The BCG Matrix, or Boston Consulting Group Matrix, is a tool that businesses use to analyze their product lines or business units. It helps them determine which ones to invest in, keep, or possibly divest. The matrix is divided into four categories:
Stars: High growth and high market share. These are promising products that require investment to maintain their position.
Cash Cows: Low growth but high market share. These are stable and generate steady revenue, often funding other areas.
Question Marks: High growth but low market share. These have potential but need significant investment to increase their market share.
Dogs: Low growth and low market share. These are less profitable and might be candidates for divestment.
Today, we are going to do an analysis of the bcg matrix of KFC.
Brief History of KFC
Kentucky Fried Chicken, or commonly known as KFC, was founded by Colonel Harland Sanders in 1952. It started with a unique fried chicken recipe, and Sanders’ original restaurant, located in Corbin, Kentucky, gained popularity for its distinctive taste and cooking method.
In 1955, he franchised his recipe to Pete Harman that led to rapid expansion. KFC became an international brand after being acquired by Yum! Brands in 1997. Today, it is known globally for its signature fried chicken and has over 25000 branches in 145 different countries.
BCG Matrix of KFC Company
It is important to note that this KFC BCG matrix analysis is based on its geographical market segmentation, not its products.
Stars
Stars, as we mentioned earlier, are the products or business units that have market share and growth. Currently, Asia, specifically China, is the star in the BCG matrix of KFC. For example, China now has more than 10,000 KFC locations, while the U.S. has only 4300. KFC generated more than $8.2 billion in China in 2023 (14% more than in 2022). What’s more, KFC China has seen an increase in sales and growth over the past few years. Apart from China, India has also become a growing market for KFC, with its sales reaching 14 billion INR in 2023 (10 billion in 2022).
Cash Cows and Dogs
In KFC bcg matrix analysis, the United States stands as the cash cows and the dogs at the moment. It seems like a tricky situation but KFC USA is showing traits of both quadrants.
The company is generating revenues in billions, but there isn’t considerable growth. For example, KFC USA generated $5.6 billion in 2019, $5.7 billion in 2020, $6.6 billion in 2021, and $6.8 billion in 2022. This means that KFC USA is generating consistent revenue. However, its market share in the U.S. dropped to 11.3 percent in 2023 (16% in the previous year). It is hard to believe that KFC USA generated $13 billion in 2012, and it has declined ever since. One of the biggest reasons behind this is the lack of innovation in their menu.
Question Marks
The question mark segment in BCG matrix of KFC includes Muslim countries. That’s mainly due to the boycott-KFC campaign caused by Israel-Palestine conflict. More than 100 KFC franchises in Malaysia and Southeast Asia have been closed as a result of this boycott and same is happening in the middle east and south Asian countries like Bangladesh and Pakistan. It is hard to predict whether these markets will flourish again or not.
Summing it up
The BCG Matrix helps businesses decide which products or areas to invest in, hold, or sell. For KFC:
- Stars: China and India are high-growth markets for KFC, with China having over 10,000 locations and growing sales.
- Cash Cows: The U.S. is a steady revenue generator for KFC but with slow growth and declining market share.
- Dogs: KFC’s U.S. operations show both high revenue and low growth, facing challenges due to lack of innovation.
- Question Marks: Muslim countries are uncertain markets for KFC due to boycott issues related to the Israel-Palestine conflict.
Overall, KFC’s growth prospects vary by region, with strong performance in Asia and challenges in other areas.