Kfc Vs Mcdonalds 2y136a

EXECUTIVE SUMMARY The international market is flooded with various sectors and industries that involve products of daily aswell as occasional use for the consumers. The use of the products can vary from industrial purpose toprivate consumption. One such thriving industry in the modern world is the food and beverageindustry. Food and beverage industry combined with the hospitality sector makes up one of the mostattractive target sectors for multi-national corporations. The concept evolved from the very first dinersin the late 18thcentury, when the world realized the concept of paid dining experience. Now, the worldcannot live without the taste of a McAloo Tikki or the zing of a Zinger. The bottom line being that theorder-to-eat MNCs have taken over the market like ants on a corpse, gobbling up every ounce of it.This sector has slowly covered all income groups of consumers and has targeted to achieve a marketshare of the highest percentage and the ever increasing competition is resulting in more profitableoptions for the consumers.The consumers are being served with a range of food and beverages to relish on catering every style of taste and preferences. With growing competition the food giants have take their services to a higherlevel with better decreased serving time, value for money prices and changing specialties in theirproducts.The following report is a comparative analysis of the operational parameters of McDonalds andKentucky Fried Chicken (KFC) and projects an overview of various factors that differentiate theservices of the two food giants. It covers factors like the product variety, customer reach, pricingstrategies, hospitality management, customer relationship management, supply chain management andemployee satisfaction programmes.The survey was based on the consumer’s response on their choice between KFC and McDonalds andthe basis of their choice was differentiated into various factors

1

INTRODUCTION

McDonald’s vs KFC McDonald’s and KFC are everybody’s favorite food trip destinations. When you like hambur gers, McDonald’s is always the top option. When you like fried chicken, KFC is always the first thing thatcomes to everyone’s mind. The reason for this is these companies claim of particular products thathave became their trademark until now. The difference between McDonald’s and KFC is mainly thecuisine.

McDonald’s 1940 is the birth year of McDonald’s and they have started everything. Their Speedier ServiceSystem that was introduced in their very first restaurant is being followed until now in modern day fast food chains. Their very first mascot was a man with a head of a hamburger that is wearing a chef’s hat. Itwas replaced by McDonald’s ever popular clown man. McDonald’s is recorded to currently serving 58million customers each day in 119 countries. Their restaurants differ from their settings, some offer by-ers with their drive thru service, some have playgrounds for kids but are just counter service alone.Some of their restaurants have outer seats as well. McDonald’s signature colors are red and yellow.Their well-ed products are their famous hamburgers, breakfast offers, desserts, chickensandwiches and French fries. For vegetarian customers, McDonald’s have offerings that are suitablefor them. When it comes to regional branches, McDonald’s are known for being fond of offering thesecountries food taboos for them to have some sort of relationship with people around. For example,Portugal McDonald’s are the only ones who have soup in the menu. Another example would beIndonesia for McRice.

2

KFC On the other hand, KFC or Kentucky Fried Chicken started during the Great Depression, which was in the year 1930. It was first named as “Sanders Court and Cafe”, following the name of Harland Sanders,the original creator from Kentucky. Their current and most popular logo is the cartooned image of Sanders with their acronym, KFC. They are popular for their trade secret, their secret recipe made from11 herbs and spices that is known to create the“finger lickin’ good” flavor of their chickens. Theirbasic products are fried chickens, chicken wraps, sandwiches, salads and some roasted and grilledchicken cuisines and desserts, too.Be it McDonald’s or KFC, you’ll surely have a great treat of a meal. Differentiating both will help usrecognize as to what we’d really love to consume. McDonald’s main offer is hamburgers while KFCoffers various kinds of chicken dishes.

OBJECTIVES 1. To conduct a comparative analysis on the marketing parameters of McDonald’s and KFC

2. To study the various aspects of supply chain management, employee satisfaction and hospitality management of both companies.

3. To conduct survey analysis on the consumer’s preference of food t amongst McDonald’s and KFC.

3

COMPANY PROFILE

MCDONALD’S History 1955 Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald's Corporation is created.

1957 Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto. 1959 The 100th McDonald's opens in Chicago. 1961 Hamburger University opens in Elk Grove, near Chicago. 1963 One billion hamburgers sold. Ronald McDonald makes his debut. 1964 Filet-O-Fish sandwich is introduced. 1965 McDonald’s Corporation goes public. 1967 The first restaurants outside of the USA open in Canada and Puerto Rico. 1968 The Big Mac is introduced. The 1,000th restaurant opens in Des Plaines, Illinois. 1972 A new McDonald's restaurant opens every dayThe Quarter Pounder is introduced.

