In 1998, it owned the catering system of three famous brands: KFC, Pizza Hut, and Taco Bell (Mexican food) (this system is a business department of PepsiCo. PepsiCo’s three major businesses are soft drinks and snacks. , fast food.) was separated from PepsiCo and independently listed on the New York Stock Exchange, the world's largest restaurant group-Yum! Global Restaurant Group was officially established. At that time, all shareholders and company members may not have thought that in just the past two years, Yum Global Restaurant Group has achieved great success in its operations and development. Today, Yum! has more than 30,000 chain stores around the world, 500,000 employees, and a turnover of US$20 billion, ranking among the top 500 companies in the world.
When it first separated from PepsiCo, Yum Global Restaurant Group not only had to make up for the losses caused in the past, but also faced serious challenges: how to create a corporate culture? How to establish a relationship between three well-known catering brands that cooperates with each other instead of competing with each other? How to build employees' confidence in the future development of the company, etc. At that time, under the co-chairmanship of Andrakk Pearson and David Novak, former presidents of PepsiCo and now CEO of Yum Brands, the company maintained in many respects the organizational structure that was viable before the separation while providing The company outlines new development goals for the future.
They have taken a series of bold and new measures: for example, KFC, Pizza Hut, and Taco Bell continue their original operations and management, but they must play a mutual coordination role; through the package form, the three brands Joint promotion, raw materials are purchased and distributed by the company, which controls the balanced expenditure of funds; for the first time, some chain restaurants owned by the company are transferred to franchise partners in the form of franchises, and part of the returned funds are concentrated on the development of new restaurants; Senior management personally visits restaurants to boost employee morale, etc. So far, the group's operating profit margin has increased from 11% three years ago to 16%, and in the whole year of 1998 and the first half of 1999, the chain turnover of all three brands has increased, and the group has a thriving new business. scene.
The Chinese market is one of the fastest-growing and most potential markets in Yum Global Restaurant Group's global strategy. China Yum Brands Restaurant Group is the collaborative development headquarters established in China by an international company affiliated with Yum Brands Global Restaurant Group. Since KFC opened China's first restaurant in Qianmen, Beijing in 1987, it has opened restaurants in Beijing, Shanghai, Hangzhou, Qingdao, Nanjing, Guangzhou, Suzhou, Wuxi, Tianjin, Fuzhou, Shenyang, Xi'an, Chengdu, Wuhan, Shenzhen, Harbin, etc. 19 limited companies were established in various places. By the end of 2000, more than 400 restaurants had been opened in nearly 80 cities and regions. So far, KFC has become China's largest and fastest-growing fast food company.
Our reporter and two members of the China MBA website (www.mba.org.cn) case study team, with the cooperation of Beijing KFC Co., Ltd., finally completed this project after more than two months of hard work. Writing of the case. When interviewing KFC, a model in the catering industry franchise, our deepest impression is that KFC is a company with a clear strategy and can successfully implement this strategy. It is also people-oriented, it is also a sound operation, and the management theory is the same, but the implementation is very different. A perfect business strategy, if not implemented well, will eventually become worthless; but only by determining an appropriate business strategy, and then supplementing it with perfect implementation, can an enterprise be invincible and prosperous.
As an international catering giant, KFC has too many aspects worthy of discussion and in-depth study, and this case only touches on a small part of them. Why did KFC make such a decision? How does KFC perform? How was it pushed forward? These are the three issues of greatest concern in this case.
KFC’s own strength, long-term strategic goals and operation management are highly unified and mutually supportive. In order to develop China's fast food industry and franchise industry, we must learn from KFC, but at the same time we must proceed from our own reality and combine its successful experience with the actual situation of our company, so that we can learn something.
Due to the length of the case, this newspaper will publish the case content in two installments. This issue covers long-term goals, marketing and site selection strategies; the next issue will cover franchising, corporate culture, supplier management and employee training? See February 27 "China Business News", Japan.
