KFC Australia - a Successful Financial Performance - Example

Business plan Student’s name Institution Business plan Executive summary KFC Australia is one of the major subsidiaries of the entire KFC with its first new outlet opened in Australia in 1968 (KFC Australia, 2016). Since then, KFC Austria has experienced a substantial growth on only in term of new restaurants opened, but also in revenues and profitability. At the moment, KFC has more than 620 stores in Australia, which is a commendable growth in a country where big brands such as McDonald’s have had a success. Collins foods, which is the general company that operates KFC Australia, generated revenues amounting to $440.6 million for the financial year ending 214, which represented an increase of 3.9 percent from the previous financial year (FY13). This particular performance was attributed to a good performance across all KFC restaurants across Australia. In the financial year ending 2014, KFC Australia experienced on of the greatest milestones as it opened 42 new restaurants in the country. As a result of these new outlets opened in 2014, KFC produced record annual sales of $265.0 million in the financial year ending 2015, which represented an increase of $23.5 million from the previous financial year (KFC Australia, 2016; Yum! Brands 2015 Annual Report, 2015). KFC has continued to focus on innovation, quality foods, excellent customer service, great taste for foods as well as creative and innovative modes of advertising. These factors are considered as the main aspects that have continued to maintain and increase KFC’s competitive advantage both locally and globally. Everyone knows that the McDonald’s is a leader in the restaurant business, but despite this, KFC still maintain its position as it continues to fight for leadership in the same industry. Going forward, KFC plans to open new outlets and stores while maintaining its core competence which is great taste for food and quality. These two factors continue to strengthen the brand and analysts believe that the company would be a force to reckon with in the future. Other aspects of key competence for KFC Australia include a strong brand supported by a solid pipeline of new and innovative products and advertising campaigns. Also, the company offers innovative as well as fun family dinner at the center of Brand strategy. KFC Australia has also been at the center stage when it comes to successfully leveraging trends in social media. Currently, KFC Australia has more than 750,000 Facebook likes and this is a major strategy for maintenance or increase of its competitive advantage (Freeman et al., 2014). Introduction KFC is a fast food restaurant with its main specialization being fried chicken. KFC, formerly Kentucky Fried Chicken, is a restaurant that deals with fast foods and specializes in fried chicken. KFC is a subsidiary of Yum! Brands, together with other restaurants such as the Pizza Hut as well as Taco Bell Chains (KFC Australia, 2016). The main KFC Headquarters are in Louisville, Kentucky in the US, but it is found globally in more than 17,000 locations across the globe. KFC is the second largest chain of restaurants after its close competitor, the McDonald’s. The first KFC outlet was started in 1968, in Guildford, Sydney. As at today, KFC Australia serves over 2 million customer in a week across its 620 stores in Australia with this making it the largest fast food restaurant in the country. Despite the fact that KFC Australia is the biggest brand in the country, that doesn’t mean that it will not continue opening new outlets in within the country. Going forward, KFC plans to have a solid pipeline of restaurants as well as the refurbishment of old ones so as to help capitalize on the attractive opportunities for growth that have been identified (KFC Australia, 2016). Currently, KFC is already a strong brand competing with the famous McDonald’s. However, it had a very humble start when 40-year old Harland Sanders started cooking food for travelers who stopped by for gas in a petrol station in Corbin where Sanders was serving. He served them with fried chicken from his kitchen table. The chicken had a very great taste such that people started travelling from far places to as to have a taste for Sander’s food. He spent the next 9 years perfecting his secret blend of herbs and spices, a technique that is still used in today’s KFC. In a nutshell, KFC started from a humble background but has grown to global chain of supermarkets (KFC Australia, 2016). Company background Within the period it has been in Australia, KFC has been passion on serving customers with food that is fresh and with great taste, and this has been a key part for success. Its mission statement, which was updated in 2013 is as follows: “To sell food in a fast and a friendly environment that appeals to its pride conscious and health minded consumers”. Through this mission statement that is customer focused, the restaurant has been able to create a team of loyal customers even in new locations. Its vison is also based on the mission statement whereby the restaurant works towards creating a friendly environment for its customers. KFC’s management believes that the customers highly regard enjoying their meals in fast and highly friendly environments, and that is one of the major reasons why the company still holds a competitive advantage over its competitors (KFC, 2013).The company’s values have made it achieve a lot of things as well as make a positive impact of the people in the surroundings. KFC Australia’s current plans to outdo its competitors lie in its desire to offer fresh and great tasting foods. The company has always been proud of new improvements that have continued to increase the quality of food they offer. In addition to this, KFC’s current plans are based on committing themselves towards improving the nutritional makeup of its main products. KFC has seen a journey aimed at improving balanced food choices for its loyal customers as well as reducing sugar, fats and sodium components in the foods they offer, and this is done without compromising the quality or taste (KFC, 2013). In addition to quality, KFC also plans to increase its current number of restaurants within Australia. This means starting new outlets in other