4

1973 Egg McMuffin is introduced. 1974 The first Ronald McDonald House opens in Philadelphia.The Happy Meal is launched. 1983 Chicken McNuggets is introduced.New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres. Training is provided for every level of McDonald's management worldwide. 1984 50 billionth hamburgers sold. Ronald McDonald Children's Charities is founded in Ray Kroc’s memory to raise funds in of child welfare. 1989 McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges. 1990 McDonald's opens in Pushkin Square and Gorky Street, Moscow. 1993 The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing between Stockholm and Helsinki. 1994 Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidadand United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents. 1996 McDonald's opens in India –the 95th country McDonalds is a leader in convenient foods and beverages, with revenues of about $23 billion and over1.6 million employees serving the customer’s worldwide. The company consists of the snack business of Beverages and Foods. PepsiCo brands are available in nearly 115 countries having more than 24,500restaurants in the world providing 24 hour service having about 1 billon customers to be served all overthe world. McDonalds’s success is the result of superior products, high standards of performance, distinctive competitive strategies and the high integrity of our people. McDonalds is continuing to expand and introduce new alternative beverages in the market. Approximately 85% of McDonald’s restaurant businesses world-wide are owned and operated by franchisees .All franchisees are independent, fulltimeoperators. McDonald’s was named Entrepreneur’sNumber-one franchise for 1997. 5

Mc Donald's in India

•McDonald’s entered India in 1996.

•McDonald’s India has a t venture with Connaught Plaza Restaurants and Hard Castle Restaurants. •Connaught Plaza Restaurants manages operations in North India whereas Hard Castle Restaurantsoperates restaurants in Western India.

•Today it has around 211 Restaurants across India.

•Presently, it has around 57 outlets in the National capital region. McDonald’s has developed a menu especially for India with vegetarian selections to suit Indian tastes And preferences. Keeping in line with this, McDonald's does not offer any beef or pork items in India. Inthe last decade it has introduced some vegetarian and non-vegetarian products with local flavours that have appealed to the Indian palate. There have been continuous efforts to enhance variety in the menu by developing more such products.McDonald's has also re-engineered its operations repeatedly in its 11 years in India to address thespecial requirements of a vegetarian menu. Vegetable products are 100% vegetarian, i.e.

6

•They are prepared separately, using dedicated equipment and utensils Only pure vegetarian oil is used as a cooking medium.

• Cheese and sauces are completely vegetarian and egg less.

•Separation of vegetarian and non-vegetarian food products is maintained throughout the various stagesof procurement, cooking and serving

Business model

The McDonald's Corporation'sbusiness modelis slightly different from that of most other fast-foodchains. In addition to ordinaryfranchisefees, supplies, and percentage of sales, McDonald's also collectsrent,partially linked to sales. As a condition of the franchise agreement, the Corporation owns theproperties on which most McDonald's franchises are located. The UK business model is different, in thatfewer than 30% of restaurants are franchised, with the majority under the ownership of the company.McDonald's trains its franchisees and others atHamburger UniversityinOak Brook,Illinois. According to Fast Food Nation byEric Schlosser(2001), nearly one in eight workers in theU.S.have at some time been employed by McDonald's. (According to news piece on Fox News this figure is one inten). The book also states that McDonald's is the largest private operator of playgrounds in the U.S., aswell as the single largest purchaser of beef, pork, potatoes,andapples.The selection of meats McDonald's uses varies with the culture of the host country. 7

McDonald’s corp. is currently one of the most successful consumer products company in the world withannual revenues exceeding $23 million and has more than 1.6 million employees. McDonald’s products are recognized and are most respected all around the globe. Currently, its divisions operate inall over the world in beverages, snack foods, and restaurants. The corporations increasing success has been based on high standards of performance, marketing strategies, competitiveness, determination, commitment, and the personal and professional integrity of their people, products and business practices.

Products

McDonald's predominantly sellshamburgers,various types of chickensandwichesand products,French fries, soft drinks, breakfastitems, anddesserts.In most markets, McDonald's offerssaladsand vegetarianitems,wrapsand other localized fare. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide byregional food taboos (such as the religious prohibition of beef consumption inIndia)or to makeavailable foods with which the regional market is more familiar (such as the sale of McRice inIndonesia).

8

Pricing Strategy

Value Ladder strategy:-

b) Started offering value meals in a range of prices.

c) Ensure affordability and attract widest section of customers.

d) Brought the customer and provided arrange of entry-level products.

e) Try those new items and graduate to higher-rungs.

f) E.g. - if a customer starts with McAloo Tikki, he will finally graduate to McVeggie and so in Nonveg.

