Customer Processing - KFC

by Fitirani Sari. Thanks to Fitriani for permission to publish her work on this blog.  

Executive summary 

The purpose of this report is to analyze management problems and business issues within the Kentucky Fried Chicken (KFC) Restaurant Chain and to recommend methods for improvement and achievement of the best possible business solution for the company (Babbar, 2002). 

KFC is one of the biggest fast-food chain restaurants in the world, primarily selling its unique, original recipe fried chicken. Due to competition in the fast-food industry, KFC needs to constantly update its service and meet customer expectations to maintain its place as a leader in the industry. On the other hand, KFC continually receives many complaints, mostly related to its service and food safety issues. These challenges could potentially alienate customers and affect the company’s image. 

This report discusses several critical issues in the fast-food process: service quality (Parasuraman, et al., 1988), food safety control,  increased competition in the market, and innovation in the fast-food industry. 

The report suggests that KFC can improve its service by adopting new technology to ensure its fast-food service is fast, differentiate its service from fast-food competitors, and engage with customers’ needs to improve and innovate in its service provision and so be a leader in the fast-food industry. 

Introduction 

News flash: KFC Vegan option added to menu!

This report's purpose is to carry out an analysis and provide advice as to how the business can be improved. 

As one of the biggest fast-food chains in the world, KFC dictates the standard for its products and services to its restaurants all over the world. This standard applies to all its franchises, but challenges still occur. KFC  faces many issues in terms of quality, service, resources, and management. KFC needs to resolve and continuously improve service if it wants to remain a top player in the fast-food chain industry. 

As an iconic service brand, KFC needs to be perceived as a service leader (rather than a qualifier or a loser).   Using service logic is therefore imperative for KFC as this will enable them to think innovatively. Service logic (Grönroos, 2000) begins with understanding what value is being delivered to customers and this means understanding  KFC's customers' end-to-end experiences. Simply, service value for customers occurs when they feel better after the service has been experienced than they did before they had the service (Grönroos, 2008). For KFC customers, several key moments (moments of truth) in the service experience are critical: these are waiting, ordering, and the quality of the food (which includes getting what was ordered). A complicating factor for KFC is that feelings (of satisfaction) are predetermined by the nature of their customers. KFC customers tend to make larger orders - family packs and/or party orders. Consequently, large orders are fairly common, as opposed to a fast-food outlet like McDonald's which handles more small individual orders. However, KFC customers may expect their meal to arrive as fast as it does at McDonald's, but the size of orders makes this challenging for KFC. 

A 'large event' requiring a large order is used to advertise KFC in a recent advertising campaign on TV and in the Youtube clip below. This shows that these larger orders are being targeted by KFC, and as one can imagine, fulfilling an order for this type of event so that all the food arrives hot in a timely way and without waiting is challenging.  

In order to co-create service value for customers, service providers need to adopt a service logic in building their facilities or services (Grönroos, 2008). This report will evaluate the issues KFC faces in service quality, food safety, and queuing systems, suggest recommendations for these situations, and suggest how to improve its service in order for it to remain a competitive and sustainable business.

Discussion 

KFC background 

Kentucky Fried Chicken (KFC) is a fast-food restaurant chain, which primarily sells well-known fried chicken with a 'secret spice' recipe. It was founded in Louisville, Kentucky, United States by Colonel Harland Sanders in 1952. Sanders started serving his fried chicken at his gas station in Kentucky in 1930. He then found a way to reduce the cooking time for his fried chicken by using a pressure fryer. Soon after he created the well-known 'original recipe' fried chicken that, as is well known from their advertising, is made with eleven different ingredients. 

When a new route was built that bypassed his town of Corbin, Sanders sold his properties and began to sell his chicken to restaurants, receiving a share of the profits from each piece of chicken sold. He gained a new partner to the fried chicken business in Utah in 1952. Together, the Colonel and his partner opened the first Kentucky Fried Chicken outlet (Nii, 2007). By the early 1960s, Kentucky Fried Chicken was sold in over 600 franchised outlets in the United States and Canada.

