EXECUTIVE SUMMARY

The international market is flooded with various sectors and industries that involve products of

daily aswell as occasional use for the consumers. The use of the products can vary from industrial

purpose toprivate consumption. One such thriving industry in the modern world is the food and

beverageindustry. Food and beverage industry combined with the hospitality sector makes up one of

the mostattractive target sectors for multi-national corporations. The concept evolved from the very

first dinersin the late 18thcentury, when the world realized the concept of paid dining experience.

Now, the worldcannot live without the taste of a McAloo Tikki or the zing of a Zinger. The bottom

line being that theorder-to-eat MNCs have taken over the market like ants on a corpse, gobbling up

every ounce of it.This sector has slowly covered all income groups of consumers and has targeted to

achieve a marketshare of the highest percentage and the ever increasing competition is resulting in

more profitableoptions for the consumers.The consumers are being served with a range of food and

beverages to relish on catering every style of taste and preferences. With growing competition the

food giants have take their services to a higherlevel with better decreased serving time, value for

money prices and changing specialties in theirproducts.The following report is a comparative analysis

of the operational parameters of McDonalds andKentucky Fried Chicken (KFC) and projects an

overview of various factors that differentiate theservices of the two food giants. It covers factors like

the product variety, customer reach, pricingstrategies, hospitality management, customer relationship

management, supply chain management andemployee satisfaction programmes.The survey was based

on the consumer’s response on their choice between KFC and McDonalds andthe basis of their choice

was differentiated into various factors

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INTRODUCTION

McDonald’s vs KFC

McDonald’s and KFC are everybody’s favorite food trip destinations. When you like hambur gers,

McDonald’s is always the top option. When you like fried chicken, KFC is always the first thing

thatcomes to everyone’s mind. The reason for this is these companies claim of particular 

products thathave became their trademark until now. The difference between McDonald’s and KFC is

mainly thecuisine.

McDonald’s

 1940 is the birth year of McDonald’s and they have started everything. Their Speedier ServiceSystem

that was introduced in their very first restaurant is being followed until now in modern day fast food

chains. Their very first mascot was a man with a head of a hamburger that is wearing a chef’s hat.

Itwas replaced by McDonald’s ever popular clown man. McDonald’s is recorded to currently serving

58million customers each day in 119 countries. Their restaurants differ from their settings, some offer

by-passers with their drive thru service, some have playgrounds for kids but are just counter service

alone.Some of their restaurants have outer seats as well. McDonald’s signature colors are red

and yellow.Their well-supported products are their famous hamburgers, breakfast offers, desserts,

chickensandwiches and French fries. For vegetarian customers, McDonald’s have offerings that are

suitablefor them. When it comes to regional branches, McDonald’s are known for being fond of

offering thesecountries food taboos for them to have some sort of relationship with people around. For

example,Portugal McDonald’s are the only ones who have soup in the menu. Another example would

beIndonesia for McRice.

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KFC

 On the other hand, KFC or Kentucky Fried Chicken started during the Great Depression, which was

in the year 1930. It was first named as “Sanders Court and Cafe”, following the name of Harland

Sanders,the original creator from Kentucky. Their current and most popular logo is the cartooned

image of Sanders with their acronym, KFC. They are popular for their trade secret, their secret recipe

made from11 herbs and spices that is known to create the“finger lickin’ good” flavor of their

chickens.

Theirbasic products are fried chickens, chicken wraps, sandwiches, salads and some roasted and

grilledchicken cuisines and desserts, too.Be it McDonald’s or KFC, you’ll surely have a great treat of

a meal. Differentiating both will help usrecognize as to what we’d really love to consume.

McDonald’s main offer is hamburgers while KFCoffers various kinds of chicken dishes.

OBJECTIVES

1. To conduct a comparative analysis on the marketing parameters of McDonald’s and KFC

 

2. To study the various aspects of supply chain management, employee satisfaction and hospitality

management of both companies.

3. To conduct survey analysis on the consumer’s preference of food joint amongst McDonald’s and

KFC.

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COMPANY PROFILE

MCDONALD’S

 History

1955 Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald's Corporation is created.

1957 Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto.

1959 The 100th McDonald's opens in Chicago.

1961 Hamburger University opens in Elk Grove, near Chicago.

1963 One billion hamburgers sold. Ronald McDonald makes his debut.

1964 Filet-O-Fish sandwich is introduced.

1965 McDonald’s Corporation goes public.

1967 The first restaurants outside of the USA open in Canada and Puerto Rico.

1968 The Big Mac is introduced. The 1,000th restaurant opens in Des Plaines, Illinois.

1972 A new McDonald's restaurant opens every dayThe Quarter Pounder is introduced.

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1973 Egg McMuffin is introduced.

