Fast Food’s Franchising Dilemma

A web of franchisees is proving a challenge for an Australian fast food icon as it seeks to build its CSR program, writes Nadia Boyce in this week’s Executive Insight.

Fried chicken empire KFC has operated in Australia since 1968. The company now employs around 30,000 Australians in more than 600 stores across the country, many run by franchisees.

As it looks to ramp up its CSR efforts, The company now faces the dilemma of how best to include franchisees and tackle the raft of issues pertinent to the food industry, including activist lobbying, nutrition, supply chain and food waste.

The company has established an executive level CSR steering committee, which comprises the heads of various departments and meets monthly to work on implementing the firm’s CSR which centres on four key pillars:  food, community, environment and people.

The food giant describes itself as being “on a journey,” having released its first CSR report last year.

Sally Glover, Chief of Legal and Corporate Affairs at parent company Yum! Foods, spoke to Pro Bono Australia News about KFC Australia’s strategy for the future and why the company has chosen to focus on the areas where it believes it could make the most impact, including youth and hunger relief.

Franchising, A Friend or Foe?

KFC Australia owns and operates around 160 of its 600-plus stores nationwide, with the remainder owned by a community of over 60 franchisees. Diversity of ownership is one challenge proving a barrier to the alignment and dissemination of CSR messaging, Glover says.

“We’re not just dealing with a strategy across one company here, we’ve got, in KFC, around 60 franchisees, so for KFC as a brand, to have an effective, aligned CSR strategy, we really need to make sure that everyone’s comfortable with the way we’re going,” she says. “That takes time.

“You’ve got to be sure you’re doing the right thing and that you’re focusing on areas where you can genuinely make a difference, and not just with ad hoc sponsorships and foundations.

“I think we see it as a long term journey that’s just going to take us a while. And fully getting that whole CSR strategy into the whole franchise system and whole organisation, it’s probably our biggest challenge.

“It’s about having discussions with our franchisees to let them know where we think they’re going and also to get their ideas as well around where they think we could benefit the community – for example, putting recycling bins in their own stores as we do with our company restaurants.”

Strong strategy is necessary to meet increased consumer demand for responsible practices concerning food supply, Glover says.

“I think transparency is emerging as, if it’s not already, a major trend. People want to know where their food’s coming from, and they want to know we’ve got a safe and sustainable supply chain, that sort of thing. I think in the food industry that’s really important because people want to know that their food is safe and that it’s coming from reputable sources,” she says.

“Engagement with our broader consumers with what we’re doing around the CSR space is important, as is targeted engagement with stakeholders who have the ability to criticise or influence your industry.

“A lot of people, when they learn about what we’re doing – in particular how we prepare our food – they’re really surprised. We recognised that we probably haven’t communicated enough in the last few years, but certainly, within the last year, that’s something we’ve really been trying to ramp up.

“We’ve spoken with various key opinion leaders in NGOs, we’ve spoken with Government, and that’s been useful, because they’ve also been able to direct us to other people we can speak with.”

Glover says the organisation is beginning to implement specific strategies to help with its CSR ambitions.

“We haven’t attended general CSR conferences because I think we’re probably new to this in some respects and still feeling our way,” she says.

“We’ve developed a stakeholder database which has more names in it every day, and we’re sending out newsletters to those people on a quarterly basis, and generally trying to engage more with people, taking up speaking opportunities.

“Fundamentally it’s about doing the right thing and not putting out PR messages. Fundamentally we want to do the right thing. Yes, we’ll communicate what we’re doing with relevant stakeholders in the hopes that they’ll trust our brand more and recognise that we’re not just about fried chicken, we’re actually broader than that.

Food for Thought

Two of KFC Australia’s most significant CSR programs align directly with its core business goals, Glover explains. It is reaping rewards in terms of both employee engagement and social impact.  

“One of the biggest programs that we’re involved with is world hunger relief. Its not just a KFC Australia initiative, it was established by our parent company Yum! brands in the US in 2007,” she says.

“It’s the world’s largest private sector hunger relief initiative, [including] over 120 countries and thousands and thousands of KFC, Pizza hut and Taco Bell restaurants globally, so that’s one program we’re particularly proud of.   

“Every year we send the top fundraisers overseas on trips. This year I went with the group and we travelled to remote villages in the north of Laos.

“The reason we do this is that it shows our people first hand where the money is being used. It really creates an ‘aha!’moment …they’re able to come back into their stores, and back into our franchise system, and talk about those stories and who they met and what they saw when they were on those trips.”

Glover also flags youth as a strong focus area for the future.

“The key partnership at the moment is definitely the world food program because it’s been in place for a while, but moving forward, we’re looking at focusing more on youth. We’re actually working on who we might potentially partner with in that space and how we might help,” she says.  

“We’ve got partnerships with Reach and Whitelion who both support disadvantaged youth. We’ve been involved with Whitelion for about 17 years.

“We’re currently in the process of developing a more comprehensive strategy around supporting youth in the Australian workforce.

“As a company we offer our employees a lot of training and development opportunities and we also offer employees complete day-to-day life skills. If you’re 15-year-old, you can earn a lot by having a job at KFC in terms of things like time management, customer service, how to dress – all those life skills. So we do have some more formal training programs.

“We also have a graduate leadership program, where we provide a career path for restaurant general managers who’ve got degrees. That program focuses on leadership skills, presentation skills, time management skills and the graduates rotate through a variety of different roles during the program to help skill them up in different areas.”

It is employment where Glover sees tremendous potential for the broader food industry to demonstrate its social responsibility.   

“We employ, in our franchises and company-owned system, roughly 30,000 employees. That’s a lot of training, and I think we set those young people up, even if they don’t want to stay with us, for future job roles. It’s very hard for young people to get that experience but it’s invaluable and something the food industry can definitely help with,” she says.  

“That’s what we do as a company, so I guess in terms of what we’re hoping to do in the community and youth space moving forward is to take some of our strengths training people and developing people, then taking them out into the community, so we can help other people – people who might not even work for us, but they can develop those skills and potentially become more employable.”

A priority for the future, Glover says, will be impact measurement.

“It’s something that we’re hoping to do because we’ve got a bit of gap there,” she says. “We really need to be able to measure the social value of what we’re doing.

“I think that businesses in Australia recognise that there’s good business reasons to be doing CSR, there’s definitely research and a lot of information around how doing CSR can enhance your business performance.

“But I think many, like us, in some respects, many businesses haven’t yet fully integrated CSR into their business strategy.

“Again, we’re on a journey, and we recognise that we’ve got a way to go yet.”