Analysis

* 1997 lost 111 million in net income due to divesture (pg 149)

o 1997 38% company own  2004 23% company own long term target to reduce company own

* 2003 NI = 585million sales = 8.3 billion ROS 7% (pg 149)

* Fast food industry  NRA  increase 4.3% to 408 b in 2003 858,000 rest made us rest industry 12 million

* Late 1990's early 2000  consumer spending increased  trend towards sit down restaurant (better service, more comfortable dining experience (pg 149)

* 8 major segments made up fast food: sandwich chains, pizza chains, family restaurants, grill buffet, dinner houses, chicken chains, non dinner concepts & other chains (149)

* Sandwich chains struggling due to discounted price (150)

* Threat of obesity & demand for better service  demand for healthier products (150) lowered demand for hamburgers fries and soft drinks combinations

* As a result  per store sales declined in Hardee's carl's jr. McDonalds & Jack in the box however, Quiznos, taco bell schlotsk's subway & wendy's increase  made more healthy food items

* Industry  going to healthy crazy with Mcdonald's Premium salads / Burger king's low fat grilled chicken sandwiches. 150

* Increased growth among dinner houses (applebee's Red Lobster, Outback steakhouse,  increased in-direct competition of chicken chains & grilled buffet chains (150)

* KFC dominated chicken segment Sales 3.8 b in 2002 & estimated sales of 5 billion on 2003 (150) look at exhibit 3

* Competitors Chick-fil-A / Popeyes / Church's

* Boston Market  major threat (upscale deli offering healthy, "homestyle chicken -Roasted) (150)

* Segment Sales fell in 2003 from 64% in 1993 to 51% in 2003 (ChickfillA & boston market combined market share by 11% 150)

* Distinguish from more traditional fast food refuse building drive thrus & established most units outside of shopping malls rather than major city intersections (151)

* Despite market share gains by Boston & Chikcfilla KFC customer base remained loyal due to KFC's unique taste (153)

* Maturation of US fast food industry increased intensity of competition within chicken segment (153) Resulted in competitors focusing on new product introduction & intense marketing campaigns

* Chains attempted to differentiate themselves based on unique product KFC used animated images of Colonel drive home its home-style image 153

* New product introduction popcorn chicken, honey bbq & spicy bbq wings  heritage design Cajun style murals balcony over drive-thru (153)

* Demographic & societal trends influenced demand for food eaten outside of the home (rising incomes, higher divorce rates, people married later in life. More than 50% of women worked outside of home dramatic incrase since 1970. Double household income contribution. Less time to prepare meals more spending power  more need to eat out. 153

* Slow growth populations rate in US along with overpopulation of fast food chains.  intensified competition (154)

* Baby boomers 35 to 50 yrs largest consumer group largest consumer group for fast food 51 to 64 second largest group  as consumer age they become less eager to go to fast food rest. 154

* Ethnic food rising in pop US immigrants 13% of US population in early 2004 looked for native food stores 154

* Labor cost made 30% of total cost second to food & bev.  less younger people short pool of empoloyees  high turnover rates  forced to hire lower quality workers (154)

* Turned to better training program & mentoring systems paired new employees with more experienced ones to combat high turn over 154

* Intense competition in mature rest. industry difficult to increase price  hard to combat increase in cost due to pension plans & healthcare 154

* Technology used to lower cost & improve efficiencies ( computers were used to improve labor scheduling, accounting, payroll, sales analysis & inventory control  resduced serving time & cashier accuracy 154

* Higher cost & poor availability of prime real estate another trend that negatively affected profitability 154

* US market mature more rest turned to international markets 155

* YUM! Brand became world's largest rest chain in 2003 21,000 stores in US close to 33,000 in non US

* KFC had a hard time breaking into german market in 1970 & 1980 germens not accustomed to buying take out or ordering food over the counter 155

* KFC more success in Asia & latin America  where chicken was traditional dish 155

* International expansion  risk harderd to control quality as physical distance from HQ

* Time, cultural & language difference incrased communication & operational problems. 155

* Internet was breaking down communication & language barriers 155

* Many of KFC's problems during 1980 & 1990s were limited menu & inability to quickly bring new products to market 155