QUARTERLY
Association of Kentucky Fried Chicken Franchisees, Inc.
Spring 2020
2020 Convention Recap
Nashville strikes a chord with franchisees
PLUS: GAC Report | Shining Stars | Service Awards
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CONTENTS
2020 Convention Recap
AKFCF QUARTERLY SPRING 2020
2019-2020 SHINING STARS
40
KFC 2020 FRANCHISEE SERVICE AWARDS
46
20
FEATURES GAC Report: 2020 Election Update 16 By Amy Agenbroad Tables are quickly turning, and the stakes are getting higher with each primary and caucus vote throughout the nation.
2020 Convention Recap 20 By Kelly Rodenberg and Cory Sekine-Pettite There were more than a handful of moving and compelling presentations, with wild and fun moments that included guest celebrities, impactful messages from keynote speaker Shawn Achor, high-energy performances from artists Lee Brice and James Dean Hicks, and the newly formatted Awards Luncheon where we honored key franchisees. SHINING STARS 40 2019-2020 By Cory Sekine-Pettite Every year, the AKFCF makes an effort to acknowledge individuals who exceed expectations in the volunteer work they do for our franchisee family. Read this year’s stories. 2020 FRANCHISEE SERVICE AWARDS 46 KFC By Cory Sekine-Pettite The AKFCF’s Service Awards honor those franchisees who have served their communities for 40-plus years. Read brief profiles of some of these franchisees and learn their secrets to success.
DEPARTMENTS 4 From the Editor 6 From the President 8 NCAC Report 10 In the News 54 Regional Short 55 Education Committee Report 56 KFC Foundation 58 Executive Director Update 60 Legal Update By Ronald Gardner 62 Best Practices *Special Report* 63 Looking Back
COVER: 2020 AKFCF Annual Convention The KFC family came out in strides for the 2020 AKFCF Annual Convention’s “Banding Together and Leading the Way” tour. It was one of the most entertaining and informative shows to hit the Nashville scene in years.
2 AKFCF Quarterly Spring 2020
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FROM THE EDITOR
QUARTERLY Official Publication of the Association of Kentucky Fried Chicken Franchisees AKFCF QUARTERLY MISSION STATEMENT
AN UNUSUAL TIME By Michelle Hunt
I
t’s an unusual time; a time we will hopefully will never see again in our lifetimes. Some businesses have completely shut down — forced or otherwise. Most of us are in the lucky (or maybe unlucky) position of still being open for carryout, click and collect, drive-thru, and delivery. The positive is that we are still providing homestyle meals for families and individuals as they weather this storm. Many of us also have donated to those who are essential employees on the front lines of this health crisis. I’m focused on the positive, and the majority of this issue should help you do that too! As always, in the spring issue we remember our great KFC family reunion in February, which now seems like a year ago instead of just a couple months. What a great event! Not realizing at the time where we would be now, makes me sad that we didn’t have more time to spend with each other. However, we did receive a lot of great information, we tasted new products, and learned both from each other and many great presenters. Flip those pages and look at our 2020 Convention recap beginning on page 20. In addition, most of the columns have a connection to information provided at this year’s Convention so don’t skimp on the columns. But we also have a special message from AKFCF President Jim McKenzie, specifically about COVID-19. Beginning on pages 40 and 46, we highlight recognition of our AKFCF Shining Stars over the past year, as well as KFCC’s 40+ Year Service Award winners. I love hearing how people started in this business and everything they’ve accomplished within their businesses, as well as in other organizations, including the AKFCF. With the ever-changing world that we are living in, we had to do some re-writes and edits to important information included in this issue. We apologize for the delay, but wanted to give you the most timely information we could within the confines of a printed publication. We know you understand, but we wanted to give an explanation for this not landing in your mailbox sooner. You will have a link to the digital edition in the next eNewsletter, and if you ever have any questions, please don’t hesitate to contact me. As for us in Iowa, we’re pushing through. I’m thankful I can either go to our small office or work from home. But most often, I’m at the office trying to maintain some sense of normalcy. We’re trying to take care of our employees and customers just like everyone else out there. I’m confident we’ll come through this and probably for the better. Every hardship offers lessons that make us better people. Find the positive in each moment, each day, and each socially-distanced interaction. I pray that all of you and your families stay safe and healthy. But if this virus does touch your lives, I pray for strength and healing. Take care,
4 AKFCF Quarterly Spring 2020
The AKFCF Quarterly is the voice of today’s franchisee family and supports the mission of the Association of Kentucky Fried Chicken Franchisees, Inc.
AKFCF EDITORIAL TEAM
AKFCF President Editor Assistant Editor AKFCF Administrative Director Communications Chair Executive Director Past President
Jim McKenzie Michelle Hunt Julie Mantlo Debbie Newton Kevin Schlutz Kelly Rodenberg Bryan Robinson
The AKFCF Quarterly (ISSN 1071-9873) is published by the Association of Kentucky Fried Chicken Franchisees for its members and their friends. AKFCF is the independent Association of Kentucky Fried Chicken Franchisees.