1974 The first Ronald McDonald House opens in Philadelphia.The Happy Meal is launched.

1983 Chicken McNuggets is introduced.New Hamburger University campus opens in Oak Brook,

Illinois. Set in 80 wooded acres. Training is provided for every level of McDonald's management

worldwide.

1984 50 billionth hamburgers sold. Ronald McDonald Children's Charities is founded in Ray Kroc’s

memory to raise funds in support of child welfare.

1989 McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges.

1990 McDonald's opens in Pushkin Square and Gorky Street, Moscow.

1993 The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing

between Stockholm and Helsinki.

1994 Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia,

Trinidadand United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents.

1996 McDonald's opens in India –the 95th country

McDonalds is a leader in convenient foods and beverages, with revenues of about $23 billion and

over1.6 million employees serving the customer’s worldwide. The company consists of the snack

business of Beverages and Foods. PepsiCo brands are available in nearly 115 countries having more

than 24,500restaurants in the world providing 24 hour service having about 1 billon customers to be

served all overthe world.

McDonalds’s success is the result of superior products, high standards of performance, distinctive

competitive strategies and the high integrity of our people. McDonalds is continuing to expand and

introduce new alternative beverages in the market. Approximately 85% of McDonald’s restaurant

businesses world-wide are owned and operated by franchisees .All franchisees are independent,

fulltimeoperators. McDonald’s was named Entrepreneur’sNumber-one franchise for 1997.

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Mc Donald's in India

•McDonald’s entered India in 1996.

 

•McDonald’s India has a joint venture with Connaught Plaza Restaurants and Hard Castle

Restaurants.

•Connaught Plaza Restaurants manages operations in North India whereas Hard Castle

Restaurantsoperates restaurants in Western India.

•Today it has around 211 Restaurants across India.

 

•Presently, it has around 57 outlets in the National capital region.

  McDonald’s has developed a menu especially for India with vegetarian selections to suit Indian

tastes And preferences. Keeping in line with this, McDonald's does not offer any beef or pork items in

India. Inthe last decade it has introduced some vegetarian and non-vegetarian products with local

flavours that have appealed to the Indian palate. There have been continuous efforts to enhance

variety in the menu by developing more such products.McDonald's has also re-engineered its

operations repeatedly in its 11 years in India to address thespecial requirements of a vegetarian menu.

Vegetable products are 100% vegetarian, i.e.

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•They are prepared separately, using dedicated equipment and utensils Only pure vegetarian oil is

used as a cooking medium.

• Cheese and sauces are completely vegetarian and egg less.

•Separation of vegetarian and non-vegetarian food products is maintained throughout the various

stagesof procurement, cooking and serving

Business model

The McDonald's Corporation'sbusiness modelis slightly different from that of most other

fast-foodchains. In addition to ordinaryfranchisefees, supplies, and percentage of sales, McDonald's

also collectsrent,partially linked to sales. As a condition of the franchise agreement, the Corporation

owns theproperties on which most McDonald's franchises are located. The UK business model is

different, in thatfewer than 30% of restaurants are franchised, with the majority under the ownership

of the company.McDonald's trains its franchisees and others atHamburger UniversityinOak

Brook, Illinois.   According to  Fast Food Nation   byEric Schlosser(2001), nearly one in eight workers in

theU.S.have at some time been employed by McDonald's. (According to news piece on Fox News this

figure is one inten). The book also states that McDonald's is the largest private operator of

playgrounds in the U.S., aswell as the single largest purchaser of beef, pork, potatoes,andapples.The

selection of meats McDonald's uses varies with the culture of the host country.

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McDonald’s corp. is currently one of the most successful consumer products company in the world

withannual revenues exceeding $23 million and has more than 1.6 million employees. McDonald’s

products are recognized and are most respected all around the globe. Currently, its divisions operate

inall over the world in beverages, snack foods, and restaurants. The corporations increasing success

has been based on high standards of performance, marketing strategies, competitiveness,

determination, commitment, and the personal and professional integrity of their people, products and

business practices.

Products

McDonald's predominantly sellshamburgers,various types of chicken sandwiches and

products,French fries, soft drinks, breakfastitems, anddesserts.In most markets, McDonald's

offerssaladsand vegetarianitems,wrapsand other localized fare. This local deviation from the standard

menu is a characteristic for which the chain is particularly known, and one which is employed either

to abide byregional food taboos (such as the religious prohibition of beef consumption inIndia)or to

makeavailable foods with which the regional market is more familiar (such as the sale of McRice

inIndonesia).

