Category Archives: Business

What’s Wrong with Kentucky Fried Chicken in the USA?

Transcript of AustinMcConnell’s video: SUBSCRIBE to his channel if you like. This is an algorithm test page.

“All right, so check it. I miss eating at KFC. When I was a kid, Kentucky Fried Chicken was the bomb. My seven-year-old heart would jump with joy whenever my grandparents decided to pull into the KFC in my hometown for lunch. We’d get a big bucket of the 11 herbs and spices, green beans, coleslaw, enough Pepsi-Cola for everybody, the whole nine yards, and it was awesome. You couldn’t beat it.

Who needs Christmas when you’ve got KFC? The chicken was crispy, the restaurant was clean, and the eating was good. But 20 years later, I go to KFC practically never, maybe the drive-thru if there’s absolutely nowhere else to eat, but never ever, ever inside. Why? Because KFC ain’t what it used to be and we all know it.

The past decade hasn’t been kind to the Colonel. Consumers have rated the restaurant as consistently terrible. They’ve been overtaken by Chick-fil-A as the largest chicken chain in the U.S. by sales. They have a truly awful marketing campaign that’s generated more anger than interest. They ranked at the very bottom of customer surveys in 2013, and they’ve been steadily closing stores since 2005.

So what’s going on? You might not know it but there are five keys to the success of your average fast food joint. Fail in any of these areas and folks aren’t gonna wanna buy your product. The less folks buy, the less money you make. Less money you make the closer your franchise comes to extinction. So let’s see how your average KFC stacks up.

First thing you’re gonna need is fast and efficient service. QSR puts Kentucky Fried Chicken in the middle of the pack, not poor, not great, with an average service time at 3.39 minutes and an 88.6% accuracy on orders. Now a question for the Colonel’s corporate bigwigs. If you owned a skydiving business and the parachutes only opened 88.6% of the time, would that be acceptable?

[inaudible 00:01:43], would you skydive there? No. So why use a price when your customer base shrinks, if out of every 100 people to go there, 11 or 12 be charged incorrectly? Sorry, I’m doing that accent thing. KFC, get it together brah. Have a training day. Get your people on the right page. Bump that figure up to the low 90s and you’ll see more customers. An A-minus always looks better on a report card than a B-plus. You feel me?

Next, let’s talk about food quality. Look, I know it’s a little bit picky to ask for a bucket of fried chicken to not be totally greasy. But why ask me if I want original or crispy if it’s all gonna be covered in oil anyway? Just ask me what you’re really asking. Mostly greasy or totally greasy? I can’t even hold onto the stuff when I eat it. And even if I get a solid grip, the thing will fall apart before I get it in my mouth. This grub is whack.

I remember when KFC meant Finger Lickin’ Good. Now I’ve got to wash my hands in a sink because licking this grease off could seriously affect my health. I shouldn’t have to put on a hazmat suit and get the green light from the CDC before tackling an eight-piece bucket meal.

Next category, cash money honey. Look, if it’s gonna be messy and give me congestive heart failure at least don’t charge me an arm and a leg for it too. You’re out of your mind if you think I’m gonna pay $22 plus tax for eight pieces of slimy chicken. Sixteen piece family meal for about $41 in total, get out of here. $41 will buy you a nice meal at a fancy restaurant with mood lighting and a personal waiter.

Why would anybody wanna pay that much money to come here? If you want more customers, lower your prices. I see what you’re trying to do with the $5 fill up and the $10 chicken share. Wrong. If people think your food is too expensive, the solution isn’t to create a budget meal for him. The solution is to lower your prices.

Right across the street from this KFC is a Popeyes where you can get the exact same meal for cheaper. That’s a stupid business strategy for you guys. Hey, which of these prices you think looks better on a windows sign? If you wanna charge people that much to eat at your restaurant at least let the dining experience be worth it.

And that leads us to our next point, the cleanliness of your crib. So you wanna know the real reason I don’t go to KFC anymore? Here it is. This is me walking into a KFC while out on the road, totally unplanned, didn’t set anything up, just walked into a random location without preparation. And oh look, it’s completely disgusting.

Know how I knew it would be? Because you all have a serious sanitation problem. Six percent of your restaurants are dirty or damaged, 6%. That’s the highest of any of your competitors. That’s triple the national average. You guys are getting beat by Taco Cabana. Most people nowadays know to stay away from the inside of KFC. Walking into this particular location, I noticed the tables are dirty. The bathroom lock is broken. There’s grease and grime everywhere. There’s a disgusting mat laying out in the very front that’s damp with all kinds of spilled drinks and chicken grease for everybody to walk on.

