KFC’s African expansion an opportunity for farmers

  

The growth of Africa’s fast-food industry is opening up opportunities for farmers.

A KFC outlet in Ibadan, Nigeria.

A KFC outlet in Ibadan, Nigeria.

In some places in Africa, fast-food giant Kentucky Fried Chicken (KFC) doesn’t serve lettuce on its burgers. This is not to save on costs or due to a difference in local tastes, but rather because there are no local lettuce producers who can supply the quantities and quality required by KFC.

“In one or two of our geographies … we haven’t got suitable lettuce production, and as a result, our burgers don’t actually have lettuce on them,” Keith Warren, managing director of KFC Africa told How we made it in Africa in an exclusive interview. “That is a short-term problem, and it is not something we want to entertain at all because burgers don’t taste as good without lettuce … We are working very hard and closely with the local farmers to get them to produce lettuce at the quality and the standard that we need to put on our burgers.”

Yum Brands!, the US-based owner of KFC, has embarked on an aggressive African expansion strategy. The company has been operating in southern Africa since the 1970s, but has over the last few years started to grow its footprint further north. In 2012 KFC plans to open new outlets in Angola, Malawi, Tanzania, Uganda, Zimbabwe, the Democratic Republic of Congo and Madagascar. The company already has a presence in Nigeria, Ghana and Kenya, among other countries.

Opportunities for farmers to supply KFC

According to Warren, there is a huge appetite for KFC among African consumers, but in many cases growth is being held back by inadequate farming capacity to supply the company with chickens and vegetables. He used the example of Nigeria, a country where KFC aims to have 300 outlets by 2020: “The only limiting factor we’ve got in Nigeria right now is actually chicken supply, and finding suppliers who are able to meet our global quality standards in sufficient quantity. The commercial chicken industry is horribly underdeveloped.”

Supplying a brand such as KFC with chickens and other products has the potential to be a lucrative business for farmers. Warren says that in South Africa, where the company has over 600 outlets, nearly 8% to 10% of the commercial chickens produced are sold through KFC.

He notes that there are numerous opportunities for farmers and entrepreneurs to partner with KFC. “In fact, a part of our issue is finding partners who want to partner with us. It has been challenging, but is now beginning to get some serious momentum.”

When KFC entered the Nigerian market, the company had difficulty in persuading farmers to become its suppliers. “When we first went into Nigeria, it took a lot of convincing to get one of the chicken farmers to partner, because of the amount of investment [he] needed to make to achieve our quality standards. The other chicken producers weren’t particularly interested. But once they saw the success we were achieving with that one farmer, they then went and said, ‘We better get on board’. And now we have four chicken producers in Nigeria, all certified and accredited, and achieving our standards …”

According to Warren, it is KFC’s ambition to have local suppliers in each of the African countries where it operates. In areas such as Nigeria and East Africa, KFC had to develop its supply chains from scratch. However in Ghana, the company currently uses imported chicken, but Warren says the plan is to start with local production. “Why would you want to be paying the cost of … shipping products, when you can actually source it locally? Most of Africa is blessed with enormous agricultural wealth, so therefore it is a matter of unlocking that and developing the technology to meet our supply demands.”

Yum! is certainly not the only restaurant group presenting opportunities for African farmers. For example, just during the last three months of 2011, South African fast-food and restaurant franchisor Famous Brands has opened 18 new outlets in the rest of the continent. This is in addition to numerous other restaurants and hotel groups looking to take advantage of Africa’s growing middle-class.




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