9

80-20 Menu Board

•80% visual.

•20% descriptive.

•Easier for customers to understand what 29, 39, 49, 59, 89, 99 rupee options are.

•Pricing range, quick service, no -tips environment attracted middle class and students.

Package deal

• The mostcommon strategy in fast food industry.

• The most preferred style for customers of McDonald’s.

• Plays on Psychological factor of the customer.

• Consumers appreciate the resulting simplification of the purchase decision

10

Advertising Over the years, McDonald's has developed TV advertising campaigns that have become, likeMcDonald's, a part of our lives and culture. McDonald's commercials have focused not only on product,but rather on the overall McDonald's experience, portraying warmth and a real slice of everyday life.This "image" or "reputation" advertising has become a trademark of the company and created manymemorable television moments and themes, including McDonald's is Your Kind of Place (1967)

You Deserve a Break Today (1971)

We Do it All for You(1975)

Twoallbeefpattiesspecialsaucelettucecheesepicklesonionsonasesameseedbun (1975)

You, You're The One (1976)

11

Nobody Can Do It Like McDonald's Can (1979)

Renewed: You Deserve a Break Today (1980 & 1981)

Nobody Makes Your Day Like McDonald's Can (1981)McDonald's and You (1983)

It's a Good Time for the Great Taste of McDonald's (1984)

Good Time, Great Taste, That's Why This is My Place (1988)

Food, Folks and Fun (1990)

McDonald's Today (1991)

What You Want is What You Get (1992)

Have you Had your Break Today? (1995)

My McDonald's (1997)

Did Somebody Say McDonald's (1997)

We Love to See You Smile (2000)

There's a little McDonald's in Everyone (2001)

Canada OnlyI’m lovin' it (2003) 12

McDonald's has for decades maintained an extensive advertising campaign. In addition to the usualmedia (television, radio, and newspaper), the company makes significant use of billboards(outdoors, onwhich large ments or notices are posted.) and signage, sponsors sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo availablefor local events of all kinds. Nonetheless, television has always played a central role in the company'sadvertising strategy. The taglines were always centralized towards the concept of overall diningexperience and complete service satisfaction

13

Employee benefit plans

The Company’s Profit Sharing and Savings Plan for U.S.-based employees includes a 401(k) feature,a leveraged employee stock ownership (ESOP) feature, and a discretionary employer profit sharingmatch. The 401(k) feature allows participants to make pre-tax contributions that are partly matched fromshares released under the ESOP. The Profit Sharing and Savings Plan also provides for a discretionaryemployer profit sharing match at the end of the year for those eligible participants who have contributedto the 401(k) feature. All contributions and related earnings can be invested in several investmentalternatives as well as McDonald’s common stock in accordance with each participant’s elections.Participants’ contributions to the 401(k) feature and the discretionary employer match are limited to20% investment in McDonald’s commonstock. The Company also maintains certain supplementalbenefit t plans that allow participants to (i) make tax-deferred contributions and (ii) receive Company-provided allocations that cannot be made under the Profit Sharing and Savings Plan because of InternalRevenue Service limitations. The investment alternatives and returns are based on certain market-rateinvestment alternatives under the Profit Sharing and Savings Plan

Training • February 24, 1961, Hamburger Universities first class of 14students graduated 14

• Today, more than 5,000 students attend HAMBURGER UNIVERSITY each year • Since 1961, more than 80,000 restaurant managers, mid -managers and owner/operators have graduatedfrom this facility •McDonald’s invests more than $1billion annually in training •“Best Place to Work” – Fortune Magazine 2005 • “One out of 5 Best Places to Work in Latin American

Finance Department McDonald’s Finance Department has two key areas of responsibility: financial reporting and management ing. Although each of these functions has different priorities, working togetherensures the best financial position for the company now and for the future.

McDonald’s has two sources of profit:

• Sales made by company -owned restaurants

• Rental androyalty income from franchised restaurants.

15

Restaurant sales

McDonald’s retains all of the profit earned by company-owned restaurants. In addition to variable costs,which increase or decrease depending on the level of sales, McDonald’s also incurs costs that are largelyfixed, for example utilities and advertising, which need to be paid for even before the restaurant makesany sales. Increasing sales and controlling costs are fundamental to ensuring the profit of each restaurantis either maintained or increased

Supply chain management at McDonalds (India)

The seed of McDonald's success was sown in 1990 - six years before it started its actual operations.About two decades ago, the QSR (Quick service restaurants) wouldn't have meant much to the IndianF&B segment. Today, the acronym has been seamlessly absorbed in the industry lingo.

