History of KFC

Harland Sanders was born in 1890 and raised on a farm outside Henryville, Indiana. His father died in 1895, and to make ends meet his mother took work at a canning plant. As the eldest child at the age of five, Sanders was left to care for his two siblings. In 1930, he took over a Shell filling station on U.S. Route 25 at the point it split into east and west spurs outside North Corbin, a small city on the edge of the Appalachian Mountains. In 1934, Sanders took over the lease of the Pure Oil filling station on the other side of the road, due to its greater visibility for motorists. He then began to sell fried chicken. To improve his skills, Sanders took an eight-week restaurant-management course at the Cornell University School of Hotel Administration. By 1936, his business had proved successful enough for him to be given the honorary title of Kentucky colonel by Governor Ruby Laffoon. In 1937, Sanders expanded his restaurant to 140 seats, and in 1940 purchased a motel across the street, the Sanders Court & Café. Sanders was dissatisfied with the 35 minutes it took to prepare his chicken in an iron frying pan, but he did not want to deep fry. Although a much faster process, in Sanders' opinion it produced dry and crusty chicken that was unevenly cooked. On the other hand, if he prepared the chicken in advance of an order, there was sometimes waste at the end of the day. Sanders bought one and modified it into a pressure fryer, which he then used to prepare chicken. The new method reduced production time to be comparable with deep frying, yet, in Sanders' opinion, retained the quality of pan-fried chicken. Although he never publicly revealed the recipe, he admitted to the use of salt and pepper, and claimed that the ingredients "stand on everybody's shelf". After being recommissioned as a Kentucky colonel in 1950 by Governor Lawrence Wetherby, Sanders began to dress the part, growing a goatee and wearing a black frock coat (later switching to a white suit), a string tie, and referring to himself as "Colonel". His associates went along with the title change, "jokingly at first and then in earnest", according to biographer Josh Ozersky. ==Early franchisees of KFC==

The Sanders Court & Café generally served travelers, so when the route planned in 1955 for Interstate 75 bypassed Corbin, Sanders sold his properties and traveled the US to market his chicken concept to restaurant owners. Independent restaurant owners would pay four cents on each chicken sold as a franchise fee (later increased to five cents), in exchange for Sanders' "secret blend of herbs and spices", his recipe and method, and the right to advertise using his name and likeness. In 1952, he had already successfully franchised his chicken recipe to Pete Harman of South Salt Lake, Utah, the operator of one of the most prominent restaurants in the city. Rodney L. Anderson, a sign painter from Roy, Utah who was hired by Harman, coined the name "Kentucky Fried Chicken". Sanders adopted the name because it distinguished his product from the deep-fried "Southern fried chicken" product found in restaurants. Harman claimed that in his first year of selling "Kentucky Fried Chicken", his restaurant sales more than tripled, with 75 percent of the increase coming from the sale of fried chicken. In Utah, a product from Kentucky was exotic and evoked imagery of Southern hospitality. Harman trademarked the phrase "It's finger lickin' good", which was eventually adopted as a slogan across the entire chain. Thomas developed the rotating red bucket sign, was an early advocate of the take-out concept that Harman had pioneered, and introduced a bookkeeping form that Sanders rolled out across the entire KFC chain. Thomas sold his shares in 1968 for US$1 million (around US$7 million in 2013), and became regional manager for all KFC restaurants east of the Mississippi before founding Wendy's in 1969. In 1956, Sanders moved the company headquarters from Corbin to Shelbyville, Kentucky, which offered superior transport links to distribute his spices, pressure cookers, take-out cartons and advertising material to franchisees. ==Sale by Sanders and rapid growth==

