Since the reform and opening up, China's beverage market, especially the soft drink market, has continued to grow and prosper. At the same time, competition has become increasingly fierce. Now I will explain to you how KFC operates, I hope it can help you. KFC's business method

KFC uses "franchising" as an effective way to expand its business around the world. In 1993, it began to try to franchise in China. After a period of silence, since 2000, KFC's franchising in China only takes the form of "not starting from scratch". "Franchising" is a representative strategy for the success of KFC's first brand strategy and has "Chinese characteristics".

1. What is it? Not starting from scratch?

The so-called "not starting from scratch" means: KFC transfers a mature and profitable restaurant to franchisees. Franchisees do not need to carry out a lot of heavy preliminary preparations such as selecting locations, opening stores, recruiting and training employees, etc. These are all ready-made. "Among them, location selection is often the key to success, and KFC has already done it for you." This is the best way for KFC to carry out franchising in the Chinese market at this stage," said Yum China, which owns well-known brands such as KFC and Pizza Hut. Su Jingshi, President of the Greater China Region of the Catering Group, said, "By handing over a profitable KFC restaurant to franchisees, the franchisees' business risks are greatly reduced, and they can succeed just by maintaining it." ?

What KFC refers to as the "current Chinese market" is: on the one hand, some Chinese companies are forming a certain economic scale and complete management systems, and chain operations are developing rapidly and gradually becoming standardized; On the one hand, due to the development of multiple economic factors, fragmentation is a major feature. Our country has yet to formulate such special regulations based on regional business characteristics. There is only a trial "Commercial Franchise Management Measures" with simple terms and cannot bear the responsibility of regulating regional economic cooperation, commercial asset operations and business brought about by franchising. functions of capital expansion and other issues.

Under such circumstances, KFC’s caution is justified. Since KFC disclosed the application conditions for franchising in the Chinese market in 1998, KFC China headquarters has received hundreds of phone inquiries and letters requesting to join almost every day. However, KFC has very strict review requirements for franchisees. In addition to having US$1 million or RMB 8 million for franchise, store decoration, equipment introduction, etc., you must also have background and practical experience in operating the catering industry, service industry, and tourism industry. Considering that the competition in the catering industry in big cities is already very fierce, the restaurants that KFC can transfer are basically distributed in small cities with high consumption levels.

Since China's first "not from scratch" KFC franchise store was authorized and transferred in Liyang, Changzhou in August 2000, 11 such restaurants have been authorized to join in January 2004. Currently, among the 1,000 KFC stores in China, 95% of the restaurants are directly operated and 5% are franchise stores.

2. "Not starting from scratch" franchise content

Financial aspects:

First of all, a franchise fee of US$37,600 must be paid at the beginning of a franchise store The initial operating fee is a one-time fee and will be adjusted based on the U.S. price index that year. At the same time, each franchisee must pay this fee when developing a new store.

Second, the transfer fee for each restaurant is more than RMB 8 million. The business area of ??KFC restaurants ranges from 350 to 400 square meters. The 8 million yuan is the reference price for purchasing a KFC restaurant based on some comprehensive indexes. The actual transfer fee will depend on the sales and profit status of the target restaurant. After the franchisee pays this fee, he can take over an operating KFC restaurant, including all decorations, equipment and facilities in the restaurant, and trained restaurant staff, as well as the cash flow and profits generated during the operation in the future. However, property rental costs are not included.

Third, continuing operating expenses include franchise royalties accounting for 6% of sales and advertising sharing expenses accounting for 5% of sales. These rates and fees are established on a current basis and will remain unchanged for ten years after the franchise contract is signed.

Location: At present, certain franchise opportunities are provided mainly in small and medium-sized cities in China, where the non-agricultural population is greater than 150,000 and less than 400,000, and the annual per capita consumption is greater than RMB 6,000, where KFC restaurants have opened. Now KFC is not allowed to use its own stores to open new stores, but only transfers KFC restaurants that are already in operation.

Time: The time from initial application to store transfer is about 6 months; the first term of the franchise agreement is at least 10 years, and future franchisees must voluntarily engage in KFC franchise operations for more than 10 years, preferably It's 20 years.