FRANCHISEE EDITORS:
Michelle Hunt 14812 N Avenue, Columbus Junction, IA 52738 Phone: (319) 728-3282 Fax: (319) 728-2940 michelle@centraliowakfc.com Julie Mantlo 855 Lovers Lane, Suite 111, Bowling Green, KY 42103 Phone: (270) 783-8880 julie@rogmancorp.com Zaira Guevara (International Liaison) Pty # 69328, P.O. Box 25207, Miami, FL 33102 Phone: (305) 384-4242 (U.S.) (011) 506 2208-7828 (Direct) zguevara@caribla.com
Copyright ©2020 AKFCF, Inc. All rights reserved. Articles may be quoted with credit to the source. Information in the AKFCF Quarterly (ISSN 1071-9873) represents the views of the authors and unless noted otherwise does not necessarily reflect the policies or position of AKFCF, Inc. Acceptance of paid advertising does not imply endorsement by the Association, or approval of the advertiser or its product or service by KFC Corporation.
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FROM THE PRESIDENT
LEADING THE WAY IN 2020 By Jim McKenzie
T
he sheer energy I witnessed at the 2020 Annual Convention in Nashville tells me that our KFC Family was truly engaged in the Convention theme, “Banding Together and Leading the Way.” Convention registration and attendance were up. Convention activities were vast, and much energy and excitement were had. Sincere thanks go out to all those involved in the planning process and presentations who exhibited excellent, challenging, engaging, and inspiring work. Our AKFCF Family is the heart and soul of the KFC brand and the Convention is equal parts family reunion and business. Among the highlights each year are the general session presentations with a breakdown of what’s to come in areas like marketing, operations, food innovation, and restaurant development. We also hold interactive workshops to get further into the weeds on more complex topics; and we spend time with our suppliers in the Trade Show who are important partners in KFC’s success and are very much a part of our extended family. The business updates are critical. It’s the one time of year that everyone gets together in person to talk about the things that will help our brand grow, and to address any challenges that may be holding us back. Another highlight of the Convention is the recognition we give to some of our very best. But most importantly, it’s a time for us all to develop our leader mindset, celebrate the progress we have made, and align on future plans to grow our business. With the AKFCF by our side,
6 AKFCF Quarterly Spring 2020
franchisees have stepped up our operating capabilities in big ways to bring home the message that KFC is the brand to beat. We have enthusiastically returned to the basics of what makes our food great. Through our re-Colonelization initiative, chicken mastery training, new Scoop to Order pack line process, sizzling hot Crisp Up delivery, and our focus on delivering Hot, Fresh and Available product, we are now cooking for our customers exactly the way we are supposed to. As franchisees, it’s our responsibility to have great operating capabilities at every restaurant, driven by the needs of our customers. We are making choices to offer our
Our AKFCF Family is the heart and soul of the KFC brand and the Convention is equal parts family reunion and business. Among the highlights each year are the general session presentations with a breakdown of what’s to come in areas like marketing, operations, food innovation, and restaurant development.
customers new products, using technology to enhance convenience, and creating contemporary and welcoming spaces. We must continue to evolve as a trusted brand that realizes boneless products are where the market is moving. I am confident that we all believe it is imperative that we have new items to talk about (Kentucky Fried Wings, a signature chicken sandwich, Beyond Chicken Nuggets, Original Recipe Fries, and boneless wings). KFCC has rolled out some new products that have been successful, but we can’t rest on our laurels. Changing customer desires and expectations demand our constant attention and ability to adjust the way we go to market and the products we are offering. We are committed and poised to lead the way with innovative products that are true to our roots and fantastic for our customers. We also are incorporating new and improved technology. For example, the technology that’s allowing us to increase our delivery capabilities is not only a significant convenience for our customers; it’s also an opportunity for all of us to increase our sales, supplementing our traditional drive-through, carry out, and dine-in business. We must embrace the technologies that allow us to reach our customers in different ways and better predict their preferences in food choices and taste. And in some cases, we are going to be using technology we can’t even imagine right now. We are committed to creating welcoming, modern spaces for our customers, and we are more than halfway
done with upgrading the assets at all restaurants — with a projection that over 70 percent of the system will be using the American Showman look by the end of this year. This new look is another push of momentum as we look to the future with net-positive restaurant growth for the first time in a long time. We all know there was a bump along the road with execution, and many of us felt it. But the concept is solid, and we have regrouped, and plans are going full steam ahead. New products, new technology, new construction. As a business owner, that’s a lot to manage — not to mention market forces and everything else you deal with on a daily basis. Always remember that AKFCF is here to help you through all of it, and to ensure that your business thrives. There is another really important question that we need to ask ourselves as we consider what it means to lead the way: What kind of culture are we creating in our restaurants that makes us the first choice for both customers and employees? Across the board, labor is our biggest challenge and opportunity as business owners. Certainly, wages are a significant consideration, but I would say that even more urgent