I. ISSUES

In 1996, KFC remained the world’s largest chicken restaurant chain and third largest fast food chain. It held over 50 percent of the U.S market in terms of sales and ended 1995 with over 9000 restaurants worldwide. KFC opened 234 new restaurants in 1995 and operated in the 68 countries. One of the first fast food chains to international during the late 1960’s, KFC had developed one of the world’s most recognizable brands.

Despite of the KFC’s past success in the U.S market, much of the KFC’s growth was driven by its international operations, which accounted for 94 percent of all KFC restaurants built in 1994 and for 100 percent of the increase in 1995. Domestically the restaurant count dropped by seven restaurants because of unit closures, intense competition among the largest fast food competitors resulted in a number of obstacles to further expansion in the U.S market. Expansion of free standing restaurants was particularly difficult. Fewer sites were available for new construction and those sites, because of their increase cost, were driving profit margins down.

However the most critical or major issue of this case in the future will be their ability to handle changes. Their system is older, in terms of facilities and product form, and their attitudes still don’t reflect the realities of their changing business environment.

One on the great challenges at KFC is that there is a lot that needs fixing and the toughest challenge is that they have to stay focused. They also have a significant service problem in a service driven industry. And they have to figure out a way to meet their customer service expectations which they don’t meet today.

In 1996, the major problem was how to transition the old KFC into a new KFC the appealed to consumer demands for more healthy food items ate lower