Report on Kfc Marketing Strategies

Document Sample
Report on Kfc Marketing Strategies Powered By Docstoc
					     KFC Holdings (Malaysia) Bhd Annual Report 2008




                                                 CORPORATE STATEMENT




                                                                                  TAN SRI DATO’
                                                                             MUHAMMAD ALI BIN HASHIM
                                                                                    (Chairman)
                                                      AHAMAD BIN MOHAMAD
                                                         (Deputy Chairman)                      JAMALUDIN BIN MD ALI
                                                                                                   (Managing Director)




14
                                                                                                     KFC Holdings (Malaysia) Bhd Annual Report 2008




FELLOW SHAREHOLDERS,

AS THE LARGEST RESTAURANT CHAIN OPERATOR IN THE REGION, WE ARE GUIDED BY
ONE VITAL AIM – TO CREATE VALUE THROUGH OFFERING THE ULTIMATE CUSTOMER
EXPERIENCE. SO, WE BUILD OUR NETWORK BASE, PROVIDE QUALITY PRODUCTS AND
SERVICES, ENHANCE OUR OPERATIONAL PROCESSES, INNOVATE NEW PRODUCTS AND
BECOME MORE COST EFFICIENT, WHILE GOVERNING OUR BUSINESS IN AN ETHICAL,
TRANSPARENT AND SOCIALLY RESPONSIBLE MANNER.

On this note, we are pleased to inform that we have outperformed yet again with a successful run
in 2008. On behalf of the Board of Directors, it gives us great pleasure to present the Corporate
Statement of KFC Holdings (Malaysia) Bhd (‘KFCH’) for the financial year ended 31 December 2008.

2008 ECONOMIC OVERVIEW

Economic growth for the year came with a melange of highs and lows. The year began at a stable
pace, made buoyant by domestic sales prospects and a steady local economy. Nonetheless,
come third quarter, the global economic downturn created a cautionary, volatile and fragile market
by year end.

In Malaysia, the impact of higher food and oil prices left a reduction in consumption and business
profits. As a result of the continued decline in merchandise exports circa November 2008, growth
for the whole of 2008 moderated to 4.6% compared to 6.3% in 2007. The country was also faced
with political uncertainties, interest rate adjustments, exchange rate fluctuations and surging
commodity prices. The Malaysian economy slowed down in the fourth quarter to grow by 0.1%
after a growth of 4.7% in the third quarter of 2008.




During the year, Singapore managed a growth of only 1.1% over 2007, primarily due to the
                                                                                                                                                      15
country’s 4.2% negative growth in the final quarter of 2008. The global economic crisis affected
Singapore’s exports, resulting in poorer sales for many business sectors. Job security fears were
further triggered by an increase in unemployment rates. In addition, although inflation eased
somewhat from its alarming peak of 7.5% in the second quarter, there was still a decline in the
retail market as consumers became more weary about spending.
     KFC Holdings (Malaysia) Bhd Annual Report 2008




                                                 CORPORATE STATEMENT

                                                      A RESULT DRIVEN 2008

                                                      Our concrete performance during the year was testament of our commitment to enhance value for
                                                      all our stakeholders. Group revenue growth improved primarily from our continued network
                                                      expansion strategies and through effective marketing programmes. In 2008, the Group recorded
                                                      an impressive revenue growth of 26% to RM2,179.8 million from RM1,730.4 million in 2007. Profit
                                                      before tax also increased to RM167.5 million against RM150.6 million in the previous year.
                                                      The stellar performance resulted in earnings per share increase by 13.7% from 52.59 sen as at
                                                      31 December 2007 to 59.78 sen as at 31 December 2008.

                                                      Revenue from KFC Restaurants Business segment contributed 75% to the Group’s total turnover,
                                                      with the balance of 20% and 5% contributed by our Integrated Poultry Businesses and Ancillary
                                                      Businesses respectively.

                                                      The main financial highlights for 2008 included:
                                                      • Revenue growth of 22.0% for KFC Restaurants at RM1,628.9 million from RM1,335.3 million
                                                         in 2007
                                                      • An impressive increase of 14.8% in Same Store Sales by KFC Malaysia
                                                      • Integrated Poultry Businesses segment reporting a 40.4% growth in revenue to RM445.0
                                                         million from RM317.0 million in 2007
                                                      • Ancillary Businesses segment reporting a 35.6% growth to RM105.9 million from RM78.1
                                                         million in 2007

                                                      Strategic Initiatives

                                                      As one of the largest restaurant chains in the region, strategic innovation continued to forge our
                                                      business forward.