is our access to quality labor. We can have the newest buildings, the most cutting-edge technology, and the best ad campaigns, but none of our plans can be implemented without having top-notch people to operate our restaurants and serve our guests. Good team members are our most valuable asset! They are the boots on the ground that get everything done. To most of our customers, they are the face of our business, the face of KFC. And when our team members shine, our customers see it — and will come back, again and again. Attracting the right team members is a good start. KFC is helping us communicate to potential employees that KFC restaurants are a great place to work, providing us with information to share about our scholarship funds, career paths, and the Rising Star program, to name a few. Training our new team members properly is so important, as is being clear about job descriptions and responsibilities. Taking the time to walk with new team members
during the beginning of their KFC journey is a key component of retaining good employees. The more we can mentor and guide our team members, the more connected they will be to their job, the business, and ultimately the customers. But even if we effectively train our team members, if the overall culture is toxic or apathetic, we still risk losing them. We are responsible for making sure our managers are equipped and supported in nurturing the kind of culture that leads to customer and employee loyalty. Franchisees’ leadership and support in helping create this culture is imperative for it to exist in the restaurants. As our RGMs learn about leading with the heart through the HeartStyles training, they have a better understanding of what motivates people to perform at their best. They are learning more about strengthening interpersonal relationships, and creating a culture in which everyone can flourish, feel valued, and be their best self. Recognition for a job well done is key to nurturing a positive culture and retaining employees. Cooking the perfect piece of fried chicken is really important. But praising someone for cooking that perfect chicken is even more important. Recognition is such a powerful tool. People have a deep desire to be recognized, so let’s do it! From new product offerings to a better point-of-sale service, new methods to aid efficiency and effectiveness are everywhere. While our Colonel’s core principles won’t
change, our methods need to. The AKFCF also is adjusting its methods and structures to make sure it is evolving and providing the benefits and services for the needs of franchisees today. As of last month, the Upper Midwest and Great Lakes regions officially merged into one region. A funding process has been established to support our National Contingency Fund, the creation of a technology committee within the NCAC will have three franchisee appointed members (Anthony Gianino, Bryann Robinson, and Justin Stewart) on it, and we have hired Speaking Socially to help us improve and enhance our communication. I know you hear this every year, but it’s worth repeating. If you get involved in the AKFCF, your association, you will get way more out of it than you put into it. I know I have. And if all of us can help build an organization that others will benefit from in the future, and if we can sustain an organization that will be even better for them than it is for us, then our hard work and experience will have an additional payoff. And don’t worry, getting involved doesn’t mean you have to be president! Each one of you in this Association is a leader, though. We have different leadership styles, and we are all at different stages of our leadership development; but we wouldn’t be here if we didn’t believe to our core in what we are doing. Even if we don’t have the answers right away, we will figure things out because that’s what leaders do. n
Spring 2020 AKFCF Quarterly 7
NCAC REPORT
ENSURING ADEQUATE ADVERTISING FUNDING By Tom Broome Dear Fellow Franchisees, By now, I hope you have started to find some relief for your business, either through sales starting to turn around or even the Payroll Protection Program. Like you, the NCAC has been trying to balance our income — your contributions — with our expenses. As of early April, we had to cut our budgets by nearly 30 percent, based on forecasted sales and restaurant closures. Nearly all of our marketing categories, as well as G/A, took cuts of 20 percent to 33 percent. Even our agency partners,
8 AKFCF Quarterly Spring 2020
with whom we have contractual agreements, agreed to cut their fees and expenses. The implications of our cuts are far-reaching and include the following: Media (31 percent) • One layer for the balance of year — no high-low strategy • Two new product launches (versus 4-5 planned), currently to support Secret Recipe Fries and new Tenders. • Ability to stay on air every week, but at “sustaining” levels • Eliminated some mediums, including
national radio • Social and digital media remain strong Creative (32 percent) • Fewer TRPs means fewer commercials • No celebrity Colonels Public Relations (27 percent) • Fewer windows supported • Fewer events that put us in the popular culture realm Testing (31 percent) • Pushed testing to late summer/early fall,
giving us time for fewer tests • Only one TV test, versus two planned These are the key pieces of marketing that drive our sales. Our concern is that if we cut any further, we will be in a hole that we cannot get out of, further impacting our sales in the future. Our food is perfectly positioned for this situation, but we also must retain enough awareness that when business turns around, consumers will think of us first. Otherwise, we could be digging ourselves out of a hole so deep that we end up not being able to climb out. I want to make sure that you all know that the NCAC is working very hard on your behalf. Most subcommittees are meeting at least weekly to ensure you have POP that will help drive sales (think $30 Fill Up), or that the KFC Operations Team has input from some of the best operators in the system.
