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    Marketing of Services

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    Bhavuk Arora
    Yum! Brands is the world's largest restaurant company operating over 37,000 KFC, Pizza Hut, Taco Bell, and other restaurants globally. In the late 1990s and early 2000s, Yum! underwent a "do-over" led by CEO David Novak to position its brands and services more competitively. This involved hybrid centralization and decentralization of functions, shared services to reduce costs, rigorous performance management and employee recognition programs, and extensive training and coaching. Looking ahead, Yum! aims to continue growing internationally, especially in fast-growing markets like China, through new market entries, brand acquisitions, and multi-brand restaurant concepts.

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    Marketing of Services

    Uploaded by

    Bhavuk Arora
    366 views19 pages
    Yum! Brands is the world's largest restaurant company operating over 37,000 KFC, Pizza Hut, Taco Bell, and other restaurants globally. In the late 1990s and early 2000s, Yum! underwent a "do-over" led by CEO David Novak to position its brands and services more competitively. This involved hybrid centralization and decentralization of functions, shared services to reduce costs, rigorous performance management and employee recognition programs, and extensive training and coaching. Looking ahead, Yum! aims to continue growing internationally, especially in fast-growing markets like China, through new market entries, brand acquisitions, and multi-brand restaurant concepts.

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    Yum

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    Yum! Brands is the world's largest restaurant company operating over 37,000 KFC, Pizza Hut, Taco Bell, and other restaurants globally. In the late 1990s and early 2000s, Yum! underwent a "do-over" led by CEO David Novak to position its brands and services more competitively. This involved hybrid centralization and decentralization of functions, shared services to reduce costs, rigorous performance management and employee recognition programs, and extensive training and coaching. Looking ahead, Yum! aims to continue growing internationally, especially in fast-growing markets like China, through new market entries, brand acquisitions, and multi-brand restaurant concepts.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    366 views19 pages

    Marketing of Services

    Uploaded by

    Bhavuk Arora
    Yum! Brands is the world's largest restaurant company operating over 37,000 KFC, Pizza Hut, Taco Bell, and other restaurants globally. In the late 1990s and early 2000s, Yum! underwent a "do-over" led by CEO David Novak to position its brands and services more competitively. This involved hybrid centralization and decentralization of functions, shared services to reduce costs, rigorous performance management and employee recognition programs, and extensive training and coaching. Looking ahead, Yum! aims to continue growing internationally, especially in fast-growing markets like China, through new market entries, brand acquisitions, and multi-brand restaurant concepts.

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    Marketing of Services

    Yum! Brands Inc.


    A Corporate Do-Over

    Group - 7
    HIGHLIGHTS OF THE CASE

    • Positioning of Services in the competitive market


    • Designing & managing service processes
    • Managing people for service advantage
    • Service employees are crucially important in hospitality
    Industry
    • Service Leadership of Novak & Culture of Yum!
    • Strength of Organizations Culture, Performance
    Management, Training & Team building
    Fact File
    • YUM! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant
    company
    • The co. has wide portfolio of 37,000 restaurants in 110 countries under the
    KFC, Pizza Hut, Taco Bell, Long John Silver’s, and A&W All-American Food
    Restaurant brands.
    • YUM! Brands, Inc. operates independently of PepsiCo, Inc. as of October 6,
    1997.
    • The company was formerly known as TRICON Global Restaurants, Inc. and
    changed its name to YUM! Brands, Inc. in May 2002
    •  It is ranked #239 on the Fortune 500 List, with nearly $11 billion in revenue
    in 2009.
    • The company has marked a voluptuous EPS growth of 13% in 2009 &
    exceeded its10% EPS growth target
    Yum! Vision & Strategy
    • Yum! Brands is committed to continuing the success
    realized during its first ten years.
    • Yum! is building a vibrant global business by focusing on
    four key growth strategies:
    Corporate History