locations within Australia. As a result of this, the company will continue increasing in terms of assets, revenues and profitability. KFC Australia has a strengthened focus on innovation moving into the future and this will be a key plan for maintaining a competitive advantage in the restaurants industry. KFC faces stiff competition from other brands such as McDonald’s and this means that it has to come up with new plans for future so as to help keep its share in the market. In addition to innovation, KFC works to ensure that its initiatives have operational efficiency and that it can market itself very well in the market. These are some of the current and future plans for the company and are termed as key growth drivers going forward. Also, the KFC brand continues to grow with the support of new and strong products as well as creative promotions for the company’s products (Freeman et al., 2014; Phau & Ferguson, 2013). Financial data KFC is part of the Collins Foods Limited, together with another food retailer, the Sizzler Australia. Its balance sheet, income statement as well as cash flows are represented below: Yum! Brands 2015 Annual Report (2015), Retrieved from http://www.yum.com/annualreport/ In general, KFC has been enjoying a strong performance across its global business making it the second profitable chain of restaurants after McDonalds. KFC Australia has continued to remain competitive in the business with more recent patterns of growth especially for those outlets located in Queensland. The company now focuses on top line growth through offering strong products with enhanced customer experience as well as opening new stores that come up with cost controls and driving improved returns. Since 2013, KFC has seen a positive growth in terms of new stores opened, assets, sales revenues and general profitability. For instance, for the financial year ending 2013, only 13,000 stores were in existence compared to the current 17000 stores. In the same year, revenues reported were $23bn made from approximately 13,000 businesses. Another example of financial data that shows that the company has been performing well is that KFC general had a 7 percent increase in sales into 2015 (Collins Foods Limited, Annual Report 2014, 2014) KFC is the biggest brand for Yum! Brands and it has continued its strong run in terms of financial performance whereby in 2015, it produces record annual sales of $265.0 million, which represented an increase of $23.5 million from the previous financial year. KFC Australia is operated by the Collins Foods Limited, which also operates food service retail, Sizzler Australia. The financial performance of Collins food limited, which also replicates the financial performance of KFC Australia, is as follows: Revenues grew from A$405.9 million in the financial year 2012 to A$423.9 million in 2013, and then A$440.6 in 2014 (Yum! Brands 2015 Annual Report, 2015). These figures represent the growth in financial performance as experience by KFC Australia, which is the subject matter in this case. In 2014, the company’s performance was termed as very pleasing by its management. There was an EBITDA growth of 7 percent as well as underlying growth in NPAT (Net profits after tax) of 9 percent. Such a growth was pioneered primarily by solid sales growth in same stores as well as margin improvements in KFC restaurants located in Queensland. Also, there were new restaurants opened during the same year with others being refurbished, hence increasing sales revenues (Collins Foods Limited, Annual Report 2014, 2014) Collins foods limited generated revenues amounting to $440.6 million for the financial year ending 214, which represented an increase of 3.9 percent from the previous financial year (FY13). This growth was primarily as a result of strong sales growth from the network of KFC restaurants in Australia. Also, the group’s Earnings before Interest, Tax, Depreciation and Amortization (EBITDA), was reported at $50.5 million in the financial year 2014. This was an increase of 7 percent from the previous year and this was attributed to direct and indirect labor efficiencies as well as new productivity initiatives (Collins Foods Limited, Annual Report 2014, 2014) Other factors that have continued to make an impact in the performance of KFC include strong product promotions and advertising which include new product offers, targeted value offers, summer cricket campaigns as well as social media engagements. KFC has continued to increase in terms of performance despite its continuing competitive trading environment as well as increased input costs such as labor rates. On its own, KFC Australia has continued to enjoy a successful financial performance from one year to another. For example, KFC experienced a continued growth in revenues of 3.5% as well as same store sales growth of 0.8% in the financial year 2014. In addition, 42 new restaurants were opened in Western and Northern Australia during the same financial year. Renovations and remodeling of new restaurants was also a major initiative for KFC during that particular financial year. Ideally, value continues to play a very big role when dealing with customers in the current market and this has been one of the major factors for continued increase in sales at KFC Australia. Also, the company has continued to bring into the market new and innovative products, a strategy for success at KFC, when coupled with new models of products promotions such as the use of social media. References Collins Foods Limited, Annual Report 2014. (2014). Retrieved from http://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvQkcC4g2%2BpmONpplJ2%2Fk%3D Freeman, B., Kelly, B., Baur, L., Chapman, K., Chapman, S., Gill, T., & King, L. (2014). Digital junk: Food and beverage marketing on Facebook.American journal of public health, 104(12), e56-e64. KFC (2013). About us. Retrieved from: http://www.kfc.com/about/default.asp KFC Australia (2016). About KFC Australia. Retrieved from https://www.kfc.com.au/kfc-australia.aspx Phau, I., & Ferguson, G. (2013). Validating the Customer Satisfaction Survey (CSS) Scale in the Australian fast food industry. Australasian Marketing Journal (AMJ), 21(3), 147-154. Yum! Brands 2015 Annual Report (2015), Retrieved from http://www.yum.com/annualreport/ Read More