Location strategy
Location is the primary factor in hotel operations, and the same is true for restaurant chain operations. The correct location selection of a chain store is not only a prerequisite for its success, but also a prerequisite and foundation for the standardization, simplification and specialization of chain operations. Therefore, KFC attaches great importance to the location selection of fast food restaurants. The location decision-making is generally a two-level approval system, with the approval of two committees, one is the local company and the other is the headquarters. Its site selection success rate is almost 100%, which is one of KFC's core competitiveness.
KFC location selection is carried out according to the following steps.
★Division and selection of business districts
1. Divide business districts
When KFC plans to enter a certain city, it first collects information about the area through relevant departments or professional survey companies. Some information is free, and some information requires money to purchase. After buying all the information, we started planning the business district.
Business district planning adopts a scoring method. For example, there is a large shopping mall in this area. The shopping mall turnover is 10 million yuan, which is counted as one point, and 50 million yuan, which is counted as 5 points. If there is a bus line, how many points will be added? points, how many points are added for having a subway line. These scoring standards are a more accurate experience value averaged over many years.
Business districts are divided into several categories by scoring. Taking Beijing as an example, there are municipal-level commercial types (Xidan, Wangfujing, etc.), district-level commercial types, fixed-point (target) consumption types, and community types. Type, social, business type, travel type, etc.
2． Selecting a business district
Determines in which business district the current focus is on opening stores and what are the main goals. In terms of criteria for choosing a business district, on the one hand, the market positioning of the restaurant itself must be considered, and on the other hand, the stability and maturity of the business district must be considered. Restaurants have different market positioning and attract different customer groups, so the choice of business districts will also be different.
For example, Malan Ramen and KFC have different market positionings and different customer groups. They are two "intersecting" circles. Some people eat KFC and Malan Ramen. Some people may never eat KFC and only eat Malan Ramen. There is also the opposite. The location of Malan Ramen is of course different from KFC.
KFC and McDonald's have similar market positionings and basically have the same customer base, so they also have the same choice of business districts. You can see that in some places on both sides of the same street, there is McDonald's on one side and KFC on the other.
The maturity and stability of the business district are also very important. For example, the planning bureau said that a certain road should be opened and where to set up an address. This area may become a mature business district in the future, but KFC must wait until the business district is mature and stable before entering. For example, how profitable will this store be in three years? , it is not helpful now, will we suffer losses in the next three years? It costs KFC several million to invest in one store. Of course, not taking such risks must be a relatively stable principle to ensure that every store is successful.
★Calculation and selection of gathering points
1. It is necessary to determine where the main gathering points are in this business district.
For example, Beijing Xidan is a very mature business district, but it is impossible for any location in Xidan to be a gathering point for customers. There must be the most important location for gathering customers. The principle of KFC store opening is: strive to open stores in and near the places with the most customers.
In the past, there was an old saying that “one step leads to three cities.” One step away from the store address may result in a 30% difference in sales. This is related to the flow line (the line of people's flow). Someone may come here and turn around, then this place is out of reach of guests. It is almost the same as a small alley, but the business is much different. These must be taken into consideration when selecting a site.
What is the flow line of people? In this area, which direction do people go after coming out of the subway, etc. These all send people to check meters and measure. Only after a complete set of data can the address be determined.
For example, to measure the flow of people in front of a store, one needs to record the flow of people passing by at the location where the store is planned to be opened, and measure how many people pass by the location in a unit of time. In addition to the flow of people on the sidewalk where the location is located, the flow of people in the middle of the road and on the opposite side of the road should also be measured. Those in the middle of the road only count as cyclists, not drivers.
Whether the traffic on the other side of the road is counted depends on the width of the road. Even if the road is narrow, if the road width exceeds a certain standard, it is usually a separation zone. Customers will not be able to come over to consume, and the traffic on the other side will not be counted.
KFC site selection personnel input the collected traffic data into special computer software to calculate the amount of investment that cannot be exceeded here, and the store cannot be opened if it exceeds the amount.
