Table of Contents
Executive Summary
The business idea is to establish a profit making KFC franchise store in London. The store will try to make the best of KFC’s brand value. The high quality chicken dishes with unique taste will be sold at reasonable prices. The main target consumer base will be the upper and middle class people who like tasty food. The food items available at the KFC store will also be healthy and reasonably priced. The location of the store will be a busy junction in the heart of London. The initial capital will be partly drawn from existing resources but also from bank loans. The main business goal is to get 20% profits every year.
Business Idea and USP
Description of your business
Business Idea
The idea is to launch a franchise for KFC in London.
Loan
KFC is a world famous brand with a large customer base in over 80 countries (Harrington et al, 2017). After the initial capital has been invested, there will be a massive growth in the business (Antia, Zheng and Frazier, 2013). This is why the loan will surely be repaid with interest. Moreover, the franchise will contribute to overall growth of UK’s economy.
Unique selling point
USP
The unique selling point of KFC is the high quality of the chicken food products, which can leave the customers licking their fingers (KFC, 2017).
Differentiation from Competition
The KFC franchise will bring a diverse set of chicken preparations for the food lovers of London. KFC is especially famous for chicken burgers.
SMART goals
SMART is an acronym for a set of business objectives, which can maximize efficiency in management (Armstrong et al, 2014). The following are its components:
Specific – Any business plan should clearly define which area is to be targeted for improvement.
Measurable – The business plan should have a quantifiable parameter of progress.
Assignable – The role played by the players in the business plan should be laid out clearly.
Realistic – The plan should be feasible within the given constraints of the firm. The budget will determine the scale of operation and resources employed for the KFC franchise.
Time-related – The objective must be fulfilled within a specific time frame.
Specifics of the Plan
The Key Stakeholders
The head of sales at the franchise will be in charge of meeting the target. Other important players are the business development head of KFC, UK and Head of Operations.
Goal
The proposed KFC franchise will have to bring about an increase in the market share of KFC in London as well as ensure profits.
Location
The KFC franchise is to be set up at London at a busy intersection with a large footfall in daily commuters.
Timeframe
The market capture and profit targets should be clinched within 1 year from the time of the franchise’s launch.
Requirements and Constraints
The KFC project will require initial capital for acquiring physical assets including store building and acquiring licenses from authorities in the UK. The constraint will mostly come from competitors when hiring the best talent. Moreover, good relations will have to be established with the suppliers.
Measurable
The KFC franchise will have to achieve a 20% profit and increase market penetration among UK fast food retailers by 10%.
Attainable
A SWOT analysis will be carried out to ensure that all the relevant factors have been considered.
Realistic
The budgetary and time constraints have been considered while making this plan, which means it is achievable in reality.
Timely
The objectives laid out earlier should be fulfilled by the end of the year 2018.
Customer analysis
The Need for Customer Analysis
Customer analysis can provide a good understanding of the customer base. Such an analysis can improve customer service, offer insight on new ways of engaging existing customer base as well as targeting new ones, increase profitability and helps in planning marketing campaigns more effectively (Armstrong et al., 2014).
Customer Segments
The Concept
Market segmentation is the process of dividing the existing as well as potential customer base into certain segments on the premise that they have shared properties like age, gender, buying and behaviour (Armstrong et al., 2015).
Segmentation for the KFC Franchise
KFC segments its market mostly based on their lifestyle and food habits. Income levels and age groups are important determinants of segmentation (Hollensen, 2015). Occupation is not very relevant, as the company does not differentiate based on professions.
Target Markets
The Concept of Targeting
Targeting refers to that part of the marketing strategy where customers belonging to the appropriate segments of the market are pursued (Bisio and Kohler, 2011). It also includes the decision regarding the association of suitable products with each customer segment.
Choice of Target Markets
KFC targets all sections of the population but pays special attention to adults who seek quality and fine taste. In addition, KFC also targets the more health conscious section of its potential buyers (Thakkar and Thatte, 2014). They will usually belong to the middle and upper crusts of the economic layers. The healthy chicken preparations on KFC’s menu are the reason behind such a choice.
Positioning
Bowman’s Strategy Clock
The Bowman’s Strategy clock is an effective way of finding the appropriate balance between the value of the product as perceived by the customer and the price (Armstrong et al, 2015).