    • In 1986 Novak joined PepsiCo. as Marketing Executive for Pizza


    Hut
    • By 1996, Novak had made significant progress, profits & same
    stores sales were growing at double digit rates
    • In 2000 Novak assumed the title of CEO & added the title of
    chairman in 2001 while Andy Pearson remained on BOD as
    Founding Chairman
    • Novak had strong belief in relationship with its franchise owners &
    his own employee
    • He renamed KFC headquarters as “Restaurant Support center”
    • He formed a corporate council including presidents & COOs of each
    brand plus his own staff
    Multi-Branding
    • Customers prefer multi-branding over
    single brands
    • It provides them more choice &
    convenience under one roof
    • Hence our KEY CHALLENGE!!
    – To build operational capabilities to run these
    restaurants & keep getting better & better
    The Do-over Options
    • Model 1 – Decentralization- Each brand
    standing alone
    – Similar to PepsiCo.
    – Overhead cost will be small &savings will be invested in
    staff at the brand level for their growth & development
    • Model 2 – Complete Centralization –One
    Headquarter for all brands
    – Redundant costs e.g. personnel for each brand
    reduced, as could travel & facilities cost
    – Restaurant brands were similar businesses; hence
    advantageous to combine functions
    The Chosen Hybrid Approach
    • Activities critical to brand-that make it unique
    will be managed from headquarters
    – E.g. Marketing & Restaurant operations
    • Functions not critical to brand identity to be
    organized into single “SHARED SERVICES”
    • SHARED SERVICES” helped leverage
    YUM!’s overall size to gain synergies &
    reduce cost
    Key Strategic Initiatives

    • Closing 700 underperforming company owned


    stores (mostly U.S. based Pizza Hut stores &
    selling off (re-franchising) another 700
    • Focusing on increasing lunch time sales at KFC
    & Pizza Hut; and
    • Continuing to grow the international business by
    focusing on fewer, but fast growing markets
    Laying the Foundation
    • The essence of the new company was set
    out by Novak by distributing:
    – “Our Founding Truths”- Guiding principles
    of the company
    – “How we work Together”- Guidelines for
    work place norms
    – “Our Passion” describing the core values of
    the organization as a whole
    “Novak was very passionate about Yum!’s
    dynasty model”
    KEY CHALLENGES

    • Restaurant design
    • Equipment selection & design
    • Food holding times
    • “Back of the house issues”
    • Managing the multi-brand restaurant
    • All brands created equals – Menu Complexity at multi-
    brand restaurant
    Shared Services, Performance
    Management & Recognition
    • Shared services was fundamental design feature of the
    company
    • It took away everything which was a distraction to
    “identity, heritage & people” however provided synergies
    • Each restaurant was rated on CHAMPS Scores –
    Cleanliness, Hospitality, Accuracy, Maintenance, Product
    Quality, Speed
    • A book titled “Customer Mania! Its never too late to
    build a Customer Focused Company” was written by
    Ken Blanchard who was impressed by Yum!’s operating
    culture & processes
    Shared Services, Performance
    Management & Recognition
    “People want to work in a place where they are
    recognized. We do not make recognition an accident.
    It is built in to the system” – Novak
    • Several Employee recognition programs were
    implemented
    – Floppy Chicken Award at KFC
    – The Big Cheese Award at Pizza Hut
    • Every Leader at Yum! was required to create a
    recognition award tailored to a specific achievement
    • Within RSC in Louisville, Kentucky, was the walk of
    Champions
    Training & Coaching of Employees
    • The company took special care while recruiting & training
    its employees
    • This was important as employee turnover in fast food
    industry is as high as 200%
    • It was important for a potential hire to get a first hand
    look at how the restaurant operates
    • Team cohesiveness was given utmost importance
    • The company taught its employees how to exceed
    expectations of the customers
    • Sharing Best Practices was a common feature in Yum!
    • It taught how to recover when you make a mistake
    Training & Coaching of Employees

    • Coaching status
    – Regional Coaches
    – Market Coaches
    – Area Coaches
    – RGMs
    • Coaching did not only occur down the hierarchy
    • Restaurant members always list “a sense of belonging &
    Family” as top reason for staying
    • Performance evaluation was done on 360 degree basis
    & they called it “Voice of the team”
    Looking Ahead
    • Novak believed in right investment at right place at the
    right time- like already done in the fastest growing
    economy in the world - CHINA
    • Increasing presence in the international market is
    challenging-Multi Branding further complicates the issue
    • Yum! Is evaluating options for overseas expansions like
    purchase of a local brand, moving from quick serve
    business to casual dinning, adding a large hamburger
    chain to its portfolio etc.
    Observations

    • The NI of the company has grown by ~ 27% in 2 years


    (from 2002 to 2004)
    • While the restaurant count of Pizza Hut is increasing that
    of A&W, LJS & TACO Bell have reduced
    • Total US Sales has increased by $ 2.4 billion (16%
    growth in 4 years), the same internationally has
    increased by $ 3.3 billion (43%)
    Recommendations

    • The company needs to pay more attention in


    strengthening the Taco Bell, A&W & LJS internationally.
    • It can also explore the options of holding the multi brand
    outlets concepts in the unexplored markets like India,
    where the food culture is vastly going quick to serve
    Thank You

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