Chapter 421 KFC's Development Plan
Chapter 421 KFC's Development Plan
The structure of the kitchen was very simple, similar to what Yang Wendong had seen in his previous life. There was also a Chinese person inside. Yang Wendong chatted with him and learned that he was from Taiwan.
Sanders also took down a document hanging on the wall and handed it to Yang Wendong, saying, "Mr. Yang, these are the various hygiene processes and regulations in our KFC kitchen. This is also the summary of our team over the past decade. Some of these items were even added because of problems that occurred."
Yang Wendong took the document and took a careful look at it. The contents did indeed provide detailed regulations on various hygiene-related tasks such as food, oil, sanitation, tool cleaning or replacement, etc.
"Very good." Yang Wendong also praised.
Although I don't know if this is just a superficial project, it is definitely better to have these than to have nothing. Just like in the manufacturing industry, when there are various process cards inside a factory, even if some people violate the rules, the overall situation will be much better than having nothing.
Sanders said with a smile: "In the long run, only if we make delicious and problem-free food can we also bring the greatest benefits to ourselves; only those small businessmen will only look at the immediate benefits."
"That's right." Yang Wendong also said: "Although I have never worked in the service industry before, I have worked in a factory, so I know this principle."
"That's good." Sanders continued, "Mr. Lin and I have discussed many business issues. I wonder if Mr. Yang would like to know anything else."
Yang Wendong thought for a moment and asked, "Mr. Sanders, I know that KFC now has a total of 100 self-operated stores, and the other 500 or so are authorized stores.
But I found that your stores seem to be different from those of other peers. Your self-operated stores are located in ordinary places, while your authorized stores are in the center of many cities. Why is that? "
A long time ago, Yang Wendong had seen all the information about KFC in Hong Kong. Although it did not involve core finances, some external information was still easy to find.
Sanders replied: “That’s because the purpose of doing this is not to maximize profits, but to maximize quality stability.”
"You mean, those self-operated stores are to ensure quality?" Yang Wendong asked puzzledly.
For most companies, the logic behind self-operation and franchising is to operate the good locations in the city center themselves, and leave other locations to local franchisees, so as to maximize profits.
From the quality perspective, except for a few cases, the quality of most franchise stores is not as good as that of directly operated stores, because many small bosses are short-sighted and only look at the immediate goals. Anyway, even if there is a big problem, the brand will suffer the greatest loss, as long as there is no obvious violation of the contract.
Sanders nodded and said, "Yes, originally due to funding issues, I started by inviting franchisees to join, and then trained the employees sent by the franchisees at the headquarters.
But problems soon emerged. In many locations, their main customers were not locals but passers-by, so the quality became worse and worse, which seriously affected the KFC brand. That’s why I cancelled or reclaimed many KFC outlets at rest stops on the roadside to ensure quality.”
"So that's how it is." Yang Wendong nodded.
No wonder KFC was able to develop. It seems that even if it was sold in the mid-60s, its early corporate culture had already been formed, and it could have just developed normally in the later period.
Yang Wendong also knew that in history, KFC was sold to an American company, but this company did not develop KFC seriously, which delayed it for more than ten years. It was later acquired by Best Catering and received full support.
Originally, even without considering the future mainland market, KFC was capable of challenging McDonald's in the United States for a period of time. However, due to funding and other reasons, it ultimately lost.
Sanders added: “For me, brand quality is more important, and allowing more people to eat safe and fast food is the most important thing;
But over the years, with the development of KFC, the rapid expansion has put me under tremendous financial pressure, and coupled with my advanced age, I have no choice but to let it go. "
"I understand. In that case, after I acquire KFC, Mr. Sanders can still be a consultant to the company and you can raise any opinions you have," said Yang Wendong.
Many people have pure purposes in the early stage of starting a business, but as the scale gets bigger, their intentions eventually deteriorate. For example, in his previous life, there was a certain person named Ma who wanted to make business easier for everyone, but he ended up making it harder to do business in the world. He even had some very 404 ideas.
"Okay, I'm happy to do that too." Sanders was very happy and said, "Then let's discuss the amount, how about that?"
"Okay." Yang Wendong nodded and agreed.