Application of Bowman’s Strategy Clock
The KFC franchise in London will have to operate in the position 5 named focused differentiation. From the segmentation, it is clear that upper and middle class people with a craving for tasty yet healthy food form the main target markets. As a result, the company has to assure high quality products and customers are expected to pay reasonable price.
We can do it today.
Marketing Mix
The Concept
Definition
Marketing mix is a business decision about four key elements of marketing to be made before the launch of a new product.
4Ps+3Ps
The 4Ps of marketing are the four key elements of the marketing mix, namely product, pricing, promotions and placement. However, Booms and Bitner had suggested a modified version of the marketing mix on the premise that service industry products were quite different from tangible goods of other industries (Armstrong et al., 2015). For this reason, three other elements were added to the mix, namely people, process and physical evidence.
Importance of Marketing Mix
The marketing mix helps take marketing strategies in an effective manner. The features of the product will help take decisions about segmentation, targeting as well as positioning (Armstrong et al., 2015). Pricing strategy assists in taking decisions on positioning.
Product
Philip Kotler had suggested three levels of the product, namely core, actual and augmented (Armstrong et al, 2015). The products of KFC can satiate demands of their customers by giving them great value for the money spent. They can enjoy the best chicken dishes with unique taste and in a great environment for hanging out with friends and relatives.
Core Benefit
The core benefit will be the delicacy of the food items. They also come in great variety. The food items on offer are juicy, crispy and provide a refreshing experience.
Actual Product and Differentiation
The actual product of the KFC franchise will be various fast food preparations of chicken like burgers. The meals are ideal for families and couples looking to have tasty food at affordable rates. The unique taste comes from the secret ingredients like herbs and shrubs that are known only to the world-class cooks of the company (KFC, 2017).
Augmented Product
The augmented product will be the ambiance of the KFC stores and the high level of customer service. It also provides an atmosphere that can provide great entertainment to all the customers.
Product and Relation to USP
The USP of KFC is “finger licking good” (KFC, 2017). This slogan makes the promise that the customers will be left smacking their lips after having their meal at the KFC store. The chicken dishes have a taste that is distinctly different from the products available at other fast food outlets.
Price
Pricing Strategy
A company can choose from among several pricing strategies. These strategies include skimming, penetration, competitive and price taker pricing.
The Right Strategy for KFC Franchise
KFC franchise in London should follow a competitive pricing strategy. This is because London already has several fast food retailers therefore the core benefit is not entirely unique. For KFC, the proper strategy will involve setting a price that is roughly similar to its competitors.
Pricing Tactics
Pricing tactics are the various special means employed by companies after selection of a specific pricing strategy. These tactics include psychological pricing, loss leader tactic and differential pricing.
KFC Pricing Tactic
KFC franchise can look to employ the differential pricing. Some of their products may serve premium customers and hence they may want better ambiance or quicker delivery times than the normal.
Place
KFC franchise will be opened in London as the city’s residents are known for their interest in high quality food (KFC, 2017).
The distribution channel will consist of the farmer as the primary producer of poultry products like chicken and egg. Bread will have to be bought from other suppliers. The final products will be sold at the retail store of the franchise.
Promotion
The AIDA model says that a customer has to pass through four stages before making the purchase (Mathews, 2011). These are awareness, interest, desire and action. The promotional strategy of the company will include making the customer aware of their differential pricing of selected premium products.
People
The people who are integral to the business are the customer service agents working in the retail store as well as the customers (Brandau, 2014). The company puts the customer above everything else and hence they are of prime importance.
Processes
The KFC franchise will offer customers great delivery times. The customer services also include offering special treatment to premium customers.
Physical Environment
The store should be properly decorated during festive seasons to attract customers. Music and visual forms of entertainment, together with smart attire of the customer service agents, will be an integral part of the physical environment of the KFC store.
SWOT
SWOT analysis
The SWOT analysis will give a clear idea about the impact of different competitors, government sector, society and other external agents on the business of KFC. However, the limitations of SWOT analysis includes the fact that this analysis can be quite superficial and may not give detailed information about the market (Mathews, 2011). It may not also provide enough solutions (Mignonac et al, 2015).
SWOT Analysis of KFC Franchise
Strengths
Main strengths are Global Domination, Differential Products for proper marketing (Singam et al, 2014) and Secrecy of Ingredients to give unique experience (Sahagun and Vasquez-Parraga, 2014).
