Keith Warren, General Manager of KFC’s Africa operations, and Managing Director Of Yum! Restaurants International, talks to Ian Armitage about KFC’s success in South Africa, expansion plans and how the company is using the brand to “improve the lives of others”.

By Ian Armitage

Africa has been the next big thing for a long time. Sceptics say it will continue to be just that for many years to come.

However investment in Africa is growing. And with African markets booming, it looks like an increasingly attractive investment option.

“Africa is being democratified – Ghana is a great example – and good governance and good governments have been installed. Africa is now beginning to boom,” says Keith Warren, general manager of KFC’s African operations. “Chicken on the bone is the protein of choice in Africa,” the native South African, who doubles up as Managing Director Of Yum! Restaurants International, adds.

Yum! is well aware of the “African opportunity” and recently outlined plans to expand its KFC footprint in Africa from its current level of 655 restaurants to 2,100 a decade from now.

“Africa has vast potential,” says Warren.

He stressed that the improved political stability of various African governments, the region's vast population and a growing middle class - as well as the fact that chicken is a dietary staple in Africa – has led Yum! to set its sights on the continent.

“The vast majority of KFC’s restaurants in Africa are in South Africa, but we are being more aggressive in opening new restaurants across the continent,” says Warren. “We currently operate in 10 African countries: South Africa, Nigeria, Lesotho, Namibia, Botswana, Swaziland, Mozambique, Egypt, Tunisia and Morocco.”

The first KFC in South Africa opened in 1971 and Yum! is accelerating development into Nigeria as well as launching into Ghana, Zambia, Malawi, Kenya, Tanzania, Angola, Senegal, Cameroon and the Democratic Republic of Congo, he explains. “More and more businesses are now moving into emerging markets as growth in developed countries has slowed.”

Warren points to examples like Wal-Mart Stores Inc., which recently offered to buy 51 percent of South African retail giant Massmart Holdings Ltd., as evidence to support his claims. “Africa is attractive for Western brands,” he says. "People are now focusing on the emerging world and a lot of companies, especially Chinese ones, have invested in Africa.”

KFC has strong brand awareness in Africa. Of the roughly one billion people in Africa, Warren estimates it currently reaches 180 million.

The menus at African KFCs are similar to those in more developed markets, with the main difference being that there are more options for chicken pieces.

Warren says: “Africans stay away from processed foods. They want chicken on the bone.”

The great thing about the chain, he adds, is that it appeals to wealthier Africans as well as to people living on lower income levels.

The company sells four chicken wings for $1.20 and two chicken pieces with a portion of fries for $2.80.

“The combination of KFC being a global brand and it’s strength in Southern Africa has created a brand that is highly aspirational across Africa.. People will save up to buy the $2.80 meal, even if only once every three months,” Warren says.

KFC sells chicken more cheaply in South Africa than most parts of the world because local labour costs are lower, he adds. “We appeal to wealthier Africans as well as to people living at a more modest income level,” Warren says.

Yum! has 44 percent market share in South Africa and there are more than 600 KFCs in the country. It is South Africa’s biggest quick service restaurant brand.

It is hugely successful in South Africa and many of KFC’s staff training and development programmes, its environmental focus and promotion of healthier diets, and its social responsibility initiatives, are the first of its kind in the country.

“The KFC brand is very strong,” Warren stresses. “We are seeing significant growth.

“Africa over the next 10 to 20 years will have massive potential.”

KFC plans to invest about $500 million in its African expansion. But, the expansion will present plenty of challenges. In some countries, KFC imports its chicken from South Africa and Brazil. But there is still “a lot of protectionism in Africa,” Warren stresses. “In Nigeria and East Africa, imports of chicken are banned,” he says.

In those places, KFC has been working with local suppliers to ensure the quality and safety of their chicken meets the company's high specifications.

All said, its growth plan is ambitious. “We are planning to open 20 KFC outlets in Nigeria in 2011,” says Warren. “We’ve got seven stores there now and we are going to build 20 next year.”

Yum! forecasts that it will have 300 KFC restaurants in Nigeria by 2020.

“We opened our first Nigerian KFC restaurant in December 2009,” Warren says. “Why Nigeria? Well, 160 million people, eating chicken on the bone, as their primary protein, has to be a good thing.

“Of course the poor infrastructure and bureaucracy as well as finding good partners are challenges.”

KFC in Nigeria is currently a joint venture between an existing Indian franchisee of the company (Devyani International Limited (DIL)) and a local Nigerian.

“Nigeria is just one of many countries,” Warren says.

KFC’s expansion can have positive effects for local industry players, he adds, citing the example of Rainbow Chicken in South Africa. “They’ve grown as we have grown in South Africa,” he says. “They’ve built their business on KFC and we account for about 25 percent of their business.”

Growth will also be achieved in South Africa, where KFC is planning to open some 200 new restaurants in the next five years.

“South Africa enjoys one of the highest levels of penetration per population anywhere in the world,” Warren says. “If we look at the US, KFC has a penetration of 17 restaurants per million of the consuming population. Our penetration in South Africa is 36 restaurants per million of the consuming population. That is largely driven by brand strength, but as I said earlier, it also comes down to chicken on the bone being a valued source of protein and the ‘finger licking good’ taste of KFC.”

KFC is committed to Africa. Its Add Hope campaign is proof of this. By adding just R2 to your meal, you can help KFC feed vulnerable people, typically children, and make a real difference.

“In 2007, KFC decided to put hope on its menu and made a long-term commitment to fight hunger by focusing on the most vulnerable members of our communities,” says Warren.

Add Hope is an independent, trusted organisation, he adds. KFC donates all the resources and marketing, so that every cent it raises goes towards feeding hungry children in South Africa.

“Add Hope has driven greater awareness and much needed continued support for the global problem of starvation,” Warren continues. “We have a number of grassroots, national and high-profile initiatives, which give us an opportunity to engage with our local communities, often with the enthusiastic involvement of our staff.

“Add Hope aims to do just that: we want to Add Hope to people and to communities.

“We want to make a real difference in the lives of ordinary South Africans. This is a long-term commitment that we have undertaken as a brand. We are dedicated to raising funds at every possible opportunity and making a sustainable difference in the lives of the underprivileged.”

The KFC’s philosophies are adapted from the Yum! Dynasty Model, he says.

As well as Add Hope, KFC recently announced a new partnership with Cricket South Africa. The deal relates to mini-cricket, the entry point to the sport, and KFC has committed to a sponsorship programme of five years with the option of extending a further five years further down the line, Warren says.

“That’s right, KFC recently took over the reins of the mini-cricket programme,” he explains. “KFC is committed to cricket from the ground up.”

For more than two decades mini-cricket has been giving primary school children, from all walks of life, the opportunity to experience the game of cricket, learning basic skills from batting to bowling and fielding in an entertaining environment.

“KFC Mini-Cricket is more than just about the game; it’s an opportunity to teach children valuable life lessons and social skills such as teamwork and discipline, while promoting a balanced and active lifestyle,” Warren says. “It is all about reinforcing the principle that we are part of the, or aspire to be part of the, fabric of daily life for every South African. That means being part of things like cricket and being part of things like encouraging a responsible and balanced lifestyle, particularly amongst the youth. Naturally when you have blokes like AB De Villiers that came through mini cricket in their day, it is also about developing the talent of the future South African cricket team.”

Somewhere in fast-food heaven, Colonel Harland Sanders is smiling.

South Africa Magazine Issue 11.