With the latest McKinsey Report suggesting consumer-facing industries in Africa are expected to grow by more than $400 billion by 2020 many businesses are taking the first steps towards establishing themselves on the continent or, if already in Africa, to build sustainable business models and expand their footprints.
KFC is one such business and its African expansion has been well documented – we've featured it a few times over the last couple of years (within this magazine and in our previous carnation as South Africa Magazine).
The global fast food giant is not new to Africa. Its South African business has been open for more than 40 years.
"Africa is undoubtedly one of the fastest growing regions globally and KFC is fully committed to harnessing this opportunity and building a sustainable business on the continent," says Bruce Layzell, KFC General Manager New African Markets. "African consumers are coming to expect world class offerings and why shouldn't they?"
One of the main drivers of Africa's growth is the increasing pace of urbanisation and consumerisation
By the end of 2012, KFC had 63 new African restaurants, with operations in Angola, Nigeria, Namibia, Botswana, Mozambique, Lesotho, Malawi, Swaziland, Ghana, Kenya and Zambia.
The 63 figure excludes South Africa, Egypt, Morocco and Mauritius, which if included, would mean there are almost 900 KFC restaurants on the continent. KFC has plans to extend its reach to Zimbabwe, Tanzania and Uganda in 2013, with much longer-term growth plans to establish a presence in any African market that "shows a significant economic promise".
"Our recent opening in Dar es Salaam shows the great lengths we go to to ensure that our customer experience will be world class and indeed exceed that of many developed markets."
KFC's African expansion has been impressive. But Layzell cautions that taking a blanket approach to conducting business on the continent does not work.
"Although we are undoubtedly a global brand when we go into these new African markets the reality is that very few people know who we are.
"Too often, the numerous countries in Africa are painted with the same broad brushstroke. The truth is Africa is made up of 53 countries that vary dramatically in cultural, socio-economic and political make-up.
"Our KFC restaurants do differ in each market as our aim is to make our brand relevant in a local context - we don't cut and paste a South African KFC into Nigeria or Zambia. I believe there are two factors when looking at market potential. The first in how we do business, call it our internal ambit of control. The second is the external environment - political stability, economic growth, infrastructure investment etc. If these two factors play positively together then we are very bullish about our growth potential."
One of the big things KFC does is adjust the menu for specific countries.
"We certainly do that, yes," says Layzell. "Of course our core products – for example the KFC Original Recipe® chicken – are standard in all of our restaurants but we'll make slight changes to the menu. It depends where you are. In Nigeria for example they eat jollof rice and so we have included that on the menu. We do however try to put a KFC spin on it so that it becomes unique to our brand. It essential to balance the local execution of a global brand."
Layzell says while Africa is undoubtedly full of potential, there are also big challenges. If businesses aren't prepared for that, they'll fail.
"Africa is full of challenges, ranging from the political and economic, to the societal and practical. Some challenges are harder to address than others – consider the power problem: not something that'll be solved overnight or necessarily something we can control. We can put in local generation and use equipment that uses less power, but we can't do much more. Some of Africa's challenges you can control but others you can't. I think we have been successful in solving the challenges within our control and finding ways of mitigating the factors we can't, even the power issues."
Typical challenges such as power shortages, quality building materials and potable water have not dampened KFC's appetite for investing in Africa. Nor has it dampened supplier appetites.
"Our suppliers are growing with us," says Layzell. "We do a lot of work with them, bringing them up to standard. It's not always easy and you can imagine the interesting conversations we have with suppliers – 'you need to improve your quality and spend money on your plant but we can't offer you guarantees for work, or we only have three or four outlets in that country.' It's a challenge but what it's really about is painting our vision of where we want to go as a brand and then finding suppliers who are willing to partner with us on that journey. It is upfront investment that might not be paid off in the short term but the point is to get in early, lay down the right standards and build the relationship. As an example we have some South African companies that have supplied us for much of the 40 years we have been in that country. We allow them to grow their business with us. We also know our global standards are exceptional and will help them in getting other business. Indeed, when other businesses enter Africa - other food service businesses – our suppliers have a foundation of the right quality they can supply to the industry, to hotels, to supermarkets. It is about painting the picture, finding the suppliers who believe in what we have to offer and creating the vision to become world class. And we have found some fantastic partners, people willing to invest in their business and do the training."
As well as KFC is performing in Africa, Layzell knows more could be done.
"Our Nigerian store openings, for example, have been some of the best in the world," he says. "However, we know that most Nigerians do not know our brand or the heritage of Colonel Saunders, so it goes back to fundamental marketing and branding principles and building the brand from scratch. We strongly believe in applying lessons learnt in the 120 countries we already operate from and shamelessly stand on the shoulders of the global giants. Globally, Yum! has a majority of franchised outlets and it is this approach we are currently implementing in Africa. It allows us to marry the process and discipline of our brand systems with in-market experience and knowledge.
"I'm not going to tell you I'm going to build X number of stores by Y year," he adds. "That is meaningless. We've said we want to build a sustainable business as fast as we can. That means we have to make sure every restaurant that goes into the ground is economically viable and can sustain itself, that we can get enough supply into that market, and build new restaurants. From our point of view we will build each market as fast as we can. But that is dependent on a number of factors – the availability of supply, real estate, and the people to work in the stores amongst others."
The secret to KFC's African success?
"Number one is our product," says Layzell. "You just have to travel across Africa and you see that people eat chicken. We have the right product and we believe what we add to it in terms of our unique recipe. It is that which gives us the edge over the competition. Also, the world class quality assurance process that we put behind our business plays a major role – every piece of chicken, tomato and bun, which comes out of our store, has gone through the rigorous quality assurance process that the same product coming out of the U.S., the UK or Australia goes through. And as I said, the huge advantage we have is that we are part of a huge organisation in Yum! We have 38,000 restaurants around the world and have been in existence for 50 years. All of that system knowledge, all the markets we have opened before, and the way we have opened them, is tapped into to allow us to open new markets today effectively and efficiently. We have a lot of intellectual property around the right way to do things and in Africa that is the way you have to be – Africa is no different to any other market. To treat Africa differently is suicide: it's the fundamentals of marketing, the right product, in the right place, at the right price, and underline it with the promotion and awesome people to serve it.
"We're excited by the future and if you have a look at any of the countless research coming out it is all saying there is a growing middle class and more disposable income and aligned with that is stabilising democracies and economies - the kinds of things that business is excited about," Layzell concludes.
To learn more visit www.kfc.co.za.
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