And none of the staff seems to think that any of this needs to be cleaned up. Your crib is gross. Look, take a weekend, close your stores, retrain your staff and invest some of your money in private sanitation inspectors. You could fix everything else on this list and if you don’t shed that stigma folks have about your business’s cleanliness, you’ll never get out of the hole you’re in.

Last but not least, marketing. Look, I don’t know what you guys were thinking this year with your comedian rotation Colonel Sanders stick but it’s about to grate on the nation’s last nerve. We’ve got real problems in this country to deal with like ISIS and healthcare, and all we want is to watch TV without seeing one of your poorly conceived and self-depreciating commercials.

Here’s how to fix it in three quick steps. One, take yourself seriously. The wink and nod routine keeps falling flat, so cut it. Entrepreneur says it best. The new Colonel is a caricature. Instead of resurrecting the Colonel to lead KFC’s sales back to their former fried glory, the company has instead unleashed a childish pantomime that people old enough to remember Colonel Sanders don’t like and people too young to know him can’t possibly understand.

Your own company’s research says that one in five people hate your ad campaign. Yet here’s you CEO saying “I’m actually quite happy that 20% hate it, because now at least they have an opinion. They’re actually talking about KFC. And you can market to love and hate. You cannot market to indifference.” Hey, Greg, respectfully? Fire yourself.

The indifference folks were feeling came from years of you giving everybody the impression you don’t really care about the quality of your product. If you don’t care, why should we, as consumers, care? Your problem isn’t that you’re losing relevance. It’s that you’re acting indifferent to legitimate problems. Until you wanna take your business seriously and advertise a KFC that people will be happy to eat at, you’re not gonna rebound.

Step two, embrace nostalgia. If you want a new Colonel cut the live action one, go animated. No, not this train-wreck, go retro. Get the guys from “Fallout” to handle the aesthetic and you’ll have a marketing strategy that looks completely different from anything else out there and you’ll find your footing. Think about it. How many fast food restaurants do you know were doing hand-drawn animated commercials these days? Yeah, exactly. There’s your opportunity. Step three, whatever this is…

Recorded Commercial 1: Six pieces of chicken or 12 hot wings or popcorn nuggets. Now get out there.

Man 1: Stop it. It’s not funny. None of this is funny. You’re not gonna annoy someone into buying your product, right? So why do you wanna annoy your customer base? Oh, look, it’s not like the good folks at KFC don’t know any of this. They somehow pulled it off in foreign markets. KFC’s exploded in popularity overseas, especially Japan. [foreign language 00:07:14]

If they can somehow get folks who can’t read, speak or understand the King’s English to like their stuff, there’s no reason they can’t do the same in the good old U.S. of A. It’s a shame to their board of directors that a business with the name Kentucky Fried Chicken is valued more by people in Tokyo than in the state it’s named after. KFC, I love you, but you’ve got to get it together.

I want future generations to know what it’s like to eat the Colonel’s chicken the way I used to, the way we all used to. Your ship is sinking but you still have time to fix it. If you find yourself endowed, just remember to ask, “What would the Colonel do?”

Recorded Commercial 2: It’s nice to feel so good about a meal.

Man 1: And that’s the video. Thanks for watching. If you liked it and wanna see more, feel free to subscribe to my channel. Or don’t, I don’t really care.”

Walt Disney: The Committee Of Minds Is Inferior To The Visionary With The Right Vision

MickeyMouse ThemedDisney was a creative thinker, engineer, project manager and master storyteller. The real way to get entertainment was to have personalities tell a coherent story. A good Disney film always has personalities dealing with various problems. Disney would always lighten-up when describing his characters. Story boarding the entire films was important to Disney; the narrative was built from scratch.

Disney CharactersDisney famously told the entire plot of Snow White to his animator team over a 3-hour session complete with all the voices done by himself. Walt Disney created the blueprint for his films in his head; he even told his nephew the entire story of Pinocchio one evening start to finish. Disney was full of energy and was always thinking of how to build a bigger future for his enterprise. He would fire people on the spot whenever he wanted because he was truly powerful. After Walt Disney died of lung cancer in 1966, the Disney company was at a crossroads regarding how it should move forward.

Black Cauldron FailureLike some many visionaries; up until the renaissance at Disney starting with the Little Mermaid, the Disney company had produced fragmented films. The films subsequent to Walt’s leadership were less successful, Michael Eisner believed this was because the creative process was disjointed because decisions were made in a committee (where ever contribution had to be negotiated in or out of the narrative) rather than by an authoritarian visionary who could veto any idea or person. You need to have an executive creative director who has good judgement. Someone had to be the producer and that relationship was that the producer’s vision is the over-riding vision: it always has to subjugate the others to the final decision maker.

