By Badrishah (See below)
Kentucky Fried Chicken (KFC) is a very well known restaurant in the world. It is rated at number 60 as the world most well known brand by BusinessWeek (McDonalds at number 9 and Nescafe, 23).
Its history spans almost 80 years when it started at Corbin (Kentucky-USA), in the 1930s. During this period the United States was under The Great Depression with almost 25% unemployment rate. The hard time was probably one of the biggest factor in forcing Harland Sanders ("The Colonel") to start experimenting with various mix of spices and herbs, trying to get the best formula for his recipe. (If we still remember the Asian Economic Crash 1997-2002, one of the last remaining business that kept going during the recession was the food industry).
By 1939, the recipe was already perfected and the Colonel had expanded his restaurant to accomodate 142 seats. This was a fairy large restaurant, the size is equivalent to several tennis courts.
However there was one problem. The WAITING time! It took almost 30 minutes for the chicken to properly cooked. Turn the gas bigger and you risk of having the chicken cooked on the outside but still red with blood inside.
Saved by the Pressure Cooker
Thanks to technology, in 1939 pressure cooker was introduced. Pressure cooker allow liquid to boils at higher temperature. Water for example normally boils at 100 degree Celcius, but with a pressure cooker the sealed lid doesn't allow air or liquid to escape and enable water to boils higher at 125 celcius.
This significantly shortened the time for cooking and as an added advantage, the nutrients (hence the taste) are retained making the food more delicious. Since the boiling point is much higher, this would also kill more germs and make the food last longer.
It should be noted that The Colonel spotted the pressure cooking technique just weeks after it was introduced. This means he was always looking for ways to improve the taste and the time it takes to cook the famous kentucky fried chicken.
Time means money.
Every minutes saved means less time waiting and more satisfaction to the customers. This would also encourage a first time buyer to become repeat customers.
The Colonel is also a smart guy. He can read the writing on the wall. By early 1950s, he probably heard rumours that an Interstate Highway is going to be built BYPASSING his town. This could have a devastating effect on his business. He is now probably under serious dilemma. When the Interstate was finally opened in 1955, it caused a huge diversion of traffic away from his town.
Owning a big percentage in a small town VS Owning a small percentage in a large country.
Seeing an end to his business, the Colonel auctioned off his operations. Confident with the quality of his fried chicken, the Colonel started travelling from town to town franchising his recipe. He visited countless restaurants, promoting his recipe by cooking fried chickens for the owner and the workers.
The first franchise was awarded to Pete Harman of Salt Lake City. A handshake agreement stipulates a payment of a nickel to the Colonel for each chicken sold. This is one of the real strength of the franchise system. It provides a stream of money albeit the sum is initially very small.
Building a franchise network is like building a pipe for money to flow to you. In the beginning, the cost is huge because you have to set the infrastructure, digging the earth, linking pipes, bypassing obstacles etc. In the beginning the volume of water flow (money) in your pipe is also dismal.
After a few years of hard work, the effort will start to bear fruits. A penny here, a penny there, ten pennies from this town, a hundred pennies from that city, a thousand pennies from this district, ten thousand pennies from that state and it happen EVERY DAY! Before long it started to make a huge impact on your income.
The KFC secret recipe: Does it matter?
It is an open secret that the KFC is made of a mix of 11 herbs & spices. Using modern spectrometer, we can blast the Colonel spice with X-ray photoelectron or burn them with a specially designed gas and study the result.
With a database of results made with similar technique using all spices & herbs known to mankind, it would take just weeks before we could identified the exact names and percentage of those 11 spices. However, DOES IT MATTER?? Does it really matter to know the exact names and compositions of those spices?
An average businessman would think the secret recipe is so valuable and willing to pay millions for a copy of it.
A genius businessman would not pay even a penny!!
It is the franchise system, not the spice recipe.
Have you been to a night market ("pasar malam") and tried the fried chickens sold by the hawkers? Have you ever been to a small restaurant or a foodstall and found out that the fried chicken was so crispy and delicious?
Then you were wondering why this small time businessman did not make a fortune out of his "secret recipe"!
The next time you visited the restaurant again, did you notice that:-
What is the point?
The "secret recipe" represent only a small percentage of the success of the KFC franchise. If I were to give a percent, it may not represent more than 20% of the total success.
THE SUCCESS IS DUE TO THE FRANCHISE SYSTEM!!
In a franchise system, everything is documented and there are strict rules for running the business. For example:-