KFC popularized chicken in the fast food industry, diversifying the market by challenging the established dominance of the hamburger. In 1960, the company had around 200 franchised restaurants; by 1963, this had grown to over 600, making it the largest fast food operation in the United States. Sanders instead proposed the sale of the company, as he lacked an obvious or willing heir among his relatives. Lacking sufficient funds himself, Brown convinced the Tennessee financier Jack C. Massey to provide 60 percent of the acquisition capital, and provided a major contribution himself, with smaller contributions from franchise holder Pete Harman and company officials Lee Cummings and Harlan Adams. Sanders began to have doubts about selling the company, as some members of his family were against it. Massey, knowing that Sanders believed in astrology, chose a day when Sanders's horoscope would be unusually positive to make a written offer. After checking his horoscope, Sanders accepted. The group acquired the company in 1964 for US$2 million (around US$15 million in 2013). Massey and Brown introduced standardization to the fragmented company. The restaurants were re-branded with a distinctive red-and-white striped color pattern and mansard roofs with cupolas. The roll-out of freestanding stores accelerated the company's growth as outlets exclusively selling fried chicken proved to be more appealing to potential franchisees. He believed that the company had reneged on their contract with him when they opened operations in Canada, arguing that the contract had granted him the exclusive rights to operate there. KFC was forced to renegotiate with Sanders regarding the Canadian activities, as he owned $1.5 million worth of stock and was using it to prevent Massey from listing the company publicly until his points of issue were addressed. Brown and Massey claimed that Sanders only had the rights to process chicken in Canada. Meanwhile, KFC entered into ventures with other companies. Brown believed that the Colonel Sanders brand could be used to market anything, and launched the "Kentucky Roast Beef" restaurant chain, and "Colonel Sanders Inns" motels. The two ventures quickly failed. Massey resigned as chairman of the company in March 1970, and Brown took over his role. The chain had reached 3,000 outlets in 48 countries by 1970, but expansion was often chaotic and poorly executed. A member of KFC senior management described the international strategy as "throwing some mud against the map on the wall, and hoping some of it would stick." The first outlet in Japan was opened after just two weeks preparation, and it proved to be a costly failure, losing $400,000 during its opening month and wasting more chicken than it sold. ==Heublein and strained relations with Sanders; R. J. Reynolds==

Once too large for Sanders to manage, Kentucky Fried Chicken grew to overwhelm John Y. Brown as well. Brown personally gained around $35 million from the sale. Reuters opined that the takeover probably saved the company from disaster. Meanwhile, Church's Chicken had encroached on KFC's market share with its offer of indoor seating and its "Crispy Chicken" product. KFC introduced its own "Extra Crispy Chicken" in 1972. The introduction of barbecue spare ribs in 1973 caused "tremendous" operating problems. When management withdrew the product, they realized that fried chicken sales had been decreasing. He began to complain of the company's declining food quality to the media: ::::My God, that gravy is horrible! They buy tap water for 15–20 cents a thousand gallons and then they mix it with flour and starch and end up with pure wallpaper paste ... And another thing. That new crispy recipe is nothing in the world but a damn fried doughball stuck on some chicken. The outburst prompted a KFC franchisee in Bowling Green, Kentucky, to unsuccessfully attempt to sue Sanders for libel. In retaliation, Sanders attempted to sue Heublein for US$122 million (around US$570 million in 2013) over the alleged misuse of his image in promoting products he had not helped develop, and for hindering his ability to franchise restaurants. A Heublein spokesman described it as a "nuisance suit". Sanders continued to attack Heublein publicly, and in 1976 complained that the company "doesn't know what it's doing" and that it was "downright embarrassing" to have his image associated with their poor quality product. The 800 company-owned stores had become unprofitable by 1978. He was credited with saving the ailing company by instituting a back-to-basics formula. Miles also lured Sanders back, and listened to his recommendations for the business. By branding himself as "Colonel Sanders", Harland became a prominent figure of American cultural history, and his image remains widely used in KFC advertising. That year, General Cinema Corporation acquired 18 percent of Heublein, who, fearing a hostile takeover, approached R. J. Reynolds, the tobacco firm, to act as a white knight and acquire the company for $1.3 billion. That year, Michael Miles resigned as chairman of KFC to take the role of CEO at Kraft Foods, and Richard Mayer took over his role. Reynolds had to contend with the introduction of Chicken McNuggets across the McDonald's chain in 1983; KFC introduced its own brand of chicken nuggets, called "Kentucky Nuggets" in 1985. In 1984, Reynolds dedicated $168 million for capital expansion at KFC. ==Acquisition by PepsiCo==