2． When selecting a site, you must consider whether the main flow of people will be intercepted by competitors.
Because people are not yet loyal to brands, I just eat KFC and get annoyed when I see McDonald’s. It seems that this has not happened yet. As long as you are in front of me, I am very tired today. Why do I have to walk another hundred meters to eat something else? I will come to you first. Unless there are too many people here and I can't find a seat, I will move forward.
But there is a main flow of people. If the competitor’s customer gathering point is better than KFC’s location, it will have an impact. If both are the same, it doesn't matter. For example, there is a KFC store at the North Taipingzhuang intersection in Beijing. If it goes 100 meters to the west, it would be inappropriate for a competitor to open a Western-style fast food restaurant, because the main customer flow is from the east. If it opens there, a large number of customers will be lost to KFC. If you stop it, the efficiency of opening a store will not be good.
3. The choice of gathering points affects the choice of business districts
The choice of gathering points also affects the choice of business districts. Because whether a business district has major gathering points is an important indicator of its maturity. For example, in a new residential community in Beijing, there are many residents and the quality of the population is very high. However, according to surveys, it is difficult to find the main gathering point in the community. At this time, you may not open a store. When will this community mature? If you are mature or relatively mature, you will open it only after you know that one of the places is indeed a major gathering place.
In order to plan the business district well, KFC’s development department has invested great efforts. For KFC Beijing, its development department personnel travel to every corner of Beijing all year round and are well aware of this place, where buildings and roads change greatly every year and locals are easily lost. This often happens. Beijing KFC receives a call from a customer, suggesting that KFC set up a store in his location. As soon as the developer hears the address, he can casually tell the characteristics of the local business environment and whether it is suitable for opening a store. In Beijing, KFC has successfully opened 56 restaurants in business districts based on its own surveys.
Long-term goals
★The issue of growth is very important for any company. Any successful company must have long-term goals, attract outstanding talents to join, and make contributions to the community. , companies that cannot determine their strategic goals will be quickly eliminated.
As a franchise enterprise, this is especially true. Of course, KFC franchisees join in order to enjoy the good development prospects of KFC. The establishment of long-term goals depends on the examination of the company's external environment, the confirmation of the company's mission, and the expectations of the capability platform required to complete the company's mission.
As soon as Mr. Su Jingshi, the president of KFC China, came to China in the early 1990s, he explained KFC’s long-term goal to his employees: to make the Chinese KFC brand the number one brand in China’s catering industry, and even The world's most popular restaurant brand. Mr. Su Jingshi worked with managers at all levels to continuously promote and elaborate on this goal during the company's development process. Every new employee of KFC is aware of this goal on the first day of work. This enables all employees of KFC to have a common blueprint for the company's development and a common vision. Everyone knows what KFC will look like in the future.
★KFC has the strength to achieve such a long-term goal.
1． Although KFC is coming to China for the first time, with its years of expansion of thousands of branches around the world and cross-international management experience, it has enough strength to comprehensively develop the Chinese market and achieve its long-term goals.
2． KFC's vision is feasible.
This is based on a rigorous analysis of China's society, its structure, markets, and customers. As a mid-range fast food, without a mature business district, it will not be able to support the passenger flow required for its daily operation. Therefore, the number of business districts that will gradually mature in China's major cities in the next few decades will determine KFC's market development potential. Based on the optimistic estimate of China's economic prospects and development momentum, KFC predicts that it will have a broad development space in China.
In addition, KFC’s timing to enter the Chinese market is very good. At that time, China's catering industry, especially the franchise catering industry, was far from mature. As the first international franchise catering giant to enter China, as long as it seizes the opportunity and strives to develop, it can become the number one brand in China's fast food industry.