                                                      Our strategic initiatives for the year included:
                                                      • Strong expansion of the KFC network, with 37 new stores in Malaysia, eight in Singapore and
                                                         one in Brunei
                                                      • Successful product launches in KFC Malaysia and Brunei that included our crowd pleaser,
                                                         Colonel Chicken Rice, which coincided with our 35th anniversary celebrations
                                                      • The continued success of innovative launches in KFC Singapore
                                                      • The introduction of the KFC breakfast menu to target the morning crowds and the 24-hour
                                                         operating hours extension at 139 KFC restaurants
                                                      • Increased customer convenience through Internet accessibility made available for the public on
                                                         weekdays from 2.00 p.m. to 6.00 p.m.
                                                      • Image enhancement works in 52 existing stores in Malaysia and Singapore, to enhance the
                                                         restaurants’ ambience and attract more customers
                                                      • The increase in RasaMas stores with 15 new openings, bringing the total to 36 stores
                                                      • The addition of five Kedai Ayamas stores during the year, bringing the total to 27 stores
                                                      • Strong sales by KFC Marketing Sdn Bhd of Ayamas chicken based products in the local and
                                                         export market
16
                                                      • New Primary Processing Plant in Bandar Tenggara, Johor, now fully operational since
                                                         December 2008

                                                      Dividends

                                                      KFCH remains focused on providing positive returns for our investors. Based on our strong
                                                      performance for the year, the Board of Directors has recommended a total dividend of 22 sen per
                                                      share (comprising an interim dividend of 8 sen and a final dividend of 14 sen) in comparison to
                                                      20 sen dividend per share for 2007.
                                                                                                      KFC Holdings (Malaysia) Bhd Annual Report 2008




STRENGTHENING OUR BUSINESS

We continued to enhance shareholders value by adhering to the Group’s Strategic Plan 2008-2012
that encourages growth at all levels of the business.

As of 2 January 2009, KFCH became a subsidiary of QSR Brands Bhd (QSR) through the
acquisition of another 865,300 ordinary KFCH shares, increasing QSR’s total holding in KFCH
to 50.25%. This is a significant milestone for the Group as it enhances management capability
and streamlines the Group’s business activities. In the long term, this exercise will result in
management stability and positive income contribution.

Another initiative undertaken by the Group was to spin off the marketing activities of Ayamas Food
Corporation Sdn Bhd (AFCSB) into a company called KFC Marketing Sdn Bhd (KFCM).
Established in July 2008, this new business division was set up with the vision to become the
marketing arm of all further processed products by the Group. It now aims to expand further by
penetrating into the ASEAN and the Middle East regions.

To help enhance the performance of our companies, we have continued the implementation of the
Johor Corporation Intrapreneurship Scheme at selected RasaMas restaurants. The scheme
provides opportunities for selected employees in the Group who meet the criteria set to own up to
25% equity stake in RasaMas restaurants.

The Intrapreneur Scheme, which was successfully introduced by Johor Corporation since 1999,
aims to provide corporate institutional support to develop entrepreneurial talent from among
young, resilient and competent executives from within the Group. Its success is primarily driven by
a direct ownership element, which offers executives an opportunity to own up to 25% equity stake
in the business, strengthening the “ownership” commitment and dedication on their part and




subsequently driving bottom line results. The success of the scheme
                                                                                                                                                       17
at Johor Corporation is illustrated by the fact that the 65 intrapreneur
companies in Johor Corporation Group by the end of 2008 recorded
a combined turnover of more than RM500 million, with aggregated
profit before tax exceeding RM 40 million.

The Intrapreneurship Scheme is now one of the key strategic drivers in the
growth of various business units under KFCH, primarily the RasaMas restaurants business.
There are now five RasaMas restaurants being run under the scheme.
     KFC Holdings (Malaysia) Bhd Annual Report 2008




                                                 CORPORATE STATEMENT

                                                      ENERGISING PERFORMANCE

                                                      Our performance culture is supported by a thorough set of Key Performance Indicators (KPIs).
                                                      Aimed primarily at gauging and defining organisational goals, our KPIs measure corporate
                                                      achievement and also form the basis for rewarding and promoting our valued crew members.

