livestock and employees, and even unethical business practices.
KFC has come through all criticism, but at a great cost and loss of business, and is hardly a profitable trend to carry on.
3. High Operation Costs
Business expansion is not cheap, and KFC has had to pay the price for taking advantage of expansion projects. Expansion efforts have caused strain on the established structure and even caused supply bottlenecks.
To cater to a newly built KFC outlet, a switch of suppliers led to the delayed chicken delivery to over 900 stores and empty KFC buckets.
There was a backlash, bad press, loss of business, and a dip in share value. This, however, is just a single example of operating costs that run out of control.
KFC usually has to spend more to survive, which undoubtedly eats into its profits and leaves it vulnerable.
4. Untrustworthy Suppliers
Unreliable supply chains can cost KFC a lot of business, as demonstrated in the example above.
KFC promises its customers to do more than sell them chicken. Rather, it undertakes that the chicken was raised and treated humanely and is safe to eat.
Suppliers sometimes fail to adhere to this treatment, which causes great loss when discovered.
What are KFC’s Opportunities?
The changing nature of the economy, both on the local and global fronts, serves up a host of opportunities for the prepared.
KFC is well placed to take advantage of the following opportunities:
- Increasing demand for healthier fast food
- Home meal delivery
- Increasing demand for quick service restaurants, especially in emerging markets
1. Increasing Demand for Healthier Food
Lifestyle diseases account for an increasing number of hospital visits and indeed shape the medical finance industry. Most of these diseases will leave one debilitated physically and financially.
The causative factors- excessive consumption of sodium, sugar, saturated fats, and high calories can be found in a bucket of fast food.
There is a slow but sure shift away from traditional fast food, with even governments being more willing to regulate.
This is a perfect opportunity to extend product offerings to include more healthy options, and KFC’s forays into healthy fast foods have been successful thus far.
2. Home Meal Delivery
The major factor for the popularity of quick-serve restaurants is the convenience it affords customers.
Home meal deliveries bring this convenience home better and are an opportunity KFC should explore further.
It would help KFC manage costs by having centralized kitchens and greater control over the procurement of raw materials.
3. Increasing Demand for Quick Serve Restaurants, Especially in Emerging Markets
CAGR estimates that the market for fast foods, particularly in China and India, will grow at 7.5% by 2025.
These countries have almost a quarter of the world’s population, and 7.5% is a sizable market.
This growth is fueled by a rise in disposable income, increased working hours, and an appetite for novel tastes.
KFC has already made inroads into these markets but now can move into second and third-tier cities.
What Threats Does KFC Face?
Much as change throws up an opportunity for businesses, it more often presents threats, more so where internal weaknesses of the company make it unprepared.
Currently, KFC faces the following threats:
- A trend toward healthy eating
- Healthy food activism
- Foreign exchange risks
- Lawsuits
1. Trend Toward Healthy Living
The trend toward healthy living presents a threat to the adamant and unprepared.
KFC has formerly asserted its commitment to its fried chicken offerings, despite some success in its health-oriented fast foods.
However, the company has an uphill road ahead if it cannot compromise this stance.
2. Healthy Food Activism
The adverse effects of fast foods are becoming popular for activists. But, unfortunately, many of their claims, some through influential voices, are valid and cannot be ignored.
They generate a lot of bad press for companies like KFC, who have to dig deep into their pockets to counter their narrative.
In some cases, the activists’ voices are winning, and governments are listening, especially when the effects of fast foods are compared to smoking.
If what follows naturally is governmental regulation, then KFC is threatened with its business model and stance.
3. Foreign Exchange Risks
World currencies are constantly in flux, either deliberately or in response to economic and political situations, real or feared.
Multinational companies like KFC are at extra risk of reduced profits or operational abilities from these fluctuations.
These fluctuations expose KFC during transactions, translation between currencies, and future value.
Economic exposure can be anticipated and mitigated. However, the company’s financial robustness must bear transaction and translation exposures.
4. Lawsuits
As noted before, KFC’s primary product and production slip-ups are invitations for lawsuits.
The lawsuits generate bad press, tie up resources as they are resolved, and sometimes end in punitively expensive lawsuits.
As far as lawsuits go, the threat of a judgment that pushes the company to bankruptcy is not unimaginable, given the nature of its business.
To know more, you can also see our posts on the biggest KFC competitors, KFC business model, and what is KFC.
Conclusion
KFC’s SWOT analysis establishes strength in the fast-food industry and the progress it’s making, as well as the opportunities it can exploit.
Finally, it also shows KFC’s weaknesses and the challenges that can be existential threats.