Tesla should go Private through Norwegian Oil Reserve Fund

Predictions are useful as they can be used to demonstrate that you have a better filter on reality than those who incorrectly predict outcomes. I don’t fully agree because being able to accurately predict how human beings will act, intermixed with the complex variables that shape outcomes, is not possible at a reliable rate.

This last month, I correctly predicted Trump winning the presidency. Doesn’t mean that’s what I wanted to happen of course; so where else can I make predictions that come true?

Tesla: Within the next 3 years, I believe that Tesla will try to go private with money from a Saudi fund or Norwegian 1 trillion fund oil reserve fund. I am not a total fan or detractor of Elon Musk’s Tesla. The companies share price will continue to be influenced on heuristics, earnings management and the state of the founder, who channels Steve Jobs. I do see his behaviour following the classic startup zeitgeist. I also believe that one option that Tesla should explore is doing what Michael Dell has done with his company.

Get out of the public markets! Why? The speculators are all short-term centred, the stock market is appropriately short-termist. If you want a solid explanation of short-selling read Business Adventures by John Brooks! But to explain it quickly, imagine you have an orange prices at $1, and I believe that the orange market is going to be saturated, driving the price down to $.50 in a weeks time! I ask you if I can borrow your orange (since you’re not going to use it) I then sell the orange at $1, I then have this orange profit, and boom, the orange market drops so I buy an orange for $.50 and give it back to you. I have made $.50 off of this interchangable orange. So there is a whole class of Tesla stock holders who let short-sellers borrow their stock and then sell it immediately hoping and even forcing the price down so that they can swap it back to the original owner. The incentives to short a highly startup-like stock are pretty obvious. Any negative news impacts Tesla’s stock price and Tesla, as a car company, does not produce enough cars. Compared to GM and Ford, Tesla is 1/10th the size.

I’m hoping my MBA will help validate the claim that financial statements helps investors decide on whether to buy or sell their stock. However, Tesla has many investors who operate on heuristics.

Meanwhile, the Norwegian oil reserve fund: which is nearing $1 trillion dollars USD. Or the Saudi funds that helped companies like the Four Season Hotels go private.

In terms of earnings management, Tesla is starting to show how much this critical skill set matters. In Finance classes at major universities, the narrative of earnings management both the “good” kind and the “abusive kind.” I have yet to actually take a finance course, but I have seen a strong cross over between politicians and CEOs in terms of positioning the best case for their re-election or their stock price respectively. I think that Tesla’s long-term vision is baked into the price of the stock and that price will fluctuate to the point where it makes more sense to go private. Only time will tell!

Lessons from a Masters In Business Administration: What Is Strategy?

What Is Strategy? Michael Porter’s five forces have shaped business strategy since his theory was published in 1980. Five Aspects of Business Strategy: 1) barriers to entry, 2) supplier powers; 3) customer power; 4) substitutes, 5) rivalry. An example of the application of this model would be a London kebab shop: barriers are relatively low, does not require highly skilled labour, and anyone can buy a kebab shop with a bank loan. That is why so many immigrants run kebab shops in London UK, for example. If you speak bad English, have little money, and are prepared to work hard, kebab shops are a great first entrepreneurial endeavor. The suppliers to a kebab shop are those who make meat rotator machines and the variable costs like the Halal meat. There is plenty of both, so prices are lowered, and there are options to change suppliers at any time. The bad news is customers, as there are 100s of kebab shops in central London. If they don’t like your kebabs, they can go to another. Competition is fierce, and stoked by low barriers to entry, weak suppliers, powerful customers, and substitutes in the market where the business is located. In addition to the five forces is “6) complements”: Complement are for example, PCs you could get the software, and printers. The better software, and computers make the PC more desirable. Nurturing complementary businesses can have a positive effect on your business.

Competitive Advantage: either you have a cost advantage where you can make things cheaper and sell them cheaper OR you differentiated your product somehow either by making it better than your rivals or by designing it differently to appeal to a different group of people. There two forms of differentiation were known as vertical or horizontal. Vertical is meant to be better or worse; horizontal means different. Vertically differentiators would mean for example that you have two cars, one with better brakes, and steering. That car is better therefore they are vertically differentiated. If you have identical cars but one has been painted pink they are horizontally differentiated. One nightmare for a business is to have no advantage, to be neither the cheapest produce nor clearly differentiated. Bill Gates has a picture of Henry Ford in his office because it reminds him that success breads complacency. Ford was over taken by General Motors overtime. When the iPad came out, Amazon introduced the kindle fire…

[This is a synopsis of several books on the MBA experience including What They Teach You At Harvard Business School by P.D. Broughton]