                                                      Pedoman, one of our most powerful performance building tools, is conducted annually throughout
                                                      the Johor Corporation Group of Companies, including KFCH and its ultimate holding company,
                                                      Kulim Malaysia Berhad. With this year’s theme, “Business Jihad”, Pedoman institutionalises open
                                                      dialogue and is a truly transparent platform for those in various leadership positions, from
                                                      restaurant managers up to the Chairman himself. Based on an open communication module,
                                                      Pedoman provides everyone a platform for voicing concerns and ideas. The Group bonding
                                                      opportunities during Pedoman embody a strong corporate culture that further signifies our “People
                                                      First” principle.

                                                      As we prosper as a Group, Pedoman would help us overcome various future challenges that might
                                                      arise from the size of the business, its ever growing complexity, as well as the effects of external
                                                      shifts and changes. The openness and informality of our Pedoman sessions enable us to maintain
                                                      dynamism and focus as a Group while enhancing mutual trust, faith and confidence.

                                                      For the year 2008, the theme “Business Jihad” was adopted for the KFCH Pedoman. The term
                                                      Jihad, a sustainable strive for higher success, comes in various forms, be it spiritual, social,
                                                      political and economic. Jihad in Business advocates the enriching of all members of the KFCH
                                                      community, and through KFCH outreach, the enriching of the public at large, through KFCH’s
                                                      ethical business practises and consistently delivering value. Pedoman’s “Business Jihad”
                                                      fundamentals encourage an ethics-based business module that is both market and business
                                                      driven. It also states that, in its pursuit for profits, business must also contribute positive outcomes




                                                      to society, nature and all creation. At the minimum it must not bring harm and diminish value to
18
                                                      society, nature and creation.

                                                      In addition to Pedoman, the Group hosted in 2008 a Group-wide Hari Mekar event with the theme
                                                      “Pursuit of Excellence in Quality”. Hari Mekar, an annual quality event organised by Johor
                                                      Corporation, is a quality movement that allows participants to showcase innovative ideas on ways
                                                      to increase sales, reduce costs, enhance profitability, improve efficiency and move creativity. It
                                                      encourages staff to put their thinking caps on and come up with ideas that can take the Group to a
                                                      higher level. It gives us great pleasure to announce that KFCH garnered the Overall Champion’s
                                                      Trophy for the second straight year.
                                                                                                           KFC Holdings (Malaysia) Bhd Annual Report 2008




IMPROVING GOVERNANCE

Realising the importance of strong governance, KFCH adheres to the fundamental principles of
disclosure and transparency as a means to help realise long term shareholder value. Taking into
account the interests of our many stakeholders, we try our utmost best to be transparent in all our
corporate activities. For better governance, we ensure that all staff, from top management right
down to our service and front line support, adopt the highest ethical standards and practice a
strong sense of due diligence, responsibility and absolute integrity in all their business dealings.

BEING A RELIABLE, SUSTAINABLE CORPORATE CITIZEN

KFCH believes highly in giving back to the community in which we serve. Through our
implementation of our Corporate Social Responsibility (CSR) structure, we aim to broaden our
current CSR activities to encompass not only the ongoing causes that we promote but also to look
at evolving and contributing in various other CSR-focused areas.

Halal compliance, a vital part of our business, is duly recognised as our core Corporate Social
Responsibility. Other than embedding Halal practices into our processes, the company sponsors
the World Halal Forum and the Malaysia International Halal Showcase, both of which involve the
promotion of our many products.

The Group also participated at the annual Halal Food Standards Realisation (HAFSTAR) MS
1500:2004. In retrospect, the Halal market is not just for the Muslim community. The concept of
Halal which puts great emphasis on cleanliness, hygiene and a healthy lifestyle has also captured
the interest of non-Muslims globally. Having identified Halal as one of KFCH’s critical success
factors, we have put in place an elaborate and professional Halal Audit infrastructure, the first of its
kind in Malaysia’s foods industry.

We are also a health conscious Group. In our efforts to promote a healthy, active lifestyle for
Malaysians, we support local sports, which include officially sponsoring of the Johor FC football
team. On top of these, we also sponsor Malaysian Yachting Association and futsal activities, with
the aim of encouraging young Malaysians to pursue the sports as not only a hobby, but also to
look at the sports as a means to garner international recognition for oneself and country. We are
                                            proud to say that some of the sailors trained under
                                              the Association participated and won in some of
                                                the leading Yachting competitions held in
                                               Malaysia as well as internationally.

