KFC's Changing Business Model
Published in Jul-Aug 2022
MAMUN M. ADIL: Why did you decide to join KFC in 2013?
NOOR ALAM: The key factor was the ambition and clarity expressed by the new KFC management at the time, especially as far as their plans for revamping the brand were concerned. I knew the power of the brand on a global level and that there was a lot of room for improvement in Pakistan.
MMA: What changes have been made as a result of the new management’s initiatives?
NA: When they took over, the business was deteriorating, be it the products, the restaurants or the marketing. Initially, we did basic things, such as fixing our products and prices and improving the ambience of the restaurants. We also realised that there was a perception among young people (our primary TG) that the brand was for their fathers and grandfathers and not them. So the challenge also included changing this perception.
MMA: How did you do it?
NA: The research we conducted told us that the passion points of Pakistani consumers were cricket and cinema. So we collaborated with Pakistan Super League (PSL) (it is more popular among the young compared to international cricket) and we also associated ourselves with grassroots-level cricket, where we are involved with the national and international formats of the game. We started the Karachi Premier League and introduced Mohammad Hasnain and Azam Khan, who initially played for the Karachi KFC Premier League, then as part of the Quetta Gladiators (our partners) at the PSL and eventually in international cricket. In terms of cinema, we provide films with financial assistance during production; we realised that apart from eating out, there were no other major entertainment venues for young people.
MMA: In 2011, KFC had 64 restaurants across 19 cities. Have these numbers changed?
NA: We have 110 restaurants in 34 cities across Pakistan and plan to introduce more every year.
MMA: What are the most growth-oriented cities in Pakistan for KFC?
NA: Cities in Punjab have a lot of potential. People like to eat and have purchasing power compared to, for instance, Sindh where the smaller cities are underdeveloped. We have also established outlets in cities like Mardan in Khyber Pakhtunkhwa recently.
MMA: How has KFC’s customer base expanded?
NA: Our TG remains people in their twenties and early thirties, because they have considerable purchasing power. However, through value-pricing, we are also successfully penetrating younger audiences.
MMA: How is KFC planning to deal with the prevailing economic situation?
NA: We don’t want to have to charge higher prices, because this is the key to our success – providing value to our customers, so that they can have KFC every day and not just on special occasions. However, the increasing dollar rates and higher duties and restrictions on imports are an emerging challenge, as we import a lot of the raw materials that provide the ‘‘finger-lickin’’ experience consumers expect from us. We will have to find efficient solutions to maintain value pricing.
MMA: How does KFC approach its messaging?
NA: Gen Z is our main TG. We understand their demographics and psychographics and our communication is geared towards them. We undertake research to gauge their interests and we make sure our 360-campaigns and silo efforts talk directly to them. This means remaining feisty, unapologetically confident, entertaining and authentic. All of this makes for communication that keeps our product at the centre. Earlier, the focus was on sales, but now we are in a position where we can do a lot more brand building. Last year, our ‘Feel Good’ campaign, led by Synergy, won an Effie.
MMA: Given the number of home-grown brands to have emerged, who are your main competitors in today’s market?
NA: I believe that anyone who has teeth is our TG and therefore every food business is a competitor and we take them all seriously. In terms of pricing, we are either at par or slightly lower compared to the local offerings. During the pandemic, we realised that people have a great deal of trust in us and that whatever we sold is hygienic and meets international standards which is why we have experienced substantial growth since 2020 and the only reason I can see for this is the trust our customers put in us.
MMA: Where does KFC generate most of its sales?
NA: Deliveries and dine-in combined constitute a substantial amount of our business, followed by takeaways. We are focusing on increasing dine-in customers as it had started to pick up, that is until recently when the government imposed a ban on keeping restaurants open after 11 p.m. On weekdays, dine-in sales come from young executives (especially lunch) and on weekends from families.
MMA: KFC’s new outlet in Sheikhupura has received a favourable response on social media. Is the emphasis on architecture a way to increase footfall?
NA: Yes. KFC outlets globally have a basic design as they are fast-food outlets and not premium restaurants. However, in Pakistan, especially in second-tier cities, people consider KFC “an American brand” – and for them, going to KFC means going somewhere outside Pakistan. We want people to experience our restaurants’ overall ambience, because we believe the experience of eating our food there is much better than having it delivered. There is nothing better than having our chicken as soon as it comes out of the fryer – there is a difference in having it delivered 30 minutes later.
MMA: KFC seems to use their delivery personnel more than delivery apps.
NA: We manage most of our deliveries ourselves, the remainder is done through apps in the few areas that have a high frequency of orders which we cannot manage. We believe in going the last mile ourselves and ensuring that our standards are met; at times we receive complaints about non-KFC delivery personnel from our customers regarding non-adherence to our hygiene standards and the quantity of our products.
MMA: What’s next for KFC?
NA: We will continue to work on the passion points I mentioned earlier and continue to be innovative, because that is another pillar we adhere to. People get bored of eating the same thing every day, so we have introduced products such as Zingeratha and Kentucky Burger. We are working on a super app, because this is the future of the business and something young people use. It will have a lot of features related to our products – be it delivery, take away or the dine-in service and we will market it heavily. Our short-term goals are sustaining the growth we have experienced over the last few years, while managing the current economic situation. Our long-term plans include having a presence in all cities across Pakistan, being even more accessible to our customers and remaining a beloved brand.
MMA: What would you say are your major accomplishments at KFC?
NA: Regaining, sustaining and retaining our customers’ trust, which we had lost. Making improvements regarding our services and products and communicating this to our customers. The biggest indicator of this is the fact that our Brand Health Tracker scores are increasing every year.
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