KFC franchisee looks to widen branch network

KFC franchisee looks to widen branch network

RD spending B2bn to open 30 stores a year

Mr Norton and Mrs Waewkanee at the opening of Thailand's 700th KFC store.
Mr Norton and Mrs Waewkanee at the opening of Thailand's 700th KFC store.

Restaurants Development Co (RD), a KFC franchisee, is set to spend at least 2 billion baht to expand its business in Thailand during 2019-22.

"We are extremely optimistic about the long-term growth of this chicken category, so we will continue to open 30-35 new KFC restaurants a year in Thailand for the next four years," Andrew Norton, chief executive of RD, said during the opening of the country's 700th KFC branch at a PTT petrol station in Krathum Baen, Samut Sakhon.

The company already spent 1 billion baht to expand its business in the past two years. It now operates 169 KFC branches.

RD plans to open at least 30 new restaurants next year, bringing the total to at least 200 branches. Each will require an investment of 10-20 million baht depending on the site.

About half the new stores will open in the northeastern region, and the remaining branches will open in Bangkok and the South.

Of the 700 KFC restaurants now operating in Thailand, 531 branches are being run by other franchisees, with 258 operated by Central Restaurant Group and 273 by QSR of Asia (QSA), an indirect wholly owned subsidiary of Thai Beverage Plc (ThaiBev).

Nongnuch Buranasetkul, senior vice-president of ThaiBev and chief of its food business in Thailand, said the company will apply two business strategies to expand KFC in the future.

The first is to operate its existing restaurants to make a profit with innovation and service and promotions to lure customers to revisit restaurants. The second is to open 25-30 KFC restaurants from October 2018 to September 2019. Each requires an investment of 15-25 million baht and hires 30-50 employees for the store.

"The quick service restaurant segment is stable because the economy has not grown as expected," Mrs Nongnuch said. "However, our sales still managed growth of 2-3%."

Waewkanee Assoratgoon, general manager of KFC for Yum Restaurants International Thailand, said 2018 was a good year for KFC, with 75 new stores opened, or 39% above the original target.

"It is a new record high since we started operations in Thailand 34 years ago," Mrs Waewkanee said, adding that the number of KFC restaurants will reach 701 branches this year, up from 638 in 2017.

The 701st branch, run by RD, is about to open in the next few days.

"The KFC organisation is now in good shape with an effective structure," Mrs Waewkanee said. "As a franchiser, our key roles are to create marketing campaigns, provide guidelines, support franchisees and business partners to keep up the brand's standard, and assist them in making a customer complaint recovery plan and crisis-handling protocol."

The company has changed the way it manages media spending, splitting off separate teams for media, advertising and branding.

Mrs Waewkanee said increasing urbanisation with the continuous construction of infrastructure projects, particularly roads, will increase opportunities for KFC restaurants in the future.

"We will become more aggressive in expanding our stores, especially the drive-through model, outside Bangkok next year," Mrs Waewkanee said.

Yum expects sales next year to grow by 9%, the same rate as this year's growth. More precise details about sales were not disclosed.

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