Sanders sold the entire KFC business operation in 1964 to Louisville business people for USD $2mill, equal to USD $14,987,124 in today’s money (KFC, 2011). The chain was sold in 1986 to PepsiCo, which made it part of its Tricon Global Restaurants division, which in turn was sold in 1997, and renamed Yum! Brands (KFC, 2011). (Check for later sales)

KFC was present in 110 countries and territories around the world by 2011. It had in excess of 5,200 outlets in the United States and more than 15,000 outlets in other parts of the world (KFC, 2011). KFC have operated in NZ since 1971 and have over 97 stores in the country.  

Due to the intense competition in the fast-food industry today, KFC needs to focus on continuous improvement of their service. Throughout its development, KFC has always focused on their product - chicken and other food items. It may appear that this focus on the product means they have not been so attentive to issues around service process and facilities. Customers complain regularly about all KFC service, and like with any service industry these complaints should be welcomed. However, they should also be listened to and acted upon. KFC needs to listen to complaints so they can see the frustration customers are feeling and what they should focus on to improve their service.  People like KFC chicken. But they complain about their service as can be seen in social media and websites. For instance, go here for a typical list from a complaint and compliment website, and search fro KFC.

For a service winner in a service industry complaints can have a big impact on the business. KFC does have service problems which might stop customers from buying their product. Thus, KFC has to find methods to meet their customer service expectations which are not currently being met (Heskett et al., 1994). 

Perhaps the most critical or major issue for KFC's is being able to deal with change. In a very competitive industry, a fast-food company needs to be constantly reflecting on their external realities. Overall KFC's focus must be on surviving and flourishing in the global fast-food industry. 

Service quality 

As stressed above, KFC's biggest issue is its service, not its product. Even though KFC has procedures for all eventualities, issues still occur because employees might not always follow these procedures. Parasuraman, Zeithaml and Berry (1985) linked customer satisfaction and behavioral intentions with service quality, saying that the success of organizations is highly related to perceived quality. Organizations providing superior service also experience high levels of customer satisfaction and positive rumor (Gilbert, Veloutsou, Goode & Moutinho, 2004; Gilbert & Veloutsou, 2006). Several studies address the issue of service quality and customer satisfaction in fast-food restaurants (Gilbert et al., 2004; Qin & Prybutok, 2008) reinforcing the applicability of general service quality measures to the fast-food industry. 

By using Parasutaman et al's (1985) SERVQUAL scale we can see the service quality of KFC from customers’ perspectives. The quality of service is determined by tangibles, reliability, responsiveness, assurance, and empathy (Gronroos, 2007). In service quality, tangible factors are related to the facilities, equipment and the appearance of the service provider. Reliability here means the accuracy of the service; that is, not making mistakes and delivering what has been promised in the setup time. Responsiveness means that the service provider is being helpful to the customers, and notifies customers when the service will be provided. Assurance is defined as an employee’s behavior, making customers feel secure, and that employees are always polite and have the information to assist customers’ requirements. Empathy means that employees understand customers’ problems and act based on customers’ interests, and give personal attention (Gronroos, 2007). 

Reviewing quality factors as identified above, and the lists of complaints available online about KFC, it appears that the service process could be improved. The commonest complaint about KFC ordering process is about accuracy. Employees often process incorrect orders and even sometimes misplace customer orders. Another common customer complaint is the waiting time for orders to be processed is too long. Customer expectations here are set by other fast-food restaurants like McDonald's and Burger King. Another common complaint is about long queues. Although KFC has drive-through options, during peak hours (lunchtime and dinner time), customers still experience long queues, both inside the store and at the drive-through. Although people enjoy the taste of KFC and it remains a popular chicken product, having a 'goods' focus to the detriment of the service process means that other important attributes of a fast-food restaurant not been dealt with satisfactorily. These factors include service response time, accuracy, and a range of other factors like cleanliness and the quality of prior service are also important factors (Qin, Prybutok & Zhao, 2010). 