Training: Training is a must when joining KFC. Successful candidates will be required to participate in an extensive 12-week training program before operating a restaurant. The 12-week restaurant training enables franchisees to Courses such as shift management and restaurant leadership that you need to effectively master the knowledge needed to run a successful restaurant also include learning about various workstations such as burger workstations and French fries workstations. After the franchisee takes over the restaurant, he or she must arrange a 5-6 month internship in restaurant management. During the training process, future franchisees will bear their own expenses (transportation costs, living expenses).

It can be seen that behind the strict regulations of franchising is the mutual interest relationship between KFC headquarters and franchise stores. KFC's success depends on the success of each franchisee. The franchisor must give sufficient support to the franchisees. Only when each franchisee makes a profit can the entire franchise system become stronger. On the one hand, these training courses improve the candidates' work ability and cultivate suitable management talents for KFC; on the other hand, they enable the candidates to identify with KFC's corporate culture and have a strong service concept, thereby achieving the best results for KFC headquarters and franchise stores. Grow together.

3. Win-win is the final result

As an advanced business model, franchising does have its advantages. For franchisees, a mature profit model can be obtained immediately, thereby greatly reducing investment risks. In addition to using the franchisor's trademark and trade name, the franchisee can also make use of the successful branch management models and methods that have been verified by the headquarters, and receive all-round guidance and support from the headquarters. The brand, trade name and products of the headquarters provide a basic guarantee for the franchise store business; the unified distribution system of the headquarters makes the product cost highly competitive; you can share the resources of the headquarters with the headquarters in advertising and publicity; join a good franchise The system also gives itself a bargaining chip in negotiations on procurement, financing and other aspects. Therefore, some people regard franchising as the most convenient investment method for entrepreneurs. It is like "standing on the shoulders of giants and picking peaches", which can quickly realize the dream of becoming a boss.

As a franchise owner, you will also get benefits from attracting investors to join: a one-time franchise fee paid by the franchisee to the franchisor when joining; a franchise fee extracted from the franchise store's turnover according to a certain proportion or quota. Royalty fees; profits from selling its own products (equipment) to franchisees; fees charged for distribution and training to franchised stores. There is another very important benefit: you can expand your brand and market without investing your own money, thereby suppressing competitors.

For every store transferred, KFC will receive an initial franchise fee of US$37,600, a one-time transfer fee of RMB 8 million, and annual franchise royalties accounting for 6% of sales. Advertising expenses accounted for 5% of sales, and all transferred stores were mostly in C-category cities. Such cities have relative development potential and less competitive pressure, which is conducive to investors obtaining good returns. At the same time, this also provides KFC with Reduce management costs and operating risks. The funds obtained from the transfer can continue to open stores, which is a risk-free and high-speed expansion path for KFC.

For the franchisee, by joining KFC, you can master advanced business management through training. Managing KFC yourself often requires more care than hiring a professional manager. After the transfer of the store, the income will be There will be more than before, which is why KFC has to be personally managed by Xu, and this also saves KFC a lot of management costs. The franchisee stands on the shoulders of KFC and can also bring considerable profits to himself through his own hard work.

This new franchising method is called "Chinese characteristics" by KFC. Its essence, that is, behind the strict regulations of franchising, is the identical interest relationship between KFC headquarters and franchise stores. KFC's success depends on the success of its franchisees. Compared with some domestic chain store owners who only charge franchise fees and have no management or training for investors, KFC's strong brand awareness is another guarantee of its success.

Among the hundreds of franchise brands in China, KFC's "not starting from scratch" franchise is probably the most stable and has the best overall effect. This approach ensures the win-win situation that KFC has been pursuing - investors make money with almost no risk, and KFC expands its brand's market share with no risk. KFC's cultural concept

Globalization concept when entering the Chinese market

First of all, during the entry period, the main strategy is to introduce a new Western-style fast food service system and catering concept.

1. With its new chain operation model with unified logo, unified clothing, and unified distribution methods, and ultimately relying on its high-quality products, fast and friendly services, and clean and sanitary catering environment, it has established its presence in the Chinese market status.