In the following days, Yang Wendong went to several other KFCs, and was always accompanied by the old man Sanders.
Although Yang Wendong had never worked in the catering industry, his experience with the Internet in his previous life allowed him to put forward some ideas that Sanders very much agreed with. Within a few days, the old man and the young man went from being business partners to acquaintances with a good relationship.
A week later, after all the data of KFC was checked by the legal team headed by Lin Youqiang, Yang Wendong and Sanders finally reached an agreement on a price of US$210 million to acquire the KFC brand and all its stores.
This was also because another competitor offered 200 million, so Yang Wendong cut the Gordian knot and directly raised the offer by 10 US dollars. In addition, he could continue to allow Sanders to participate in the management of KFC, so he finally got the deal.
After the agreement was signed, Yang Wendong immediately asked Zheng Zhijie to mobilize funds from Hong Kong in the name of this transaction, in order to transfer a large amount of Hong Kong dollars in the hands of Changxing Real Estate.
On December 12, Yang Wendong hosted a banquet for Sanders at the InterContinental Hotel in Los Angeles.
"Mr. Sanders, let me toast you first." Yang Wendong raised his glass and said with a smile: "In the short term, KFC will still be managed by you. We will look for a new professional manager later, but you will still need to participate more in the operation of KFC in the future."
Our company is not a professional life service company, so after acquiring KFC, we did not have a professional person to take over the management immediately; and Sanders himself sold KFC because he is getting older and considering the future, and he still likes this job.
Therefore, it was natural that they hit it off, and it was even because of this that Sanders was willing to sell KFC to him.
Although Sanders had many experienced team members under him, under the previous model, these people were not very suitable for managing a large company, especially during a period of rapid expansion. Even Sanders, although he was not old, did not have this ability.
The founders or the initial team are still relatively inexperienced in operating and managing the company after it has grown too large. The same is true for Yang Wendong. He basically does not participate in direct management, but rather determines the strategic direction.
"No problem." Sanders also raised his glass, took a sip and asked, "Then what should we do next?"
"Shouldn't I be the one asking you this?" Yang Wendong asked back.
Sanders paused and said, "In fact, I have already had plans for the future of KFC, but I have never had the money, so I can only develop it step by step. Now that you have acquired it, I want to know how much resources you can invest in KFC in the future."
Yang Wendong asked, "How much money do you want?" Sanders smiled and said, "I want another $100 million in cash, is that okay?"
Yang Wendong did not answer directly, but asked: "What are you going to do with a million dollars in cash?"
One million US dollars was a huge sum of money in the United States in the 60s. Judging from the proportion of GDP, this amount of money is at least equivalent to 2024 million US dollars in 4000; if we look at it based on certain assets, it is more than hundreds of millions of dollars.
Sanders said: “There are two goals: to build frozen chicken plants in at least four different locations in the United States and to have all the chicken processing in our own hands;
This can reduce costs and control quality at the factory level to avoid problems. Last year, the problem at KFC cost us $20 to fix, which is enough to build a small chicken factory."
"Building a factory is not a problem, but what about transportation? The United States is so big, and relying on four factories to deliver goods to the entire country, isn't the cost too high?" Yang Wendong asked puzzled.
Many businesses in the United States are different from those in Hong Kong. The different levels of density means that the transportation costs are bound to be very different.
Sanders shook his head and said, “It doesn’t matter. Although KFC stores are scattered, they are currently divided into 13 regions in total, and the stores in each region are relatively close;
As for delivery, as long as we deliver in that direction, we can distribute it to all stores. Besides, the gas price is not expensive now, so I have already calculated this cost.”
"Okay, I was overthinking it." Yang Wendong nodded.
People like Sanders are quite capable and must have considered transportation in the early days.
The only flaw is that the business was started too late, otherwise it would be hard to say which one was stronger between KFC and McDonald's in history.
However, since oil prices are not expensive now, inland transportation is not greatly affected. Things will be different in 73. We will talk about this later.
Sanders added, "In addition, if the funds are sufficient, we need to continue to expand the stores. Only when we have more stores, the cost will be lower. Mr. Yang is also a businessman, so he should understand this."
"Yes, I know that." Yang Wendong nodded and asked, "Then should we continue to adopt the franchise system?"