3. KFC's vision is consistent with the characteristics of its franchise.
As a franchise industry, KFC is different from many other industries and is characterized by a high degree of risk aversion. Because once the catering chain industry establishes a good corporate image, all chain stores will be able to enjoy the benefits brought by it. But correspondingly, once any problem occurs in any store, the entire brand will be affected. Therefore, its ability to resist risks is very fragile.
KFC wants to continuously open up new markets in China, but since it is a franchise, it must try to avoid risks and ensure that the brand does not depreciate due to expansion. It is always a process of brand appreciation. That is to say, no matter how you expand, you need to operate steadily. The combination of the two is included in KFC's long-term goal of becoming the number one brand in China's catering industry.
★After more than ten years of development, KFC has become the largest and fastest-growing fast food company in China; according to a survey conducted by the world-famous AC Nielsen research company in more than 30 cities in China, KFC It is widely known and loved by Chinese consumers, and is recognized as the brand "most frequently patronized by customers", ranking first among the top ten internationally renowned brands. It can be said that KFC has achieved double success in terms of market share and reputation, which is closely related to the correct and feasible formulation of its long-term goals.
Up to now, China's catering industry has developed greatly. International chain catering giants have rushed to China, and domestic catering is also eager to try it. The market potential of China's catering industry is still huge. KFC wants to be the first in China's catering industry. The brand's long-term goals are still applicable and guide KFC on its new journey.
In the eyes of all employees of KFC China, the current development of more than 400 stores is only part of the expected long-term goal, not the final result. Just like a small seedling, after more than ten years of cultivation, it takes root and grows leaves, and gradually grows into a big tree, full of vitality and a bright future.
If you look back, Mr. Su Jingshi set this long-term goal when KFC entered China, which can not but be said to be extremely far-sighted. The established long-term goals will directly affect corporate business planning, talent management, performance management and other aspects. Obviously, KFC's long-term goals also indicate that its "localization" strategy is imperative, otherwise it will not be able to meet the shortage of human resources and source of raw materials for KFC's rapid growth in China.
Marketing
★ Standardized Services
The "CHAMPS" champion program promoted by KFC globally is one of the main essences of KFC's successful performance. The contents are:
Cleanliness Maintain a beautiful and tidy restaurant;
HHospitality Provide sincere and friendly reception;
AAccuracy ensure accurate Supply?
M Maintenance Maintain excellent equipment;
P Product Quality Insist on high-quality and stable products;
S Speed ??Pay attention to fast and efficient service .
The "Championship Plan" has very detailed and highly operable details, requiring every employee of KFC in every restaurant around the world to strictly implement unified and standardized operations. This is not only a code of conduct, but a corporate strategy of KFC. It is the result of KFC’s decades of experience in fast food service operations.
★Market positioning
KFC takes family members as its main target consumers. The promotion focuses on young people who are more receptive to foreign culture and new things. All food, services and environment are designed in a targeted manner. This is because young people prefer the brisk dining atmosphere of Western fast food and hope to influence family members of other age groups to visit.
In addition, KFC also spends a lot of energy on child customers. It has a special dining area for children in the store. As an area for children to celebrate birthdays, colorful decorations are arranged to cater to children's preferences. They also provide toys as gifts during holidays. On the one hand, they hope to cultivate children. On the other hand, I also hope that through the guidance of children, I can attract the whole family to come to the store to receive warm service. When children grow up, KFC may become a part of their lives.
KFC has always wanted to create a happy atmosphere where the whole family dines together, emphasizing this added value. This will leave some deep impression on people. They have many good memories that happened at KFC. When guests come to the restaurant, they first feel the taste of food. If the food doesn’t taste good, it’s useless no matter how cheap it is. No matter how good the service is or how beautiful the decoration is, customers will not like it. KFC's market advantage is the unique taste of its chicken products. It is positioned as a "world-renowned expert in cooking chicken" and "the best chicken cooking is in KFC." This is also the biggest difference in positioning between KFC and McDonald's. The series of fried chicken products produced by its 60 years of experience in cooking chicken include original chicken, spicy chicken wings, crispy chicken drumsticks, boneless chicken fillets, etc. The outer layer is golden and crispy, and the inner layer is tender and juicy? The unique and fragrant taste is widely praised by customers. KFC has also continuously strengthened its selling point of "Chicken Cooking Expert" in various advertising campaigns.