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Pricing Strategy

Value Ladder strategy:-

b) Started offering value meals in a range of prices.

c) Ensure affordability and attract widest section of customers.

d) Brought the customer and provided arrange of entry-level products.

e) Try those new items and graduate to higher-rungs.

f) E.g. - if a customer starts with McAloo Tikki, he will finally graduate to McVeggie and so in

Nonveg.

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80-20 Menu Board

•80% visual.

 

•20% descriptive.

 

•Easier for customers to understand

what 29, 39, 49, 59, 89, 99 rupee options are.

•Pricing range, quick service, no

-tips environment attracted middle class and students.

Package deal

• The mostcommon strategy in fast food industry.

• The most preferred style for customers of 

 McDonald’s.

 

• Plays on Psychological factor of the

customer.

• Consumers appreciate the resulting

simplification of the purchase decision

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Advertising

Over the years, McDonald's has developed TV advertising campaigns that have become,

likeMcDonald's, a part of our lives and culture. McDonald's commercials have focused not only on

product,but rather on the overall McDonald's experience, portraying warmth and a real slice of

everyday life.This "image" or "reputation" advertising has become a trademark of the company and

created manymemorable television moments and themes, including

McDonald's is Your Kind of Place (1967)

You Deserve a Break Today (1971)

We Do it All for You(1975)

Twoallbeefpattiesspecialsaucelettucecheesepicklesonionsonasesameseedbun (1975)

You, You're The One (1976)

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Nobody Can Do It Like McDonald's Can (1979)

Renewed: You Deserve a Break Today (1980 & 1981)

Nobody Makes Your Day Like McDonald's Can (1981)McDonald's and You (1983)

It's a Good Time for the Great Taste of McDonald's (1984)

Good Time, Great Taste, That's Why This is My Place (1988)

Food, Folks and Fun (1990)

McDonald's Today (1991)

What You Want is What You Get (1992)

Have you Had your Break Today? (1995)

My McDonald's (1997)

Did Somebody Say McDonald's (1997)

We Love to See You Smile (2000)

There's a little McDonald's in Everyone (2001)

Canada OnlyI’m lovin' it (2003)

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McDonald's has for decades maintained an extensive advertising campaign. In addition to the

usualmedia (television, radio, and newspaper), the company makes significant use of

billboards(outdoors, onwhich large advertisements or notices are posted.) and signage, sponsors

sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange

drink with their logo availablefor local events of all kinds. Nonetheless, television has always played

a central role in the company'sadvertising strategy. The taglines were always centralized towards the

concept of overall diningexperience and complete service satisfaction

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Employee benefit plans

The Company’s Profit Sharing and Savings Plan for U.S.-based employees includes a 401(k)

feature,a leveraged employee stock ownership (ESOP) feature, and a discretionary employer profit

sharingmatch. The 401(k) feature allows participants to make pre-tax contributions that are partly

matched fromshares released under the ESOP. The Profit Sharing and Savings Plan also provides for

a discretionaryemployer profit sharing match at the end of the year for those eligible participants who

have contributedto the 401(k) feature. All contributions and related earnings can be invested in several

investmentalternatives as well as McDonald’s common stock in accordance with each participant’s

elections.Participants’ contributions to the 401(k) feature and the discretionary employer match are

limited to20% investment in McDonald’s commonstock. The Company also maintains certain

supplementalbenefit t plans that allow participants to (i) make tax-deferred contributions and (ii)

receive Company-provided allocations that cannot be made under the Profit Sharing and Savings Plan

because of InternalRevenue Service limitations. The investment alternatives and returns are based on

certain market-rateinvestment alternatives under the Profit Sharing and Savings Plan

Training

• February 24, 1961, Hamburger Universities first class of 14students graduated

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• Today, more than 5,000 students attend HAMBURGER UNIVERSITY each year 

 • Since 1961, more than 80,000 restaurant managers, mid

-managers and owner/operators have graduatedfrom this facility

 •McDonald’s invests more than $1billion annually in training

•“Best Place to Work” – Fortune Magazine 2005

• “One out of 5 Best Places to Work in Latin American

Finance Department

McDonald’s Finance Department has two key areas of responsibility: financial reporting and

management accounting. Although each of these functions has different priorities, working

togetherensures the best financial position for the company now and for the future.

 

McDonald’s has two sources of profit:

 

• Sales made by company

-owned restaurants

• Rental androyalty income from franchised restaurants.

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Restaurant sales

McDonald’s retains all of the profit earned by company-owned restaurants. In addition to variable

costs,which increase or decrease depending on the level of sales, McDonald’s also incurs costs

that are largelyfixed, for example utilities and advertising, which need to be paid for even before the

restaurant makesany sales. Increasing sales and controlling costs are fundamental to ensuring the

profit of each restaurantis either maintained or increased

Supply chain management at McDonalds (India)

The seed of McDonald's success was sown in 1990 - six years before it started its actual

operations.About two decades ago, the QSR (Quick service restaurants) wouldn't have meant much to

the IndianF&B segment. Today, the acronym has been seamlessly absorbed in the industry lingo.