Weaknesses
The weakness is unhealthy fattiness in KFC’s foods which can put off customers (Nasir et al, 2014).
Opportunities
Opportunities are expansion into emerging economies (Chiou and Droge, 2015) and specialization in vegetarian food items as healthy food is quite popular (Larson et al, 2014).
Threats
Competition: KFC is likely to face strong competition from other fast food retailers.
Animal Rights Activists: KFC has often been castigated for its abuse of animal rights, given its inhuman treatment towards chickens.
Competitor Analysis
The top competitors of the planned business will be the fast food chains Five Guys, Nando’s, Gourmet Burger Kitchen and Burger King (Chloe, 2017). These are the main competitors because they are all fast food chains in London having the highest market share (Grandhi, 2016).
Table of Competitors
| Name, Location and Business Size | Product/Service | Price | Strengths | Weaknesses |
| Five Guys, London, US$ 831.95 million (Five Guys, 2017) | Hamburgers, French Fries, hot dogs | $6.99 – $8.69 | 1. Customized burgers 2. No trans-fat in food items | 1. No expansion of menu 2. Not many healthy options |
| Nando’s, London, €21.1 million (Nando’s, 2017) | Portuguese-inspired chicken preparations | €3 – €10 | 1. Lot of variety 2. Reasonable Prices | 1. Online ordering is not possible 2. Too much emphasis on healthy food only |
| Gourmet Burger Kitchen, London, £2,800,000 (Gourmet Burger Kitchen, 2017) | Gourmet Burgers | £2.45 onwards | 1.Good location 2. Innovative store design | 1. Online presence needs to improve 2. Some aspects about staff |
| Burger King, London, US$4.05 billion (Burger King, 2017) | Burgers | $3.89 onwards | 1. Franchise network is strong 2. High Brand recognition | 1. Decreasing Sales 2. Instability in ownership |
Finance
Business Start-up Costs
The estimation of business start-up costs is a necessary part of every business plan (Barrow, 2015). These costs relate to the various expenditures that are to be made while starting the business (Solomon, 2014). These include the cost of purchasing physical assets, designing logo, advertising commercials
The business start-up costs are not the same as cash flow (Tan, Devinaga and Hishamuddin, 2012). The latter are also important to businesses that are starting afresh but include both incoming as well as outgoing cash flows (Daniels, Radebaugh and Sullivan, 2013).
Business Start-Up Costs KFC Franchise
| Serial Number | Item | Cost (in million £) |
| 1 | Insurance, license, and permit fees | 0.10 |
| 2 | Equipment and supplies | 0.45 |
| 3 | Advertising and promotion | 0.10 |
| 4 | Loan | 0.10 |
| 5 | Employee expenses | 0.05 |
| 6 | Technological expenses | 0.35 |
| Total Cost | – | 1.15 |
Cash Flow Forecast
Cash flow forecast is a statement that depicts how the various actions and transactions of a company have affected its cash position (Barrow, 2015).
Advantages
- The exact cash position of the company is known from this statement, which is not available easily from balance sheets and profit and loss accounts (Barrow, 2015).
- The future status of liquidity in the firm is accurately predicted from cash flow statements.
Disadvantage
The exact profit and loss position is not clear from this statement (Barrow, 2015).
Cash Flow Forecast for KFC Franchise
| Month | 2018 | 2019 | 2020 | 2021 | 2022 | |
| A | Month Name | September | September | September | September | September |
| Money in £ | ||||||
| B | Loan From Bank | £150k | – | – | – | – |
| Own Funds | £100k | – | – | – | – | |
| Incomes from Sales | £100k | £120k | £144k | £172k | £206k | |
| C | Total Money in £ | £350k | £120k | £144k | £172k | £206k |
| Money Out in £ | ||||||
| D | Capital Expenditure | £35k | – | – | – | – |
| Loan Interests | – | £15k | £15k | £10k | £2k | |
| Staffing (300 employees) | £44k | £49k | £57k | £75k | £125k | |
| E | Total Money Out (£) | £79k | £64k | £72k | £85k | £127k |
| F | Balance (£) | £271k | £56k | £72k | £87k | £79k |
Break-even Analysis
The break-even analysis is carried out to find out the point when the revenue of the company start surpassing the costs incurred (Barrow, 2015). The advantage is that profit and loss are shown at different levels of output. The disadvantage is that it works only for a single product or a single mix of products (Barrow, 2015).
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