KFC Problems Faced in India Case

KENTUCKY FRIED CHICKEN (KFC) IN INDIA.
BACKGROUND OF (KFC):-
KFC was founded by Harland Sanders (Sanders) in the early 1930s, when he started cooking and
serving food for hungry travellers who stopped by his service station in Corbin, Kentucky, US.
He did not own a restaurant then, but served people on his own dining table in the living quarters of
his service station. His chicken delicacies became popular and people started coming just for food.
Kentucky Fried Chicken was born. Soon, Sanders moved across the street to a motel-cum-
restaurant, later named 'Sanders Court & Cafe,’ that seated around 142 people.
Over the next nine years, he perfected his secret blend of 11 herbs and spices and the basic cooking
technique of chicken. Sanders' fame grew and he was given the title Kentucky Colonel by the state
Governor in 1935 for his contribution to the state's cuisine.
Sanders' restaurant business witnessed an unexpected halt in the early 1950s, when a new interstate
highway was planned bypassing the town of Corbin. His restaurant flourished mainly due to the
patronage of highway travellers.
The new development meant the end of this. Sanders sold his restaurant operations. After settling all
his bills, he was reduced to living on a meagre $105 social security cheque. But Sanders did not
lose hope. Banking on the popularity of his product and confident of his unique recipe for fried
chicken, Sanders started franchising his chicken business in 1952. He called it Kentucky Fried
Chicken. He travelled the length and breadth of the country by car, visiting as many restaurants as
possible and cooking batches of chicken. If the restaurant owners liked his chicken, he entered into
a handshake agreement that stipulated payment of a nickel9 for each plate of chicken sold by the
restaurant. By 1964, Sanders franchised more than 600 chicken outlets in the US and Canada.
KFC IN INDIA:-
Foreign fast food companies were allowed to enter India during the early 1990s, thanks to the
economic liberalization policy of the Government of India (GoI). One of the first fast food
multinationals to set foot in India was Kentucky Fried Chicken (KFC), owned by PepsiCo.
KFC received permission to open 30 new outlets across the country. It chose Bangalore as its
launch pad because the city had a substantial upper middle class population, with a trend of families
eating out. Also, it was considered India’s fast growing metropolis in the 1990 .
The Bangalore outlet was opened in June 1995. Apart from Bangalore, PepsiCo planned to open 60
KFC and Pizza Hut outlets in the country over the next seven years. However, KFC became
embroiled in various controversies even before it started full-fledged business in India.
PROBLEMS FACED BY KFC IN INDIA:-

The case highlights the ethical issues involved in Kentucky Fried Chicken's (KFC) business
operations in India. KFC entered India in 1995 and has been in midst of controversies since then.
The regulatory authorities found that KFC's chickens did not adhere to the Prevention of Food
Adulteration Act, 1954. Chickens contained nearly three times more monosodium glutamate
(popularly known as MSG, a flavor enhancing ingredient) as allowed by the Act. Since the late
1990s, KFC faced severe protests by People for Ethical Treatment of Animals (PETA), an animal
rights protection organization. PETA accused KFC of cruelty towards chickens and released a video
tape showing the ill-treatment of birds in KFC's poultry farms.
However, undeterred by the protests by PETA and other animal rights organizations, KFC planned a
massive expansion program in India.
RE-ENTRY OF KFC INTO INDIAN MARKET:-
A case in point is KFC. KFC entered India in 1995, but a controversy surrounding the levels of
MSG in its preparations and subsequent protests from farmers' groups and animal rights activists
spelt trouble for the company. Ultimately, the company had to shut all but one outlet in the country.
Only recently in 2003 it made a quiet re-entry into the Indian market. Then came up with the
strategies and menu that is desirable by the Indian consumers. And since 2003 it is expanding
successfully its business in India.
OUTCOME OF CASE STUDY OF KFC IN RESPECT OF SRC

(SELF REFERENCE CRITERION):-
KFC has not understood the significance of cultural, economic, regulatory and ecological issues
while establishing business in a country like india .
»KFC has not Appreciated the need for protecting animal rights in developed and developing
countries like India.
» They have not understood the importance of ethics in doing business.
»They have not examine the reasons for protests of PETA.
INTERVIEW OF TRANEE AT KFC,SEC.18,NOIDA:-

TRANEE’S NAME:- MR. DEBASHISH
• HE SAID THAT WHEN KFC ENTERED IN INDIA IN 1995 IT WAS NOT SUCCESSSFUL
BECAUSE THEY HAVE NOT ADDED THE FLAVOURES AND SPICES IN THE KFC MENU
WHICH INDIAN PEOPLE LIKE.
• THE MAIN REASON OF KFC FAILURE WAS THAT KFC WAS TARGETTING HIGHER
CLASS INCOME GROUP IN INDIA TO HAVE THE COMEPETITIVE ADVANTAGE WITH
THE LOCAL ‘ CHICKEN DHABA WALAS’.
• BUT DUE TO PROTEST OF INDIAN FARMERS AND GOVERNMENT PRESSURE IT HAD

TO LEAVE INDIA.
• BUT AGAIN IN 2003 IT CAME BACK INTO INDIA WITH THE STRATEGIES LIKE
TARGETTING HIGHER INCOME GROUP LEVEL.
• BUT AT THE SAME TIME PROVIDING MENU WHICH CAN BE AFFORDED BY THE
MIDDLE INCOME GROUP LEVEL LIKE KFC MINI BURGER AT RS.25 AND CAME UP
WITH MENU LIKE HOT CRISPY CHICKEN WHICH CONTAINS INDIAN SPICES WHICH
INDIAN PEOPLE LIKE.
• BUT NOW THEY ARE ADHERING THE RULES OF FOOD CORPORATION OF INDIA AND
PETA AND EXPANDING BUSINESS SUCCESSFULLY.

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KENTUCKY FRIED CHICKEN (KFC) IN INDIA.

PROBLEMS FACED BY KFC IN INDIA:-

OUTCOME OF CASE STUDY OF KFC IN RESPECT OF SRC

» They have not understood the importance of ethics in doing business.

»They have not examine the reasons for protests of PETA.

INTERVIEW OF TRANEE AT KFC,SEC.18,NOIDA:-

• BUT DUE TO PROTEST OF INDIAN FARMERS AND GOVERNMENT PRESSURE IT HAD

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