KFC spreads its wings
Yum! Restaurants International continues to expand KFC's African footprint. Africa Outlook talks to Bruce Layzell, KFC General Manager New African Markets, about the firm's growth across the continent and particularly in Nigeria.
Writer Ian Armitage
Project manager Eleanor Watson
Africa is undoubtedly one of the fastest growing regions globally and an increasingly attractive investment option, with the latest McKinsey Report suggesting consumer-facing industries in Africa are expected to grow by more than $400 billion by 2020.
The Economist Intelligence Unit meanwhile predicts that by 2030' Africa's top 18 cities could have a combined spending power of $1.3 trillion.
The short-term outlook for the region remains broadly positive, and growth is projected at 5.25 percent a year in 2012–13. One of the main drivers is the increasing pace of urbanisation and consumerisation.
"Africa is undoubtedly one of the fastest growing regions globally and KFC is fully committed to harnessing this opportunity and building a sustainable business model on the continent," says Bruce Layzell, KFC General Manager New African Markets.
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 itself in the Democratic Republic of Congo, Ethiopia and Senegal.
"In Nigeria, our business has been primarily focused on Lagos as we seek to set up a world class system to ensure we can grow sustainably," Layzell says. "We are now in a position to focus more aggressively on other regions. We are enjoying seeing an expanding eating out culture and seeing the competitive landscape widen. This will no doubt start to bring economies of scale to suppliers, encourage more and better property development and generally stimulate the consumer environment whilst helping with business fundamentals.
"Yum! Africa has the vision to be the defining restaurant company on the continent and our efforts in 2013 will be to establish a firm foundation on which we can grow further.
"KFC has 16 outlets in Nigeria with significant plans to increase this."
According to some reports Yum! is targeting 300 KFC restaurants by 2020. Mr Layzell warns that taking a blanket approach doesn't work.
"Our KFC restaurants in each market differ - our aim is to make our brand relevant in a local context. We won't cut and paste a South African KFC into Nigeria or Zambia," he says. "There are two factors when looking at market potential – the first is 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."
In Nigeria, KFC is planning to launch a seafood range. "KFC customers around the world enjoy a varied menu obviously coupled with some key brand defining elements like our Original Recipe ™ chicken. Our outstanding Fish Zinger ™ burgers and Zinger Shrimps ™ are a way of bringing diversity to our menu but with a familiar meat block that we know Nigerians love," Layzell says. "Nigerians are very much part of the global village and they demand world class products, world class service and world class experiences. At KFC we strive to deliver on this need and we are uncompromising to ensure, through our products, customers' and restaurants demands are met. Our global reach allows us to tap into the very frontline of product development and consumer trends and we know that success here will hinge on us ensuring that Nigerians get to experience these things sooner rather than later."
As well as KFC is performing in Nigeria, Layzell knows more could be done.
"Our Nigerian store openings 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. It goes back to our initial marketing and branding principles and building the brand from scratch but on the shoulders of the global giant and implementing lessons learnt from around the world. 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."
Already, despite only entering the country in 2010, KFC has made a valuable contribution to the Nigerian economy.
All of its chicken is Nigerian farmed and processed and it has helped improve local standards.
Importantly, it has increased consumer choice.
"100 percent of our chicken in Nigeria is Nigerian farmed and processed. We have worked with some outstanding partners to upgrade facilities and standards to meet the exact requirements that our brand demands," says Layzell. "We want to be seen as a Nigerian company that contributes to the Nigerian economy and people on a number of levels. As such, we will always try to localise production where we can source the right quality at the right price. The ultimate goal would be to get Nigerian suppliers to the level of capacity that would allow them to export to other countries.
"We apply the same global standards regardless of where in the world we operate. We thus hold our Nigeria suppliers to these high standards. This has required many to invest significant amounts in upgrading facilities and support systems. We have really enjoyed how our suppliers have embraced our standards and systems and many have seen our entry as a catalyst to help them achieve world class standards.
"I think our entry has raised the bar in a number of areas and most of our competitors have responded positively. This is ultimately giving the Nigerian consumers a better experience of our sector as a whole, enabling us to grow the sector resulting in a win-win situation for the parties concerned. It is interesting to see the increasing number of international brands entering the market and I'd like to think it is because we have shown others that it can be done."
Nigeria isn't a country without problems however and investors should take note of the challenges of operating there. "Obviously the power supply challenges would interrupt our daily productivity – this is why we have invested in generators etc," Layzell says. "These added overhead costs make the business model challenging and thus pushes up the price of our products. Congestion makes deliveries challenging but we need to think outside the box for solutions – after hour deliveries are an example of this. The cost of real estate, challenges in tracking down property owners and the myriad of planning permissions required for each store means that we can't build as quickly as we would like. However, we face these challenges in many parts of the world and the key is to improve the things which are in our control and look to mitigate the effect of things which are not."
All things considered, he is excited by the future.
"Every day there is a new report on the opportunity that Africa presents, most showing the usual numbers of GDP growth, rising middle class, and improving political stability. However, the challenge for all businesses looking at Africa is how to turn this potential into profit. Businesses on the continent still face many challenges and all of the growth talked about in the reports mentioned earlier is yet to flow through into the majority of consumers. We are absolutely positive about our growth potential in Africa though understanding that overall success will not be achieved overnight. It will take time and significant effort, though we celebrate having gotten it right in the initial stages of setting up shop in Nigeria.
"We are most positive about our future as a brand in Nigeria."
What does Layzell believe is the secret to the firm's Nigerian success? "Like any business it is about delivering the right product at the right price in the right location and delivering an exceptional customer experience simultaneously," he says. "Nigerians demand world class service and we're going to give it to them."
To learn more visit www.kfc.co.za.