In July 1986, Reynolds sold KFC to PepsiCo for a book value of $850 million (around US$1.8 billion in 2013). At the time, PepsiCo had interests in soft drinks and snacks, and also owned the restaurant chains Pizza Hut and Taco Bell. Reynolds divested KFC in order to pay off debt related to its recent purchase of Nabisco and to concentrate on its tobacco and packaged food business. It was anticipated that PepsiCo would bring their merchandising expertise to the company. KFC chairman Richard Mayer was of the opinion that Reynolds had treated their restaurants division as a "hobby". PepsiCo's acquisition was seen by some analysts as a means for the company to increase its soft drinks sales. The purchase of KFC by PepsiCo led to some fast food competitors switching from Pepsi to Coca-Cola. One of the first to switch was Wendy's, whose chairman, Robert Barney, stated, "[PepsiCo's] interests are now in conflict with Wendy's and we will not support a company that is trying to make our customers its customers." By 1998, the majority of KFC franchisees had agreed to stock PepsiCo soft drink products. In November 1987, KFC became the first Western restaurant chain in China, with an outlet in Beijing. In 1989, first quarter sales at KFC rose 30 percent to US$280 million. In July, president and CEO Richard Mayer left KFC in order to become the CEO at Kraft Foods, and was replaced by John Cranor III. International growth and franchisee disputes under John Cranor III In August 1989, Cranor proposed amendments to the existing 1976 contract for US franchisees: PepsiCo could take over weak franchises, existing restaurants would not be safeguarded against competition from new outlets, and PepsiCo would have the right to increase royalty fees. The contract proved controversial amongst franchisees, who countered with a lawsuit, and the issue was not resolved until 1996. PepsiCo was accused of behaving in an imperious manner towards franchisees, who it believed were holding back the firm's growth, while the franchisees believed they had been the backbone of the company during a succession of indifferent corporate owners. He invested an additional $50 million to refurbish outlets and $20 million on a new computer system to link outlet cash registers to the kitchen, drive-through window, manager's office and company headquarters. The change was advised by the Schechter Group brand consultancy agency. Research demonstrated that 80 percent of customers already associated the "KFC" initials with Kentucky Fried Chicken. Kyle Craig, president of KFC US, admitted the change was an attempt to distance the chain from the unhealthy connotations of "fried". In 1994, Milford Prewitt praised the "crafty and well-timed repositioning" in ''Nation's Restaurant News. On the other hand, a 2005 editorial in Advertising Age'' stated, "the chain's jettisoning of a venerable name—and distancing from the word fried—was ill-conceived and damaging. It made a clear brand fuzzy." The early 1990s saw successful major products launched throughout the chain, including spicy "Hot Wings" (launched in 1990), popcorn chicken (1992), and, outside the US, the "Zinger", a spicy chicken fillet burger (1993). In 1993, rotisserie style chicken, under the name "Colonel's Rotisserie Gold", was introduced at over 30 percent of US outlets. However, despite a $100 million investment in marketing, the product failed to gain sales traction. The launch of skinless chicken, designed to appeal to health-conscious customers, failed; customers disliked the unfamiliar texture, and the product resulted in increased overheads, which contributed to a 37 percent decline in operating profits in 1991. In June 1991, Singapore was chosen for the launch of the first-ever KFC breakfast menu. Products included chicken, omelettes and scrambled eggs, sold under the "Colonel's