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McDonald's

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Kentucky Fried Chicken

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SURVEY ANALYSIS The report has been designed to study the consumer behavior with respect to McDonalds

and KFC. A questionnaire was designed in order to understand the reasons of the consumer

perception towards the two food giants. Our method of going about the study at hand involved the

basic survey method, whereby we put forward questions to individuals who were divided into the

basic segments provided by and aimed at as either the source or target service provider. This was

carried out by a survey comprising of two questionnaires, one aimed at the customers at either of the

two food joints and the other for the employees employed at the food joints. Our questions were

designed to capture the market trends, the grounds behind such a trend, the peripherals related to the

functioning of the food joint, key marketing strategies adopted and finally aimed at drawing the

inferences and conclusions for the same.

Question 1

Which age group do you belong to?

The first question was essentially designed to throw light on the age group of people visiting/dining at

the food joints. This gave us an idea of the preference of a particular food brand among a given age

group if any. For e.g. the HAPPY MEAL available at McDonald's attracted the major portion of the

younger crowd. As a matter of fact as shown in the following questions, this particular strategy

drained almost the entire young consumer segment. Of the individuals surveyed a majority of the

individuals belonged to the 18-25 yr age group both for McDonald’s as well as KFC.

Question 2

What is your profession?

This question was essential in calculating the trend of the customers who visit these food joints i.e. the

working class of the people visiting the respective places. The survey revealed that the majority

of people visiting both the places i.e. 46% for KFC and 55% for McDonald's were students. This thus

lays direct stress on the strategies adopted by both the joints resulting in a heavy demand among the

student group.

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Question 3

Are you a vegetarian/non-vegetarian?

This was essentially designed to demarcate the groups according to whether they were vegetarians or

otherwise. It was a preconceived idea that the vegetarians preferred McDonald's of the two while KFC

proved to be a non-vegetarian paradise. This thus showed a balanced market for McDonald's whereas

a strong shift for KFC towards the non-vegetarian section

Question 4

What is your saying on the pricing of the joint?

In KFC 31% found the food priced nominally and an equal amount of people surveyed i.e. 31% found

inexpensive. Hence it was concluded that it dropped down to the individual in the case of KFC and

there was no clear market trend. In McDonald's 46% found it nominally priced as well as value for

money while just 8% found it expensive. Hence in terms of comparative study it was concluded that

McDonalds was optimally priced although KFC wasn't overpriced either.

Question 5

How much do spend on an average per visit?

This question again was concerned with the pricing as well as spending capability of the people. The

results indicated that a major section, i.e. around 52% for KFC and 42% for McDonald's, of people

spent between Rs.100-500 thus advocating the fact that the places are priced moderately.

Question 6

Do you get drawn in by the television commercials of the food items?

This question was designed to get an idea about the publicity/advertising strategy of the food brands.

Both the brands under consideration are big brands and hence have the capability to allocate adequate

budgets towards all sections of marketing. Whether they choose to or not to, is the question at hand.

This particular question analyzes the potency of the advertising strategies used by the food brands in

attracting or influencing the customers. The significant questions from the survey and their respective

response have been mentioned in the Annexure.

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CONCLUSION

In India fast food market is strongly dominated by these 2 brands. But when it comes to

comparing thesetwo brands the following study brings us to a conclusion that as far as market

presence and brand valueis concerned McDonald's has definitely proved a point for themselves. But

KFC who reentered in 2003has shown a rapid progress and no wonder if in the coming years KFC

overtakesMcDonald’s in the Indian market share. Both the food-giants have given each other

immense competition in terms of customer satisfaction and promotional strategies. The range of

products and offers offered by each isremarkable in every context. Although McDonalds has an upper

hand with the vegetarian crowd becauseof its exclusive products, KFC is slowly catching up to the

challenge. KFC provides vegetarianalternatives with an added advantage of a complete meal

including rice and desert. Where McDonaldsfall into the snack option KFC had covered the meal area.

Thus it is not quite evident which one can betermed as better than the other.

RECOMMENDATIONS

•KFC needs to re-vamp its vegetarian menu and add more options to it. The fried chickencategory

already has more options and varieties as compared to the vegetarian section.

•McDonalds could try to enter the meals category into its menu

•Both companies need to work on their logistics and inventory management (as discussed withBranch

managers)

•Need to train their staff better in handling of the cooked food

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