Chinese people love to eat chicken, and chicken ranks first among chicken, duck, and fish. Compared with other foreign fast food, chicken products are more in line with Chinese tastes and are more easily accepted by Chinese people. . This can be seen from the fact that McDonald's quietly broke away from its unified "beef burger" menu in the global market and launched "McSpicy Chicken" and "Chicken Leg Burger" similar to KFC in the Chinese market.
KFC is not satisfied with its current success, but continues to use huge human and financial resources to find tastes suitable for Chinese people, what KFC products they like, why they like KFC, etc. To adjust services, adjust food, and even launch new products.
As the saying goes, "it's hard to agree with everyone", everyone has their own values ??about whether it tastes good or not. How to prove it? Turn heads. It tastes good. Maybe if 100 people come to eat it and 80 people think it is good, then it can be considered that the positioning has been accepted.
For example, the newly launched "Hibiscus Fresh Vegetable Soup" is carefully prepared from nutrient-rich raw materials such as vegetables, egg blossoms, shiitake mushrooms, skirt vegetables, and carrots. Pairing "Hibiscus Fresh Vegetable Soup" with KFC's staple food - chicken, or other side dishes such as salad, mashed potatoes, corn, etc., allows Chinese consumers to enjoy a more complete dining choice at KFC that is more in line with their eating habits. This soup food, which specifically caters to the tastes of Chinese consumers and even has a very Chinese name, was carefully developed by KFC through research and research to meet the needs of Chinese consumers. It has become very popular since it was introduced to the market.
★Heavy consumers and light consumers
KFC divides consumers based on their return rate, which can be divided into three types: heavy, moderate and light. Heavy consumers are those who come once a week, moderate consumers are those who come about once a month, and once every six months is considered a light consumer. After investigation, KFC's heavy consumers account for almost 30% to 40%. For them, KFC has become connected with their environment and habits, and has gradually become a part of their lives.
For heavy consumers, KFC’s marketing strategy is to maintain their loyalty and not let them down. These heavy consumers know KFC well because they frequent it. Even the waiters at KFC are good friends with them. The only and simple way to treat them is not to let them down (quality, service attitude).
For light consumers, the survey found that the biggest factor that prevents many people from visiting KFC stores is convenience. This can only be achieved by constantly opening stores.
★Promotion
Promotion is the most commonly used means for enterprises to promote sales. In modern enterprises, promotion must be continuous. KFC will constantly have a more favorable product on sale. The purpose is to increase turnover, increase the number of transactions, focus on expanding certain markets, etc.
Promotions are uniformly arranged by the headquarters' annual plan. Arrange different product promotions according to time. All branches across China follow the same instructions. There may be some differences in time, but the plan is the same.
For example, KFC will promote "Pokemon" (children's meals) at one time, and hot chicken wings at another time.
Promotion management is a careful and meticulous work. The Shanghai headquarters has made unified arrangements, and even the posters have been printed, and a planning manual will be distributed to each branch. The rules of the planning manual are very detailed, such as which poster should be posted on the light box in front of the door, which poster should be hung on the ceiling, etc. All KFC branches can follow it. Television commercials, etc. are also arranged uniformly and broadcast in this market at the corresponding time.
★Service
When facing the bottleneck of market competition, we must not harm the interests of consumers. For example, during the competition between KFC and its peers, a price war emerged. Do you want to respond? Responding will sacrifice a lot of profits, but it will also attract a lot of customers. But at this time, can your service keep up? Can your product keep up? These are bottlenecks in development.