Based on these issues, KFC’s problems might be understood as reliability and assurance. KFC is experiencing a service delivery gap, wherein quality specifications are not met by performance in the service production and delivery process (Gronroos, 2007). The cause of this gap can come from management and supervision, employee perspective of the procedure and a lack of technological/operational support (Gronroos, 2007). Another gap that KFC is experiencing is a perceived quality gap, in which the customers feel disappointed because the service that KFC gave is not the same as the expected service (Gronroos, 2007). The result of this could be negatively confirmed quality (bad quality) and quality problems, bad word-of-mouth and negative impacts of corporate, or local, image. All of these can lead to lost business. One thing that KFC should improve is their service recovery process so that this negative word-of-mouth can be changed to positive-word-of mouth (Spreng, Harrell, 1995).  

Service logic

Service logic from a customer perspective is when customers generate value for themselves when using resources offered by a service provider. On the other hand, from a service provider perspective, when they make interactive services, service providers create a chance to co-create value together with customers (Gronroos, 2008). KFC should employ service logic to add value creation to its customers. By employing service logic, the business should focus on building the service based on customers’ needs where they can have more freedom to choose their own product or service. Customers would like to customize their purchases and create their own service value and service providers could help the customers in the process. The form of service logic in the KFC could be self-kiosks service with nutritional details so then the customers could select their own menu and pay without influence from the employees and KFC could add value with adding nutritional information on the application. This would have the added value of helping customers to understand the healthier options KFC makes available. 

To improve the service 

When it comes to improving service fast food companies should employ new technologies, as the fast-food industry has gained a lot in terms of efficiency and customer support by applying simple ideas in technology. In fast-food restaurants reducing queue waiting time is essential. By making processes faster there is a direct improvement in customer satisfaction due to shorter waiting lines. Fast-food restaurants are now routinely using ordering channels, such as online and mobile ordering services. 

E-Commerce 

The adoption of the drive-through system by the fast-food industry was one of the main technological advances in the sector. Drive-through options helped reduce waiting times in the store and helped improve service efficiency. KFC has employed this system, yet there is still queuing in the drive-through line and inside the store. This means that KFC needs to employ other systems in order to reduce these queues; for example, takeaway and delivery services. Many fast-food restaurants apply e-commerce and m-commerce in their sales systems. KFC has delivery services in NZ now. By ordering online, however, customers can choose in their own time rather than waiting in a line to make an order, especially when in a group of people where it is harder to reach a consensus. Moreover, the advantage of online ordering is that people have access to the menu online, which makes it simple to choose from the several options normally available to customers. Whether or not these new ordering systems are reducing queues at the restaurants is unknown, but online complaints about waiting still abound. 

M-Commerce 

As Smartphones are becoming more widely used, people now do many things through their Smartphones. Smartphones have replaced the use of the computer for some people who not only browse on their phone but also buy using their Smartphone applications. Many businesses now build their shopping application platforms to attract the growing number of Smartphone users. For example, Domino’s Pizza has Domino’s mobile platforms. The company has announced £10m of sales in the UK in eight months period in 2011 via its iPhone application and almost fifteen percent of its total digital sales were made through Smartphones (Domino’s, 2012). KFC should adopt this m-commerce style as well in order to gain more customers and improve their service, giving its customers more purchase options. (Update this section)

Self-service kiosks 

The newest technology being used in the service industry are self-service kiosks, where customers control the entire process of purchasing, starting from choosing the menu to carrying out their own payment without any assistance from a staff member. Self-service kiosks are now not just used for ordering and payment, but can also display nutritional and other promotional campaigns. These kiosks are more common in Quick Service situations and are used mostly as a remedy for queues. McDonald's has already replaced cashiers with self-service kiosks. Branches in Texas USA trailed nutritional kiosks that have a 'build a meal' application to help customers review the menus and nutritional details in their selected menus (Kelso, 2010) to improve the customer service experience. KFC should employ similar technology and compete with other fast-food restaurants to win customers. Moreover, by adopting self-service counters, companies can reduce the cost of labour and eliminate human error. Many factors can affect a human cashier, with errors tending to increase during busy times (Hoeft-Wessel, 2010). 