I want to make sure that you all know that the NCAC is working very hard on your behalf. Most subcommittees are meeting at least weekly to ensure you have POP that will help drive sales (think $30 Fill Up), or that the KFC Operations Team has input from some of the best operators in the system.
But all the hard work will be for naught if we don’t have adequate funding, and that means we need all franchisees to commit to paying your contributions on time. As it stands now, we may have cash flow issues June through November, forcing us to tap into a line of credit that we haven’t used in many years, if ever. That of course, will cost us additional money in interest. I know this is easier said than done, whether you’re a single-restaurant operator
PROUD KFC PARTNER Your Pilgrim's contact:
or even a mid-size operator like myself. With deferred royalties, support from the Payroll Protection Plan, and many suppliers offering extended terms, we are hopeful that you will put advertising first on your list to pay, as it will be advertising that helps us recover. I am confident that we will recover, and the KFC family will be closer than ever before. The full NCAC committee sincerely appreciates your support. n
l<.FC
Scott Tucker • scott.tucker@pilgrims.com • 256-201-2928 Spring 2020 AKFCF Quarterly 9
In the NEWS
KFC PARTNERS WITH BLESSINGS IN A BACKPACK TO PREVENT CHILD HUNGER DURING SCHOOL CLOSURES
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lessings in a Backpack, a 501(c)(3) non-profit organization that provides meals to children who might otherwise go hungry, accepted a critical donation to help fulfill its mission amidst the country’s coronavirus pandemic. KFC U.S. donated $400,000 to the organization, which funded pre-packed “Blessings Bags” filled with food for school children. One in five American children faces food insecurity — more than the populations of New York City, Los Angeles, and Chicago combined, the organization reports. Federal school meal programs provide breakfast and lunch during the school day, but Blessings in a Backpack works to fill the gap so that children do not go hungry on the weekends. With mandatory school closures that impacted the United States in March and April, this donation helped to feed 100,000 children who depend on the federal free and reduced meal programs at their schools, bridging a critical gap during the global pandemic. To best serve children
who faced school closures, these meals were distributed through existing Blessings in a Backpack programs at local feeding sites throughout the country. KFC has been partnering with Blessings in a Backpack since 2017. Employees at KFC’s Louisville headquarters volunteer weekly to provide and physically package up more than 300 meals for local students. “We’re all living in a time of uncertainty, but children shouldn’t have to worry about
where their next meal is coming from,” said Kevin Hochman, president, KFC U.S. “We’re proud to partner with an organization like Blessings in a Backpack who, like KFC, is focused on feeding America.” Both founded in Louisville, Kentucky, Blessings in a Backpack and KFC share common goals of changing lives for the better, fighting hunger, and providing whole meals for children and families across the country. Blessings feeds more than 87,000 children in 1,092 schools in 45 U.S. states and the District of Columbia. In addition to its support of Blessings in a Backpack, select KFC restaurants across the country donate surplus food every week to nonprofit organizations in their communities through the KFC Harvest program. Since it began in 1999, KFC’s Harvest program has donated more than 82 million pounds of food to those in need. This critical work continues during this time of increased food insecurity. n Source: Appalachian News-Express
INTERNATIONAL MENU INNOVATION: KFC SINGAPORE INTROS A TACO WITH A FRIED CHICKEN ‘SHELL,’ VIETNAM SELLS DRAGON FRUIT BURGER
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Photo courtesy KFC Singapore/Instagram
ne of KFC Singapore’s latest LTOs, known as the KFC Kentaco, is a taco with a fried chicken shell stuffed with lettuce, tomato, and a mix of four cheeses. Online reviewers are calling it genius.
10 AKFCF Quarterly Spring 2020
When the new menu item was launched in February, people began flocking to restaurants to try it. Delish.com News Editor Kristin Salaky noted that KFC Singapore also offers fried chicken skin. Regarding these two items, she says she is ready to pack her bags for a trip to try them herself. Of course, the item is now gone, but it may have proved popular enough for the Kentaco’s eventual return. Meanwhile in Vietnam, KFC fans there have been lining up for a new fried chicken sandwich that features a bun made with dragon fruit. Business Insider reported recently that pink baked goods made with dragon fruit have become popular in Vietnam, after the country struggled to sell
excess fruit due to the coronavirus outbreak. The pink sandwich offer ended in late March, but could return soon, ideally as a popular bun alternative and not because of a global pandemic. n Source: Delish.com
WEST QUALITY FOOD SERVICE MAKES HEADLINES IN MISSISSIPPI
K
FC franchisee West Quality Food Service (WQFS) is known as a “Best of the Best” operation, a fact that was not lost on the local news media in New Albany, Mississippi. The New Albany Gazette reported recently from WQFSowned KFC as the staff celebrated its Best of the Best designation for the second straight year. “We’re here to celebrate Catina Jeffries and the team in New Albany for their second Best of the Best designation,” Hilary Black, director of restaurant excellence for West Quality Food Service, told the newspaper. “This store was named number 18 out of 5,000 KFC’s in the United States.”