                                             Entrepreneur development is another cause that we are
                                             passionate about. As such, we continue to play our part
                                               to help develop entrepreneurial skills among young,
                                                 talented Malaysians. A collaborative effort with
                                                   Johor Corporation’s current entrepreneurial
                                                    programmes are aptly called Tunas Bistari, Didik
                                                                                                                                                            19
                                                     Bistari and Siswa Bistari. These developmental
                                                     programmes aim to churn out global-ready
                                                    business practitioners and entrepreneurs of
                                                  tomorrow.
     KFC Holdings (Malaysia) Bhd Annual Report 2008




20
                                                                                                        KFC Holdings (Malaysia) Bhd Annual Report 2008




As a means to help develop market-ready entrepreneurs, Johor Corporation has initiated Catur
Bistari – a Malaysian business board game which cultivates entrepreneurial skills amongst young
Malaysians. The investment game, which was developed by Bistari Young Intrapreneurs, a
subsidiary of Johor Corporation, is currently sold at all KFC outlets in Malaysia. KFC also organises
and sponsors Catur Bistari competitions yearly to encourage entrepreneurship developmental
skills amongst the younger generation. This is part of our CSR marketplace initiative, aimed at
making a success of Malaysia’s developmental program in the next lap in the country’s economic
growth. This next lap has obviously to be more business-driven than before, thus relying
extensively on the role to be played by the country’s entrepreneurs, and KFCH has positioned itself
to play a strong supportive role.

Extending our hands to the less fortunate remains an important part of our CSR platform. In
addition to the many long running CSR programmes conducted through the years, KFCH now
sponsors two episodes per year of Tijarah Ramadhan – a television programme that highlights the
plight of the less fortunate and poverty-stricken families. The show provides an avenue for various
Malaysian corporations and individuals to extend that much needed helping hand.

As a committed caring Group, we took part in the Yum! Brands Annual World Hunger Relief
Campaign, which is the world’s largest volunteer movement and private sector effort to combat
hunger. The relief campaign aims to help stop world hunger through volunteerism and
increased donations to benefit the United Nations World Food Programme (WFP)
and other hunger relief agencies. Through Malaysia’s Hunger Relief Period 2008
campaign, the Group together with our holdings company, QSR, raised RM1
million for the relief fund.




Founded in 1996, Projek Penyayang is our avenue to feed and reach orphaned children and the
                                                                                                                                                         21
underprivileged. Held on a quarterly basis, the Group continues to extend free food to over 150
charitable homes and institutions throughout the country.

BUILDING BETTER BRAND PRESENCE

Our commitment to incessantly build brand presence and constantly keep top-of-mind recall in the
minds of our loyal customers has led to us to garnering the Brand Laureate Award 2007-2008 for
Brand Excellence in Product Branding under the Fast Foods Chicken Category for KFC.
     KFC Holdings (Malaysia) Bhd Annual Report 2008




22
                                                                                                     KFC Holdings (Malaysia) Bhd Annual Report 2008




KFC also received a Gold Trusted Brand award in the Reader’s Digest Trusted Brand poll, which is
considered the region’s leading, objective barometer of brand performance.

In addition, Ayamas received the Brand Laureate Award 2008-2009 for Excellence in Product
Branding under the Chicken Based Products category, an indication of our brand building fortitude.

LOOKING FORWARD

The global financial crisis has unfortunately deepened further. The initial International Monetary
Fund (IMF) projection of a world economic growth of 2.2% in 2009 has recently been revised
downwards to a projected growth of only 0.5%. To date, developed economies such as the USA,
United Kingdom and Japan are currently in recession.

Numerous industries are expected to be affected continually by the global slowdown. In view of
this, Malaysia’s GDP growth is expected to be in the range of –1% to 1% for 2009 from 3.5%
announced in November 2008. Nevertheless, we expect an upward business to continue to grow
further helped by the expected boost in the local economy as a result of the recently announced
RM60 billion stimulus package by the Government. This package follows the previously
announced RM7 billion stimulus package and aims to prevent the country from sliding into
recession. As a result, we expect an upward swing to the current a refreshing twist to the current
economic scenario, which is likely to boost consumer spending, among other things. The
reduction in commodity prices will also work in our favour and will improve margins and help
sustain the Group’s performance in 2009.