"Yes, all franchisees, only in this way can we expand at the fastest speed. If we operate it ourselves, the management pressure is too great." Sanders said: "Our funds should be used for headquarters management, including the research and development of catering food, the training of employees in each branch, the training of branch managers and so on. These things seem simple, but they are also very costly and time-consuming.
We can temporarily give up some stores that need to be self-owned to ensure quality, and we will deal with them later. The ones I owned before were also sold to franchisees long ago, so it would be difficult to close them after I took them back.”
"Okay, I agree to this, let's all join." Yang Wendong also agreed naturally, and then asked: "Have you ever considered the overseas market?"
"Overseas? I haven't considered it yet. It's too early to enter the American market now." Sanders just finished speaking and immediately understood what was going on. He then asked, "Mr. Yang, do you want to open a KFC in Hong Kong?"
Yang Wendong nodded and said, "I have this idea, but don't worry, I will send people over to learn, and the operations in Hong Kong will also be managed locally."
The Hong Kong market is naturally not very big, but if we operate well here, we will have the foundation to enter other parts of Asia in the future. If we acquire KFC, it will inevitably speed up its development.
He couldn't interfere in the US, so he could only let Sanders or the future management team manage it, and at most he could pay a little more money. But Asia was his home turf, so he had to manage it well, especially in the next ten or twenty years, when the entire Asian economy would take off. For the middle class, KFC's consumption was actually nothing, and he could even improve its status and take the middle-to-high-end route, just like the early days of the mainland in his previous life.
"That's fine." Sanders smiled and asked, "What about the funds I need?"
"No problem, I can give you a million dollars, but I also need a detailed plan." Yang Wendong agreed.
If you want to develop quickly, you will definitely have to spend money, building factories, advertising, opening new stores, etc. Even if it is a franchise store, the promotion cost also costs money. Only when the brand operation is successful and the popularity is high enough, and many people are rushing to join, can you make money without doing anything.
"Of course, I will give you a specific plan." Sanders agreed.
Yang Wendong asked again: "One more thing, since you have built a meat processing factory, where do the chickens come from?"
Sanders replied: "I choose the location of the processing plant. There must be a breeding farm nearby. I can just buy it directly from there."
"Have you ever considered raising chickens yourself?" Yang Wendong added, "I have a chicken farm in Hong Kong."
Sanders shook his head and said, "Not for now. Our funds should be used where they should be used. In the future, when there are enough stores in an area and sufficient funds, we should consider raising chickens ourselves."
"Okay, I'll listen to you on this matter." Yang Wendong didn't ask any more questions, and said, "I will leave the United States before Christmas. Can you write a simple plan for me?
If it is feasible, I will allocate some funds to you for initial expansion, and then review it later. If there is no problem, I can give you enough funds you need. "
In this era, information transmission is too difficult. Basically, the only way to get from the United States to Hong Kong is by phone. Many things cannot be explained clearly. If there is a problem that needs to be understood, it may take ten days or half a month to explain it.
Face-to-face conversations are better than face-to-face ones. Even in the 21st century, WeChat video chats are not as good as face-to-face conversations.
"Okay, I'll make a draft plan as soon as possible." Sanders agreed immediately.
Yang Wendong added: "There are currently 600 KFC branches. I hope that one day this number can increase tenfold, or even more."
In the past, McDonald's in the United States had more than 10,000 branches, which was the result of decades of competition among multiple brands.
Now that I have taken over KFC, I naturally hope that it can become the world's number one fast food brand. The biggest advantage of this industry is that it is stable and basically will not be targeted by the government. It is one of the best industries that Chinese can invest in.
"Ten times? 6000 stores?" Sanders was also shocked, and then said: "This goal is too big. If the number of stores increases tenfold, the management cost will increase by more than ten times. On the contrary, the profit will not increase tenfold because of the location problem."
In the early stages, catering companies generally choose locations in the city center, so the efficiency is high. However, as they grow larger, they can only choose more convenient locations, and the average store revenue will definitely decline.
"I know this is a goal, but I think it can be achieved." Yang Wendong nodded.
In the past, McDonald's had 1.3 stores in the United States, so it was normal to set the number at 6000.
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(End of this chapter)