Black and other representatives from WQFS were on hand to present employees with cake and ice cream, as well as pizza and gift cards. She said that Jeffries, the restaurant’s general manager, also received a three-day trip to San Diego for recognition at a company-wide meeting. The award is based upon several metrics, including customer satisfaction, operations, and store inspection. “They’re graded every 28 days,” Black said. “The store received a perfect five for the year, which put them in the running for this award.” n Source: New Albany Gazette
Condolences: Roy Matthews, 77, former franchisee from Valley, Alabama, passed away in February. He was the owner of KFC franchises in Alabama and Georgia for over 30 years. After retiring, he and his wife, Adell, enjoyed traveling, gardening, and collecting Roy Rogers memorabilia. These endeavors afforded Roy and Adell many endearing friendships. Roy is survived by his son, Richard (and wife, Allyson) of West Point, Georgia; three granddaughters, Carrie, Langley, and Emily Jo Matthews; and by his sister, Jane (Wesley) Johnson of Gadsden, Alabama.
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Spring 2020 AKFCF Quarterly 11
In the NEWS
NEW RESEARCH DETAILS EARLY IMPACT OF CORONAVIRUS PANDEMIC ON RESTAURANT INDUSTRY
A
ccording to a Mar. 25, 2020 report from the National Restaurant Association (NRA), as the coronavirus epidemic rages on, 3 percent of restaurant operators have already permanently closed their restaurants, 44 percent have temporarily closed their restaurants, and 11 percent say they anticipate they will permanently close within the next 30 days. The NRA conducted a survey of more than 4,000 restaurant owners and operators, and found: • Nationwide, sales were down 47 percent during the period from March 1 to March 22 • 54 percent of restaurant operators have switched to off-premises service only • Seven in 10 operators have had to lay off employees and reduce the number of hours worked • Roughly half of them anticipate more layoffs and hourly reductions over the next 30 days • More than six in 10 said they’ve had to reduce their operating hours A full 88 percent of operators reported that total sales volume between March 1 and March 22 this year was lower than it was during the same period a year ago. “Association research found that 54 percent of operators made the switch to all off-premises services; 44 percent have had to temporarily close down. This is uncharted territory,” said Hudson Riehle, the NRA’s senior vice president of research. “The industry has never experienced anything like this before.” Based on the survey results, the NRA estimates that during the first 22 days of March, the restaurant industry lost an estimated $25 billion in sales and more than 3 million jobs. n Source: restaurant.org
FOOD DELIVERY DEMAND SPIKES AMID DINE-IN RESTAURANT CLOSINGS
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oodBoss, the largest online food ordering search engine in the U.S. that aggregates multiple food delivery services in one place, released data recently that demonstrates the impact the Coronavirus pandemic has had on the demand for food delivery. According to the company, during the nation’s peak self-isolation period in March, demand for food delivery rose dramatically as cities and states ordered residents to stay home. FoodBoss found consumer demand for food delivery jumped 23.1 percent nationwide from February to March. On a city by city level, demand for food delivery increased: • 19.6 percent in Chicago • 12.7 percent in Philadelphia • 9.0 percent in New York City • 61.5 percent in Los Angeles • 128.7 percent in Boston
12 AKFCF Quarterly Spring 2020
As officials take more aggressive measures to fight the spread of COVID-19, it is likely more cities and states will follow suit and limit restaurants to delivery or carry-out options only. After an Initial Spike, Fees for Consumers Have Dropped The increased demand initially caused a rise in food delivery fees. In early March, food delivery fees were 16.3 percent higher compared to early February. Since then, fees have returned to pre-quarantine levels and in some cases lowered as third-party food delivery companies and restaurants continue to work to provide an essential service in the face of the novel COVID-19 outbreak. FoodBoss users can compare food
delivery prices and time estimates across multiple different food delivery services in one place. In cities where dine-in options have closed, there has been a rise in consumers searching based on estimated delivery times. In Chicago, the percent of users searching based on estimated delivery times jumped from 12.2 percent in February to 32.1 percent in March. Users are valuing faster delivery times more while in quarantine than previously before. Ordering at off peak hours is the best way to get your food delivered faster. According to FoodBoss data, the least busy times to order food is 2 p.m. on weekdays, before 12 p.m. on Saturday, and before 11 a.m. on Sunday, though demand is fluid and could vary by day-to-day conditions in different cities. n Source: FoodBoss
YUM! TO ELIMINATE FOAM PACKAGING
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aco Bell, KFC, and Pizza Hut are getting ready to ditch polystyrene foam packaging at all of their restaurants. Yum! is aiming to eliminate the foam packaging by 2022. The company said it is continuing work on an earlier pledge by Taco Bell to make all its packaging recyclable, compostable, or reusable by 2025. KFCC also previously pledged to make all plastic-based consumer-facing packaging recoverable or reusable by 2025. Foam packaging has become an increasingly frequent target of environmental activists, prompting many quick-serve brands to move to alternative packaging. For example, McDonald’s pledged to stop using the material for packaging in 2018, and Dunkin’ Brands has said it will also stop. The Yum! decision came after a shareholder proposal urging action on foam packaging from As You Sow, a nonprofit that promotes environmental causes through shareholder advocacy and other strategies. “This action could significantly reduce the amount of single-use packaging that ends up as littered waste, especially in developing economies where Yum! does substantial business,” Conrad MacKerron, senior vice president at As You Sow, said in a news release. Expanded polystyrene foam packaging, sometimes known as Styrofoam, is used in beverage cups and takeout containers, according to As You Sow. It’s a frequent component of beach litter, where it breaks down into indigestible pellets and is often consumed by animals, sometimes leading to death. n Source: Syracuse.com
DID YOU KNOW? Colonel Sanders’ restaurant in Corbin was called the Sanders Court & Café. The Colonel’s favorite word, “Dadgummit,” also is the first word in his book. Before Colonel Sanders developed his worldfamous chicken, the first food item he was taught to make was bread.
