What are the fast-food industry's key success factors?

Product quality and consistency.

Q
Service.
S
Cleanliness.
C
Perceived Value.
V
Location.
Global brand awareness.
Restaurant companies use the acronym Q S C V to refer to the industrys key success
factors. Because of intensified competition in the mature and increasingly saturated U.S.
market, many companies have also begun to view location and global brand awareness as
important key success factors.
In what ways are Pizza Hut and KFC positioned to take advantage of the industry's key
success factors?
High product quality and consistency.
Strong brand name and customer loyalty.
KFC customers love the product despite the fact that it is fried.
Pizza Hut customers are strongly loyal to the Pizza Hut brand despite alternatives
like Papa Johns and Little Caesars.
Pizza Hut and KFC's leading market shares in the pizza and chicken segments
strengthen consumer awareness, give both brands a location advantage, and create
economies of scale in marketing and distribution.
Opportunities for Yum! Brands, Inc. to benefit from technology, management, and
market sharing among its five restaurant chains (KFC, Pizza Hut, Taco Bell,
A&W, and Long John Silvers).
Opportunities for Yum! Brands, Inc. to lower costs by sharing distribution of food
products and supplies among its five brands (KFC, Pizza Hut, Taco Bell, A&W,
and Long John Silvers).
Both Pizza Hut and KFC have strong expertise and experience doing business
outside of the United States. Few chains other than McDonalds can match their
international experience.
Both Pizza Hut and KFC have strong market shares and brand image in Japan,
Asia, Australia, Canada, Mexico, and the Caribbean.
Pepsico Management:
Acquired KFC $841 Million.
New Franchising Contract
Reduced Staff
Replaced KFC Management with their own management
High Performance, Accountability and drive unstable future for management
Franchise contract: take over weak franchise, relocate restaurants, make changes to
existing restaurants.
Corporate Level Strategies:
Switched from franchise to company owned in their large market
Interest in local community
Change name and logo
Introduced different menu items
Updated technologies in services and production unit.
Switched to high performance based management strategies.

 Pay closely aligned with customer service restaurant performance.

Business Level Strategies:
Closed unprofitable restaurants
Strive to fill the needs of local market by hiring locally and offering menu
Re-establish and maintain an emphasis on clean and updated restaurant and pay close
attention.
Cutting out marginal production
Alternates for KFC Expansion:
Global Strategy:
Key Success Factors:
Quality, Service, Cleanliness, satisfying customer needs.
Market entering strategies:
Franchising, Licensing, Joint Venture

KFC Joint Venture

Export equipment
Franchising
Transferring expertise
New product in menu
Strategic alliance

Issues:
Animal Cruelty, Unsafe chicken/ Bird Flu, Unhealthy and Fettering Chicken
Culture Way to Success
Job Stability
Strong loyalty among employees
Financially relaxed atmosphere
Franchise friendly

Alternatives:Alternate # 01
Adopt the strategy of related diversification:
Advantages:
Easy to apply globally
Maximize market penetration
Market can easily adopt
Disadvantages:
May result in slowing growth
Adding management cost

Attractive Forces:
Industry growth
Changes in consumer trends
Rigid economy
Unattractive forces:
Health related issues
Encourages unhealthy eating habits
Low level customer commitments

Recommendations:
KFC need to differentiate in its product,
service and variety of menu.
KFC may reduce its cost so that it survive
Decentralize Pepsico:
It increases the flexibility to managers
It also motivates the mangers

Alternate # 02
Low Cost Strategy
Advantages:
Economic of scales
Image/Brand Recognition
Boost the sales
Bargain more their powers
Cheaper operational cost
Disadvantages:
No permanent and for temporary
Market become uncertain to the product quality

Alternate # 03
Strengthen 7ps of marketing strategies :
Advantages:
Boost morale Employees
Enhance Brand name
Increase in sales
Planned operations
Disadvantages:
Lot of data is needed
Cost expenses

Overall Cost Leadership Strategy:

When product is standardized then go for cost leadership

Features acceptable by many customers
Lower competitive prices
Two approached to achieve cost advantage:
Do a better job than rivals of performing value chain activities efficiently & cost
effectively
Revamp the value chain to bypass cost producing activities that add little value of
buyers perspective
Approach 1: ways to achieve cost advantage:
Economics and diseconomics of scale
Learning and experience curve effect
The cost of key resource input
Link with other activities in the company
Sharing opportunities with other business units
Benefits of vertical integration
First mover advantage
Strategic choice and operating activities
Approach 2: Revamping the value chain:
Shifting to e-business technologies
Direct selling and marketing approach
Simplifying product design
Striping away the extras
Bypassing the high cost raw material
Relocating facilities
Re-engineering core business process to cut out low value added activities