16

McDonald's

17

15

18

19

20

Kentucky Fried Chicken

21

22

23

24

25

26

27

28

29

30

31

32

33

SURVEY ANALYSIS The report has been designed to study the consumer behavior with respect to McDonalds and KFC. A questionnaire was designed in order to understand the reasons of the consumer perception towards the two food giants. Our method of going about the study at hand involved the basic survey method, whereby we put forward questions to individuals who were divided into the basic segments provided by and aimed at as either the source or target service provider. This was carried out by a survey comprising of two questionnaires, one aimed at the customers at either of the two food ts and the other for the employees employed at the food ts. Our questions were designed to capture the market trends, the grounds behind such a trend, the peripherals related to the functioning of the food t, key marketing strategies adopted and finally aimed at drawing the inferences and conclusions for the same.

Question 1

Which age group do you belong to? The first question was essentially designed to throw light on the age group of people visiting/dining at the food ts. This gave us an idea of the preference of a particular food brand among a given age group if any. For e.g. the HAPPY MEAL available at McDonald's attracted the major portion of the younger crowd. As a matter of fact as shown in the following questions, this particular strategy drained almost the entire young consumer segment. Of the individuals surveyed a majority of the individuals belonged to the 18-25 yr age group both for McDonald’s as well as KFC. Question 2

What is your profession? This question was essential in calculating the trend of the customers who visit these food ts i.e. the working class of the people visiting the respective places. The survey revealed that the majority of people visiting both the places i.e. 46% for KFC and 55% for McDonald's were students. This thus lays direct stress on the strategies adopted by both the ts resulting in a heavy demand among the student group. 34

Question 3

Are you a vegetarian/non-vegetarian? This was essentially designed to demarcate the groups according to whether they were vegetarians or otherwise. It was a preconceived idea that the vegetarians preferred McDonald's of the two while KFC proved to be a non-vegetarian paradise. This thus showed a balanced market for McDonald's whereas a strong shift for KFC towards the non-vegetarian section Question 4

What is your saying on the pricing of the t? In KFC 31% found the food priced nominally and an equal amount of people surveyed i.e. 31% found inexpensive. Hence it was concluded that it dropped down to the individual in the case of KFC and there was no clear market trend. In McDonald's 46% found it nominally priced as well as value for money while just 8% found it expensive. Hence in of comparative study it was concluded that McDonalds was optimally priced although KFC wasn't overpriced either.

Question 5

How much do spend on an average per visit? This question again was concerned with the pricing as well as spending capability of the people. The results indicated that a major section, i.e. around 52% for KFC and 42% for McDonald's, of people spent between Rs.100-500 thus advocating the fact that the places are priced moderately. Question 6

Do you get drawn in by the television commercials of the food items? This question was designed to get an idea about the publicity/advertising strategy of the food brands. Both the brands under consideration are big brands and hence have the capability to allocate adequate budgets towards all sections of marketing. Whether they choose to or not to, is the question at hand. This particular question analyzes the potency of the advertising strategies used by the food brands in attracting or influencing the customers. The significant questions from the survey and their respective response have been mentioned in the Annexure. 35

CONCLUSION In India fast food market is strongly dominated by these 2 brands. But when it comes to comparing thesetwo brands the following study brings us to a conclusion that as far as market presence and brand valueis concerned McDonald's has definitely proved a point for themselves. But KFC who reentered in 2003has shown a rapid progress and no wonder if in the coming years KFC overtakesMcDonald’s in the Indian market share. Both the food-giants have given each other immense competition in of customer satisfaction and promotional strategies. The range of products and offers offered by each isremarkable in every context. Although McDonalds has an upper hand with the vegetarian crowd becauseof its exclusive products, KFC is slowly catching up to the challenge. KFC provides vegetarianalternatives with an added advantage of a complete meal including rice and desert. Where McDonaldsfall into the snack option KFC had covered the meal area. Thus it is not quite evident which one can betermed as better than the other.

RECOMMENDATIONS

•KFC needs to re-vamp its vegetarian menu and add more options to it. The fried chickencategory already has more options and varieties as compared to the vegetarian section.

•McDonalds could try to enter the meals category into its menu

•Both companies need to work on their logistics and inventory management (as discussed withBranch managers)

•Need to train their staff better in handling of the cooked food

36

37

38

39

40