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Spring 2020 AKFCF Quarterly 13
In the NEWS
YUM! COMPLETES ACQUISITION OF THE HABIT RESTAURANTS INC.
I
n mid-March, Yum! announced that it had completed its acquisition of The Habit Restaurants, Inc. (“The Habit Burger Grill”), a fast-casual restaurant concept that specializes in preparing fresh, made-to-order chargrilled burgers and sandwiches. “The Habit Burger Grill is a sweet spot within fast-casual because of its delicious California-inspired menu with premium ingredients at a QSR-like value, strong unit economics, and tremendous untapped
growth potential in the U.S. and internationally,” said David Gibbs, CEO, Yum! Brands, of the $375-million deal. “Our franchisees have a new investment opportunity in an award-winning, fast-casual concept and The Habit Burger Grill can access Yum!’s unmatched scale and strengths in franchising, purchasing, and brand-building.” The Habit Burger Grill has grown its company-operated restaurant average unit volumes (AUVs) from approximately $1.2 million in fiscal year 2009 to approximately $1.9 million for fiscal year 2019, representing an increase of 53.9 percent. In the same time period, the company has grown from 26 locations in California to 271 locations in
13 states, as well as internationally in China at a compound annual growth rate of 26.4 percent. The Habit Burger Grill will remain based in Irvine, California, and will continue to be managed by the company’s President and CEO Russell Bendel and CFO Ira Fils. n Source: Yum!
Know Your Acronyms
In our business, there is a great deal of terminology and jargon. As more processes and systems are added, the acronyms continue to pile up. Thus, AKFCF Quarterly decided it is time for us all to brush up on the many acronyms you will hear in your daily lives and read about in this magazine. Be sure to pass this along to your employees, or post a copy in your offices. 76(5P) 1976(5P) KFC Franchise Agreement AKFCF Association of Kentucky Fried Chicken Franchisees ARL
Above Restaurant Leader
ASAP American Showman Asset Program AUM
Assistant Unit Manager
BOGO
Buy One Get One
BOH Back-of-house BSC
Balanced Scorecard
COB
Chicken on the Bone
COGS
Cost of Goods Sold
DMA
Designated Marketing Area
FA (Or F/A) Franchise Agreement FIT
Food Innovation Team
FSC
Food Safety Consultation
GAC
Government Affairs Committee
14 AKFCF Quarterly Spring 2020
IAYF International Association of Yum Franchisees (formerly known as the IAKFCF, International Association of KFC Franchisees) KFCC Kentucky Fried Chicken Corporation
POS
Point of Sale
QSR
Quick Serve Restaurant
REC Restaurant Economics Committee RGM
Restaurant General Manager
NAC National Advertising Cooperative (merged with NFAC to become NCAC)
RMI
Restaurant Margin Improvement
NCAC National Council and Advertising Cooperative
ROI
Return on Investment
NFAC National Franchisee Advisory Council (merged with NAC to become NCAC)
RSC
Restaurant Support Center
RSCS Restaurant Supply Chain Solutions (formerly UFPC)
NMS National Marketing Subcommittee NPC National Purchasing Cooperative (i.e., KFC NPC)
ROCC Restaurant Operations Compliance Check
SBRA Supplier Business Relationship Agreement TOL
Territory Operations Leader
TRP
Targeted Rating Point
OEC Operations Excellence Committee
VOC Voice of the Customer (formerly CBCC)
PAC
Political Action Committee
YUM
Yum! Brands
POP
Point of Purchase
YRI
Yum! Restaurants International
The Hard Way It is comparatively easy to prosper by trickery, the violation of confidence, oppression of the weak … sharp practices, cutting corners — all of those methods that we are so prone to palliate and do as “business shrewdness.” It is difficult to prosper by the keeping of promises, the deliverance of value in goods, in services and in deeds — and in the meeting of so-called “shrewdness” with sound merit and good ethics. The easy way is efficacious and speedy — the hard way arduous and long. But, as the clock ticks, the easy way becomes harder and the hard way becomes easier. And as the calendar records the years, it becomes increasingly evident that the easy way rests haphazardly upon shifting sands, whereas the hard way builds solidly a foundation of confidence that cannot be swept away.