BUILDING THE FUTURE

Although the business landscape looks daunting to say the least, we are optimistic that 2009 will




showcase yet another promising performance by the Group.
                                                                                                                                                      23
Heightened revenue through aggressive customer-centric channels
such as expansion of restaurants, image enhancements, creative
product promotions, increased business activities, continued cost
efficiency measures and increased productivity initiatives will
continue to be part of our action plan to build the KFCH Group.

Kedai Ayamas will continue building the Ayamas brand name
and will also boost its market presence with the introduction
of a number of other food products in its stores.
     KFC Holdings (Malaysia) Bhd Annual Report 2008




24
                                                                                                        KFC Holdings (Malaysia) Bhd Annual Report 2008




Having gone through a recent rebranding exercise, RasaMas is expected to move towards
profitability. Plans are underway for the opening of additional RasaMas outlets. A more vigorous
brand push through advertising campaigns will help increase RasaMas’ brand presence in
Malaysia, while a key brand building initiative will be the launch of an exciting new reality TV cook
show called “Syoknya! RasaMas”.

Another major factor for the expected turnaround of the RasaMas brand is the implementation of
the Intrapreneur Scheme. Intrapreneurs with strong managerial skills and business acumen are
selected to run new RasaMas restaurants or revive existing ones. In 2008, we had five RasaMas
restaurants under the scheme and more talented and committed employees under the Group are
being identified to participate in the scheme in the near future.

The Intrapreneurship scheme has also been implemented in the poultry farming sector beginning
2009. This was done with the aim to release energy, enrich careers for our employees, meet
Ayamas’ increasing demand for live birds, enhance quality control and minimise stock loss. The
scheme also encourages cost efficiency by keeping farms within closer proximity to processing
plants. To date, there are eight intrapreneurs involved in the poultry farming intrapreneurship
scheme. The Group is continuously looking for other business segments within the Group that can
be incorporated to make a success of the Intrapreneur Scheme, especially if it enables the
transformation of traditional cost centres into new value-creating profit centres.

As a means of enhancing our poultry operations, a third integrated poultry facility and processing
plant was built in Bandar Tenggara, Johor at a cost of RM30 million. The new plant, in operations
since December 2008, has increased the Group’s operational capacity by more than 40%. The
proximity of the plant to the poultry farms in the south of Peninsular Malaysia will result in
significant logistical efficiencies and transport and handling cost savings for the Group.




The establishment of KFC Marketing Sdn Bhd as the trading arm for all further
                                                                                                                                                         25
processed products under the Group is expected to have a positive impact in
the growth of our business. The company is now looking to diversifying into
non-chicken products, such as packed frozen vegetables and other frozen
food related products. Furthermore, it aims to penetrate the Malaysian market
with its shop-in-shop concept, which combines all our products under one
roof in hypermarkets and supermarkets throughout the country. Besides, the
company is looking at ways to aggressively market its products in the ASEAN
and the Middle East regions.
     KFC Holdings (Malaysia) Bhd Annual Report 2008




26
                                                                                                    KFC Holdings (Malaysia) Bhd Annual Report 2008




On the ancillary front, our feedmill operations are expected to benefit from lower commodity prices whilst Region Food’s LIFE
brand sauces will continue to increase its market share especially through a 50% increase in its mayonnaise production
capacity. Open market sales of our Bakery division are also expected to increase.

WORDS OF APPRECIATION

On behalf of the Board and our management, staff and shareholders, we would like to thank the following for their ongoing
support to the Group.

For their high level of professionalism and expertise in delivering top quality products and services, we would like to express
our unending admiration to all our people who continue to serve the Group in good stead.

To all our stakeholders – our customers, shareholders, financiers, suppliers and governmental and regulatory authorities,
we extend our deepest gratitude for the unrelenting support and belief in us. We wish to also record our thanks to Yum!
Brands Inc for the ongoing guidance given over the years.

Lastly, our heartfelt appreciation goes out to our colleagues on the Board as well as the management team of KFCH. Your
contribution continues to help drive our business progressively forward and enabled us to achieve results that had far
exceeded all stakeholders’ expectations.




Tan Sri Dato’ Muhammad Ali bin Hashim                   Ahamad bin Mohamad                   Jamaludin bin Md Ali
Chairman                                                Deputy Chairman                      Managing Director




                                                                                                                                                     27

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:470
posted:7/14/2011
language:Malay
pages:14
Description: Report on Kfc Marketing Strategies document sample