2. We have always insisted on localizing 100 employees and continuously invested money and manpower in various aspects and levels of training. From restaurant waiters, restaurant managers to managers of company functional departments, the company arranges scientific and rigorous training plans according to the nature of their work. In order to enable management employees to reach professional fast food operation and management standards, KFC has also established a professional training base and education development center suitable for restaurant management.

3. KFC’s speed-oriented fast food industry enterprise spirit makes it pay special attention to teamwork and rely on the high efficiency achieved by teamwork to ensure correct and rapid service during peak business hours. It has formed an efficient, flexible, complete and advanced management incentive mechanism. Its teamwork spirit and excellent management level are the secret of KFC's foothold in the market.

4. Excellent service. At KFC, you will get more service than you originally expected. KFC's purpose is to put customers first, and it is this purpose that makes every customer, whether an adult or a child, feel at home.

In the mature stage, a strategy of combining Chinese and Western was formulated

1. KFC hired more than 10 domestic experts and scholars as consultants to improve and develop fast food that suits the needs of Chinese people variety. KFC has always focused on fried chicken, cole slaw, and mashed potatoes as its main products. However, as Chinese people's dietary tastes continue to change, having too many varieties is detrimental to its development prospects. In order to cater to the tastes of Chinese people, the United States has successively launched KFC spicy chicken wings, chicken leg burgers, hibiscus fresh vegetable soup and other varieties that are very popular among the Chinese people. This is a great blow to KFC, an old store that always pays attention to tradition and standardization. Said this is an unprecedented change.

2. KFC has specially established the China Health Food Advisory Committee to research and develop new food and beverage products suitable for the tastes of the new generation of Chinese consumers to further expand the market.

The establishment of franchise mode

Like operations in other regions, franchising played an important role in the expansion of KFC. The so-called franchise refers to the right to use patents, trademarks, product formulas or any other valuable methods obtained by the franchisee paying a certain transfer fee to the transferor. The transferor does not control strategic and production decisions, nor participate in the franchise operation. profit distribution.

The business method used by KFC is exactly this franchise method. KFC provides brand, management and training as well as a centralized and unified raw material and service system, and the partners use unified brands and services to operate. , and finally both parties share business interests as agreed. Because China had not yet opened up to the outside world at that time, the political risks of KFC's development in China were relatively high, and China's cultural separation was serious. Therefore, franchising became KFC's preferred business method to enter the Chinese market. Another benefit of franchising is that KFC can ensure stable income with little investment, which will leverage existing operating conditions. This is an attractive option where franchisees can easily avoid deviations from KFC's operating procedures. It is precisely because of the correct market strategy for entering China that KFC has flourished all over China since it was introduced to China from the United States in 1986.

Not starting from scratch

The so-called "not starting from scratch" means: KFC transfers a mature and profitable restaurant to franchisees. Franchisees do not need to carry out a lot of heavy preliminary preparations such as selecting locations, opening stores, recruiting and training employees, etc. These are all ready-made. "Among them, location selection is often the key to success, and KFC has already done it for you." This is the best way for KFC to carry out franchising in the Chinese market at this stage, handing over a profitable KFC restaurant to franchisees. The business risk of franchisees is greatly reduced, and success can be achieved by maintaining the franchise alone. ?

Since KFC disclosed the application conditions for franchising in the Chinese market in 1998, KFC China Headquarters has received hundreds of phone inquiries and letters requesting to join almost every day, but KFC has no requirements for franchisees. The review requirements are very strict. In addition to having 1 million U.S. dollars or 8 million yuan for franchise, store decoration, equipment introduction and other expenses, franchisees must also have background and practical experience in operating catering, service and tourism industries. Considering that the competition in the catering industry in big cities is already very fierce, the restaurants that KFC can transfer are basically distributed in small cities with high consumption levels. Since the first "not from scratch" KFC franchise store in China was authorized and transferred in Liyang, Changzhou in August 2000, 11 such restaurants have been authorized to join in January 2004. Currently, among the 1,000 KFC stores in China, 95% of the restaurants are directly operated and 5% are franchise stores.