Thus We Builded
®
*Dictionary: Present participle and verbal noun. To fashion or frame according to a systematic plan or by a definite process, to create, to BUILD reputation. Reprinted by permission of Colonel Sanders, November 1964. Copyrighted by Harland Sanders, 1973.
Spring 2020 AKFCF Quarterly 15
GAC Report
2020 Election Update
16 AKFCF Quarterly Spring 2020
By Amy Agenbroad
T
ables are quickly turning, and the stakes are getting higher with each primary and caucus vote throughout the nation. Washington is keeping a close eye on the moving parts of this election cycle, all in preparation for the 2020 Presidential election. Recently, Super Tuesday saw 14 states or territories vote with a significant share of pledged delegates available. Below you can find a summary of the nation’s first Super Tuesday and the shocking results.
Spring 2020 AKFCF Quarterly 17
To the Races March 3, 2020 marked the nation’s first Super Tuesday, which brought an unexpected result. Former Vice President Joe Biden reigned on that night, winning 10 of the 14 contests, including Texas, North Carolina, Virginia, Massachusetts, Minnesota, Tennessee, Alabama, Oklahoma, Arkansas, and Maine. At press time, Biden continues to perform well in state primaries.
Total ad spending by 2020 candidates Here’s what the candidates spent on TV, radio and digital advertising as of March 3.
factor in Minnesota was likely the last-minute endorsement of former candidate Sen. Amy Klobuchar. Sen. Elizabeth Warren Michael Bloomberg $560M underperformed with a thirdTom Steyer $210M place finish and was defeated in her home state of MassaDonald Trump $60M chusetts, ultimately ending her Bernie Sanders $55M 2020 presidential campaign. As Pete Buttigieg $36M they say, everything is bigger in Elizabeth Warren $27M Texas, and once again the state Amy Klobuchar $17M lived up to its name and was one of the night’s biggest upsets. Joe Biden $16M Biden swept Texas even though Tulsi Gabbard $5.5M Bernie Sanders was expected as $0.0 $200M $400M $600M Joe Biden the favorite. Meanwhile, former Note: These figures do not include PAC spending Former VP Biden was on a New York City Mayor Mike Source: Kantar Media/CMAG high as the first Super TuesBloomberg’s underperformance day’s polling doors began to after spending over $200 million close. He won over a broader in campaign ads just in Super coalition of voters than previously expected, and Massachusetts, both states where Biden Tuesday states caused him to drop out and which delivered several upset victories. Two spent very few or no campaign funds and endorse Joe Biden alongside Klobuchar and of the biggest upsets were in Minnesota did not actively campaign. A contributing Pete Buttigieg.
AKFCF – Political Action Committee (PAC)
The AKFCF created a PAC to make sure our voices are heard in Washington, D.C. The AKFCF Government Affairs Committee and the AKFCF PAC Board of Directors would like to thank the franchisees listed below for their contributions to the AKFCF PAC. Each quarter, we list the names of the franchisees who have supported the PAC at time of print as a token of our appreciation. This list is all the latest contributions, broken down by region. We encourage you to please join your fellow franchisees and support your AKFCF PAC. For information on how you can become involved, or if you don’t see your name and should, please contact Leslie Sharp, treasurer of AKFCF GAC/PAC at lcsharp4133@icloud.com. Great Lakes Lesley Hottinger Mark Lambos Craig Lee Diana Myers Shelly Vorrath Scott Vorrath Nanette Walker Robert Widder Northeast Ray Aley Cheryl Aley Bryan Barrett J. Michael Barrett Tommy Cecconi Keith Cole Frederick Gallant Sherry Houston Michael Houston Rob Rianna
18 AKFCF Quarterly Spring 2020
Alex Rosenblum Eugene Skowronski Larry Starkey Northwest Ralph Harman Jeannie Harman Brett Harris Fred Jackson Jamie Jackson Marvin and Cindy Jorgensen Anne Mehl Todd Stewart Amin Vakil Calvin White Southeast Eric and Sandra Felker Austin Felker Kim Fowler Chris Fowler Tim Harris
Howard Killgo James and Angela Ogle Eric Overcash Vic Peeples Terry Rogers Andy Rosen Leslie Sharp Marcus Shelton Bill and Bonny Shelton Kelly and Jay Shoffner Mallory Shoffner Quintero Jeff Wallace Charles (Tim) West Richard (Dick) West William (Bill) West Daniel Yagoda Southern California Amjad Chaudhry Shahid Chaudhry Lonnie Noble
Raziel Valiente Southwest Robert Alred Debra Ashmore Sheila Boespflug Andie Cremer Doyle Sanders Kelli Spring Upper Midwest Noah Hommerding Kirstin Mana Jain Rajeev Alan Salts Kevin Schlutz Sally Shane Douglas Smith Amanda Urquhart Peter Wasilevich Adam Wright