Differentiate the service 

Other than adopting the new technologies mentioned above, KFC could provide better service to influence the waiting experience such as by providing TV and magazines so that customers could watch or read when waiting. Or KFC could provide a playground for children so they can play while their parents are waiting in line and/or eating. KFC is already very successful at differentiating its products from its competition with KFC's famous original fried chicken. To attract its customers, KFC should differentiate its service as well. This could be the way to market their brand and also give back to customers by providing better service. 

Long-term 

KFC employs a mix of low cost and differentiation leadership strategy (Peng, 2009), as it can count on its brand name and original taste and recipes to be unique, while at the same time it competes on price using the benefits of cost savings from economies of scale. One of their main goals is to take advantage of potential growth in new territories, to establish a strong position and to develop their image. Crucial factors are to continue cost savings through R&D, innovation and to adopt new technology to enhance efficiency. These methods will reduce costs and increase margins in the industry. 

KFC also needs to focus on health issues, as it has a fast-food image and is generally considered to produce unhealthy food. The current generation is, on the whole, more health-conscious than previous generations. Many people consider a healthy menu to be very important and more of a determinant to choice than price. Companies already implemented in the market are adapting their menus to make them healthier. Thus, KFC needs to find something healthier to put on the menu. 

KFC has, in the past, always concentrated on its product. To maintain its leadership in the industry KFC needs to focus on what customers want and follow market changes, as well as continue to improve their service as well as their products. In the age of social media, KFC also needs to follow the trends to engage with social media users. This is not just important for marketing, but for listening to and learning what customers want and need. With this, they can be a step ahead of their competitors in the industry. 

Conclusions

Competition has become increasingly intense in the fast-food industry. Fast food restaurants are expected to be fast and accurate in delivering orders. Complaints are common and include mistakes like packing orders incorrectly and also the ubiquitous problem of customers waiting in line. KFC has focused on their tasty product but they need to focus more on service. Complaints should be listened to and made the focus of operational improvements. Many complaints from customers indicate KFC often delivers poor service despite having detailed service process procedures.

KFC should apply a service logic to their operations.  KFC has 'drive-through' but the service world is changing very fast. Competition is very high in the fast-food industry. Competitors are building their service to keep up with customers’ needs. KFC needs to do at least the same, and preferably better than their fast-food competition.   

Recommendations

To improve the service 

KFC should use service technology to improve its service such as employing e-commerce practices in their service - for example, online ordering. Another way to improve the service is through employing m-commerce, which is now a trend for service-based business due to the growth of mobile phone technology. 

To increase service accuracy and solve the queuing problem KFC could adopt new queuing systems that separate the ordering queue and the waiting queue and provide self-service kiosks, which would minimize human error. These self-service kiosks could have an additional function which provides nutritional screens that show the calories in meals being ordered. This will allow the customers to choose and review the meal that they will buy. 

To understand its customers KFC should try to be more interactive in engaging with customers through social media, such as Facebook and Twitter. 

Long-term: 

KFC should place greater focus on product innovation. It should learn about customers preferences and create new menus. Therefore, the role of R&D is essential to remain a leader in the field. The R&D department needs to differentiate KFC products from other similar products and create a competitive advantage. For example, it should consider aiming for healthier products as people now tend to be more conscious about their health. 

KFC should use service logic, which focuses on customer needs in order to create a better service experience and improved quality

References (to be updated)

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Grönroos, C. (2007). Service management and marketing: Customer management in service competition (3rd ed.). Chichester, West Sussex, England Hoboken, NJ: John Wiley & Sons. 

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Kelso, Alicia. (2012). Kiosks helping McDonalds' customers order healthier meals. Retrieved from http://www.selfserviceworld.com/article/191550/Kiosk-helping-McDonald-s-customers-order-healthier-meals 

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