Country Breakfast" banner. By 1993, KFC in the Asia Pacific region accounted for 22 percent of all KFC sales. By 1993, KFC was the leading Western fast food chain in South Korea, China, Thailand, Malaysia and Indonesia, and was second to McDonald's in most other Asian markets, including Japan and Singapore. David Novak appointed President By 1994, KFC had a total of 9,407 outlets worldwide, including 5,149 outlets in the US, and over 100,000 employees. That year, the chain began to struggle after competitors such as McDonald's introduced value menu offerings. After a disappointing set of quarterly earnings, Cranor left the company in January 1994. In 1995, Novak introduced two successful new products— Crispy Strips (breaded strips of chicken) and the chicken pot pie— the chain's first major new product launches in almost two years. Meanwhile, less popular items, such as corn muffins, were removed from the menu. At the same time, Enrico scaled back the increasing competition between KFC and its sister companies, Taco Bell and Pizza Hut; Taco Bell had begun offering its own chicken products, and KFC had attacked Pizza Hut in its marketing. The 1976 contract was restored, including the 1.5 mile outlet exclusivity zone, while the parent company gained greater control over national advertising. As a result of his success at KFC North America, Novak became president and CEO of the entire KFC organization in 1996. ==Spin-off as Tricon (later Yum! Brands)==

in 2007 In August 1997, PepsiCo spun off its poorly performing restaurants division as a public company valued at US$4.5 billion (around US$6.5 billion in 2013). Although KFC had been doing well, Pizza Hut and Taco Bell had been under-performing. One PepsiCo executive admitted, "restaurants weren't our schtick". The new company, named Tricon Global Restaurants, had 30,000 outlets and annual sales of US$10 billion (around US$14 billion in 2013) at the time, making it second only to McDonald's in global sales. Since the turn of the 3rd millennium, fast food has been criticised for its animal welfare record, its links to obesity and its environmental impact. Eric Schlosser's book Fast Food Nation (2002) and Morgan Spurlock's film Super Size Me (2004) reflected these concerns. PETA have held thousands of demonstrations, sometimes in the home towns of KFC executives, and CEO David Novak was soaked in fake blood by a protester. KFC President Gregg Dedrick said PETA mischaracterized KFC as a poultry producer rather than a purchaser of chickens. In 2008, Yum! stated: "[As] a major purchaser of food products, [Yum!] has the opportunity and responsibility to influence the way animals supplied to us are treated. We take that responsibility very seriously, and we are monitoring our suppliers on an ongoing basis." Tricon was renamed Yum! Brands in May 2002. In that year, the chain had to contend with Burger King's launch of the Chicken Whopper, as well as fried chicken offerings from the Domino's and Papa John's pizza chains. Within three months, the Chicken Whopper became Burger King's most successful launch of all time, with sales of 50 million. KFC responded in March 2005 by adding a cheap, small chicken burger to the menu called the "Snacker". In international markets, KFC introduced the "Boxmaster", a meal-sized wrap in a box. KFC also began a makeover of the US brand image, bringing back the full "Kentucky Fried Chicken" name at some outlets and returning portraits of Colonel Sanders to prominence. In April 2010, the Double Down sandwich was launched. Criticised as an unhealthy product, it featured two pieces of fried chicken in lieu of a conventional bread bun. In September 2012, the Chicken Little sandwich returned in the US. In 2013, KFC opened a fast casual version, KFC Eleven, with a test location in Louisville on Bardstown Road. The sole KFC Eleven was closed in April 2015. By December 2013, there were 18,875 KFC outlets in 118 countries and territories around the world. KFC is the second largest restaurant chain in the world by sales after McDonald's. In April 2014, Yum! announced that first quarter KFC sales had risen by 11 percent in China, following a 15 percent fall in 2013. In July 2014, Chinese authorities closed down the Shanghai operations of the OSI Group, amidst allegations that it had supplied KFC with expired meat. Yum! immediately terminated its contract with the supplier, and stated that the revelation had led to a significant decline in sales. ==References==