Fast-food giant Kentucky Fried Chicken (KFC) last year entered the Kenyan market. Kuku Foods holds the KFC franchise in East Africa. How we made it in Africa’s Dinfin Mulupi chats with Gavin Bell, a veteran restaurateur and Kuku Foods general manager, about the market reaction to KFC and why we can expect other international fast-food brands to soon open shop in the region.[hidepost=9][/hidepost]
What inspired the decision to bring KFC to Kenya?
We had been looking at Kenya as a potential location for a number of global franchises and KFC seemed to be the obvious choice in terms of the provision of the quality products that it offers, predominantly from the chicken perspective, given that chicken is a popular luxury here in Kenya. We have three branches in Kenya and we are in the process of building in Tanzania and Uganda, with at least one store in both countries.
How much have you invested to bring KFC to Kenya?
It is a significant investment and it is long-term. As Kuku Foods we take a long-term approach with everything that we do. Part of our agreement with KFC is to roll out at a fairly aggressive pace in East Africa. They want to ensure that there is a growth rate that allows us to move at a significant pace. We can only achieve volumes once we start rolling out stores and this will help drive down the cost of raw materials and allow for more expansion. It is expensive to set up, especially the support infrastructure and purchasing high quality raw materials to adhere to the quality standards expected by KFC.
Describe the market’s reaction to KFC
It was very flattering and humbling to see Kenyans queuing to try our products when we first opened. Even today we still have similar volumes, although the queues have died down because the processes are much faster and efficient. We are doing around six tonnes of chicken a week, up from four tonnes when we opened last year.
What challenges have you faced in East Africa?
We have faced challenges predominantly in the supply chain, especially getting local suppliers to the level where they can pass the Yum! Brands (owner of KFC) Supplier Tracking and Recognition (STAR) audit system, which monitors suppliers for food safety and security. A lot of businesses here have various certifications, but are not at the level where they can be able to supply KFC. In instances – when we cannot find a KFC approved supplier locally – we have to purchase outside the country from a KFC approved supplier. For instance, we buy our processed, pre-blanched, blast-frozen potato chips from Egypt because it has total traceability back to source. We are working with Kenyan companies to ensure that in the future we will have local chips suppliers. It is in our interest in terms of cost, logistics and storage. It is a huge expense for us to import from Egypt.
Do you expect other global fast-food chains to enter the Kenyan market?
Kenyans are becoming a lot more globally aware, brand aware and quality conscious. It doesn’t mean that people necessarily have more money, but what people are spending their money on has shifted to leisure and social activities. This will drive the entry of more brands into the market. Once KFC enters, other global brands tend to follow. It has sent a positive message for Kenya. McDonald’s have looked at the market and the challenges for their supply chain are slightly broader because they offer more products. Their model in terms of market entry compared to KFC is very different. However, it is only a matter of time before other brands come.
Kenya is ready to take its level of professionalism in the hospitality industry to a different tier. I have no doubts that other Yum! Brands restaurants like Pizza Hut and Taco Bell will be coming to Kenya in the near future. The growth of Kenya in the next 10 to 15 years is going to be astronomical.
What are your future plans for the business?
We would like to have 30-plus outlets in East Africa within the next five years. This will depend on the cost of raw materials, especially chicken. Our growth is tantamount to the changes in the cost of chicken.