Customers queued up in long lines and couldn’t get the product, and even what they got didn’t meet KFC’s production standards because there were too many people and everyone was squeezing in to get the five-dollar hamburger. As a result, you If I can’t supply it, do you still want to respond? If you don't do it, someone else will, and they will take away the business, and you will have no customers. It's like you can give guests a bench or a sofa. In the process of deciding, what do you want? What do you want to give your guests? There are challenges like this every day.
When this kind of choice or bottleneck occurs, KFC has a very important principle orientation: the interests and needs of customers. Just try not to harm the rights and interests of customers. When KFC encounters bottlenecks, of course it has to make changes, but it also needs to focus on customer interests and have thousands of employees work together to do the right thing.
The establishment of a brand takes time, and the maintenance of a brand requires huge efforts and various difficulties. Like all other businesses, KFC certainly hopes to make profits, but it pays more attention to investment. Only by constantly exploring needs and investing continuously can we make greater profits. Just trying to keep it, maybe next year there will be nothing left.
Kentucky Fried Chicken (KFC) in China -
The business case of "World Famous Chicken "Expert" (Part 2)
Franchise
KFC has been using "franchising" as an effective way to expand its business around the world for more than 20 years. KFC started its franchise business in Xi'an in 1993. Currently, KFC has nearly 20 franchise restaurants. Under this circumstance, all of the more than 300 branches currently opened by KFC's competitor McDonald's in mainland China are directly operated stores, and none of them are franchised stores.
★Qualifications required by franchisors
KFC hopes that franchisees should be real operators in the food service industry. They are required to have an industry background, take "practice" as the management direction, be able to quickly master the basic knowledge of the industry, and prove that they have the ability to expand development in a certain area. Potential. The franchisee must also be an owner and be responsible for a significant portion of the required shares or capital. Because of this, KFC is only interested in franchising. Cooperation will only begin when the supplier's organizational structure, financial situation and project plan are completely satisfied.
★Franchise model
KFC's current approach to developing franchise stores in China is not to allow franchisees to operate. Franchisees pay the franchise fee to open a store on their own, but instead allow franchisees to invest in the purchase of an already operating and profitable chain store.
To transfer an already mature restaurant, franchisees do not have to start from scratch and can do so quickly. It is the most stable and convenient approach for KFC and franchisees to fully integrate into KFC's operating system, thereby greatly ensuring the franchisee's chances of success.
Considering the challenges of franchising in large cities. Currently, KFC only seeks applicants for franchise operations in areas with a non-agricultural population of more than 150,000 and less than 400,000 in mainland China, and an annual per capita consumption of more than RMB 6,000. Of course, not all restaurants in these areas are suitable for franchise operations. However, if possible, KFC may give priority to franchisee proposals for locations
★Franchise Fee
The new franchisee will be authorized to operate an operating KFC restaurant. , the entry fee for each restaurant will be more than RMB 8 million (excluding the purchase of real estate). The entry fee is a transfer fee and is the investment required to purchase a mature and profitable KFC restaurant.
This is based on the investment, turnover, and profitability of a KFC restaurant. From all angles, it has been carefully evaluated and is in the interest of all parties.
An initial franchise fee of US$35,000 must be paid at the beginning of a franchise period. Ongoing operating expenses include franchise royalties, which account for 6% of total sales, and advertising sharing expenses, which account for 5%. These rates and fees are established on a current basis and will remain unchanged for ten years after the franchise contract is signed.
Franchisees can arrange their own financing. According to the survey, successful candidates need to invest a majority of the equity amount (>70%) in the project.
★Contract
The initial term of the franchise agreement is at least ten years. Future franchisees must voluntarily engage in KFC franchise operations for more than ten years.
★Training
Successful candidates will be required to participate in an extensive twenty-week training program, including the following: "Restaurant Assistant Manager", "Restaurant Assistant Manager", "Restaurant Manager", "How to Manage a Franchise Restaurant", "Specialized Introduction to the Headquarters", "Small Company Management Course". Prospective franchisees will bear their own costs during the training process. Franchisees with restaurant and industry experience may apply to be exempted from certain training.
