(Source: YouTube - featuring Kimberly Joseph: Cindy on Lost)

David Novak should thank me. Yesterday, I ordered KFC promotional special (9 dark pieces-$8.95). This added to his bottom line. As the CEO of Yum Brands, a recently Forbes article reported that he received $10.6 million in 2007. (Forbes - Full Article) Yum Brands include Quick Service Restaurant (QSR) chains that mainstream customers are familiar with. With more than 35,000 outlets in over 110 counties, this Fortune 500 company has a solid portfolio and stock record. {Taco Bell, Pizza Hut, Long John Silver, A&W}

Food.
KFC serves good chicken. For crunch and flavor, I enjoy the spicy chicken. At Taco Bell, their flaky crusted Mexican Pizza - although not authentic Mexican food - provides a great blend of crunch and ingredients (minced meat, tomatoes, cheese). Pizza Hut’s personal mushroom pizza delievers a crispy crust, earthy flavor from mushroom, and chewy cheese. Fast food aims to provide customers with two main values: good food delivered quickly.

side note: The best tasting QSR fried chicken is Popeye’s Chicken and Biscuits which delivers great spices and moist chicken. (Don’t forget their beans and rice) Also, avoid the Chicken Snacker at KFC (two bread, mayo, and chicken patty). The chicken patty was dry.

Consultant hat.
Diversification is the main strength of Yum Brands. Imagine going to a food court, Yum Brand’s strategy is that one of the many brands will create consumer temptation. Hip hopping my way to my KFC, I immediately smell the oil from the frying station. Looking at the menu, I intend to just order a bucket of chicken. Pizza Hut and Taco Bell items are also offered. In a matter of seconds, I start ordering a few tacos and over sweetened apple turnovers.

Novak will continue to be successful. With a background in advertising, his ability to create food products that appeal the public has made him King Midas. Restaurant groups grow big through franchising programs. Franchising has its pros and cons. Once a marketing manager for a Hawaiian fast food, I helped convert a mom ‘n pop restaurant chain into a franchise in the Bay Area. I have found that it is more an emotional decision for franchisees. Looking at the financial balance sheet, you have educated yourself about the franchise program.

Start up cost.
Total Investment: $1,100,000-$1,700,000
Initial Franchise Fee: $25,000
Royalty Fee: 4%
Advertising Fee: (n/a)
Term of Agreement: 20 years
Renewal Fee: $4.9K
(source: Franchisemall)

The pros are obvious. Yum Brands corporate will allocate a few hundred million dollars to advertise and promote products. Traning and coaching is also provided. Yum Brands want their franchisees (people who own the franchise) to succeed since they take a percentage of the earnings. With the advent of technology, each point of sales (POS-super smart electronic cashier system) will deduct and transfer the money to corporate. For instance, your KFC on Broadway brings in 100,000 dollars in business in March. If your franchise fee is 3% of the gross sales, then $3000 will be transfered electronically to the KFC corporate account. Another con with owning a franchise is control. Under the strict restriction and guidelines as a franchise owner, you will not be able to paint your KFC yellow and red color or add menu items. I advise first time restaurant owners to do their homework diligently. Interview three current franchise owners and consult a franchise lawyer.

Here’s the breakdown of a restaurant’s success.

(Good food: 20%) + (operations: labor, hiring, daily function:20%) + (marketing: enticing customers to purchase food products:60%)

Marketing plays a major role. After all, consumers have so many food options. I can grab a bucket of fried chicken from the super market deli or countless other food chains. Living in the San Francisco, I have over 5000 restaurant choices. Additionally,
cross promotion is key. The Golden State Warriors, sadly out of the playoff chase, ran a KFC promotion. Chicken + two NBA tickers for around $40. (don’t quote me on the price)

Hollywood and food. In certain movies, you will see actors eat KFC or see the red and white bucket in the background. This is called product placement. KFC negotiates with product placement agents. A price will be determined to place their product in a certain scene. In a recent article I read, $11 billion are spend annual on food advertising.

My pick: I don’t smoke pot. But if I had the chance, I would purchase a White Castle franchise. Eating the microwave version by default: the sweet carmalized onions, soft buns and savory beef makes me hungry. Harold and Kumar: Go to White Castle has become a pop culture iconic film. Why White Castle has yet to locate to California has been a mystery.

Lost in Translation. When evaluating a brand, think about if a bran can be globalized. KFC has been a success in China since the people love chicken. On the other hand, Taco Bell has not been able expand to China. Guacamole just does not appeal to most people.

Read daily for updated post.