It can be seen that behind the strict regulations of franchising, there is a common interest relationship between KFC headquarters and franchise stores. KFC's success depends on the success of its franchisees. The franchisor must give sufficient support to the franchisees. Only when each franchisee makes a profit can the entire franchise system become stronger.
On November 13, 2000, among the five "2000 Excellent Franchise Brands in China" recently announced by the China Chain Store and Franchise Association, KFC, which is affiliated to China Yum! Brands, was the only foreign-funded international brand that was specially selected. Recommended for selection.
Supplier Management
From its first restaurant to more than 400 restaurants in 59 cities, 100% of the chicken raw materials used by KFC come from domestic sources. , China has consumed 60,821 tons of chicken in the past ten years. The rapid development of KFC has also led to the start and development of various related raw material supply industries. Currently, about 85% of food and packaging raw materials are provided by domestic suppliers in China. In line with the principle of consistent interests and common progress, KFC has formed close strategic cooperation with suppliers, from teaching new business management concepts to introducing advanced technology to suppliers, from proactive training and testing to actively supporting suppliers. partner.
★Status of KFC suppliers
The 25 chicken suppliers located in 27 cities and regions across the country are now basically the best in the domestic chicken industry. Shandong Zhucheng Foreign Trade Group Company, which has a history of five years of cooperation with KFC, is the largest county-level foreign trade group company in the country. The company has established production and marketing ties with 70% of local farmers. The large-scale operation of Liaoning Dacheng Agriculture and Animal Husbandry Industrial Co., Ltd. has solved the employment and income problems for 80% of local farmers. At present, KFC's chicken orders account for 80% and 60% of the company's Dashiqiao Factory and Fortress Factory respectively.
★Promote the localization of foreign suppliers
KFC is a business partner with internationally renowned companies such as Charoen Pokphand Group, Swiss Nestle Company, and PepsiCo. These companies have built large factories in China. , thus further promoting the development of China's economy in terms of investment, employment creation, and technology transfer. At the same time, in order to establish a long-term and symbiotic relationship with its suppliers, KFC has been actively encouraging foreign suppliers that have not yet entered China to build factories in China. For example, the American company Lambweston is engaged in agricultural production in China. Investing heavily in developing methods to increase yields of potatoes and corn; Henny Penny, which supplies fried chicken pots to KFC, will develop a professional equipment assembly plant in southern China by the end of 1998. In the past two years, KFC has localized 17 products that originally relied on imports. Currently, about 85% of food and packaging raw materials are provided by domestic suppliers in China. In the next five years, KFC hopes to achieve 100% of product raw materials from China as soon as possible.
★Star SYSTEM for evaluating suppliers
KFC’s suppliers often say this: “Evaluated by the KFC Star System (STAR ??SYSTEM) Manufacturers can easily pass the national ISO9002 quality certification. "The star system is a global evaluation system specifically for supplier management, which has been fully implemented for Chinese suppliers since 1996. This evaluation system can help suppliers improve the quality of their products from five aspects in a scientific, rigorous, objective and fair manner. Since its implementation, suppliers across the country have believed that it has benefited a lot.
The five aspects evaluated by the star system are:
Quality: Assessing the supplier's ability to provide safe, stable, high-quality products;
Technology: Assess the supplier's level of technical improvement and research capabilities;
Finance: Assess the supplier's financial status and support capabilities;
Reliability: Assess the supplier's integrity and supply reliability
Communication: Evaluate the supplier’s communication system and ability with Yum;
The evaluation contents involved in the five aspects are very detailed and very operable: for example , whether the supplier who installed the metal detector checks whether the machine is operating normally every hour, and has on-site records showing that he has done so; whether the diameter, height, and even the size of the internal holes of the bread meet KFC's requirements standards; whether the supplier has a documented system and fixed channels to communicate with customers. Every three months to half a year