How the VP emerged Biden’s strongest support remains in the South. The support that led to a near-30-point victory in South Carolina carried over to similarly strong wins in neighboring North Carolina and Virginia. Super Tuesday’s results show Biden is building a coalition and widening voting margins by winning over older voters (who are most likely to vote), late deciders, and those focused on nominating a candidate they consider to be best positioned to defeat President Trump in November. Sen. Klobuchar and Former South Bend, Indiana Mayor Buttigieg had a big hand in Biden’s success by dropping the race and giving him their endorsement. Their endorsements helped him appeal to Democrats in the suburbs and win to Sen. Klobuchar’s home state of Minnesota. Their endorsements, along with the surprisingly strong results in South Carolina, are said to be a turning point in Biden’s fight for the Presidency. The lingering question remains, “do voters stand with Biden or Sanders, or are they just wanting President Trump out of office?” Presidential campaign spending The 2020 presidential election is predicted to become one of the costliest campaigns in history. A few reasons for this are: 1. U.S. presidential candidates are announcing their candidacy early on in the race, therefore having to fund long-run campaigns 2. Reaching target markets and spreading message across America in terms of population and size, and 3. Incumbent members continuing their already established campaign funding from previous election cycles. Bloomberg alone spent $4.2 million per Super Tuesday delegate, totaling $224 million. His lone win was in American Samoa. Individuals are allowed to give up to $5,600 to a presidential candidate’s principal campaign committee, but can give unlimited amounts to super PACs, which are meant to be independent political action committee that support particular candidates. Additionally, individuals are able to run ads for or against candidates using their own funds. Please see the chart highlighting total ad spending by 2020 candidates as of March 3.
time to act is now. The AKFCF PAC needs your help raising funds for the campaigns of the 116th Congress. Contributing to the AKFCF Political Action Committee (PAC) is the best way to support the election and re-election committees of pro-business Members of Congress who share the same concerns as franchisees. The money raised in the PAC goes directly to the campaign of those run-
ning for Congress, or incumbent members seeking reelection. You may make your 2020 AKFCF PAC donation online by visiting our portal on the AKFCF website in the Government Affairs tab. For more information, please contact your regional GAC representative or Amy Agenbroad of Polaris Consulting, LLC (aagenbroad@polariswdc.com). n
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Stay Involved, Donate to the AKFCF PAC 2020 will be a landmark election year and the Spring 2020 AKFCF Quarterly 19
2020 Convention Recap Nashville strikes a chord with franchisees By Kelly Rodenberg and Cory Sekine-Pettite
20 AKFCF Quarterly Spring 2020
Spring 2020 AKFCF Quarterly 21
2020 Convention Recap
T
he KFC family came out in strides for the 2020 AKFCF Annual Convention’s “Banding Together and Leading the Way” tour. It was one of the most entertaining and informative shows to hit the Nashville scene in years. There were more than a handful of moving and compelling presentations, with wild and fun moments that included guest celebrities, impactful messages from keynote speaker Shawn Achor, high-energy
performances from artists Lee Brice and James Dean Hicks, and the newly formatted Awards Luncheon where we honored key franchisees. Our theme, “Banding Together and Leading the Way,” really struck a chord on many levels when we were developing this year’s Convention. And being in Nashville, it just made sense to involve one of Nashville’s premier singer/songwriters. The “AKFCF Song” was the core statement that
kicked off the opening act. The song was created and written by AKFCF President Jim McKenzie and 10-time, number-onehit singer/songwriter James Dean Hicks. James has written numerous hits such as “Goodbye Time” by Blake Shelton and “It Takes a Little Rain” by The Oak Ridge Boys. Not only that, artists such as Kenny Chesney, Miley Cyrus, Merle Haggard, Conway Twitty, and Kenny Rogers have recorded his songs.
Here are the lyrics to the “AKFCF Song”: They say this world is changing, changing so fast In this day and time it’s hard to find, anything that lasts But we’ve got something special, the original recipe It’s not the just the taste that makes us great, It’s our KFC family We do it for the Colonel To make him proud everyday We do it for the Colonel Banding together, and leading the way The road hasn’t always been easy, but it’s been well worth the ride What got us here thru all these years is working side by side
22 AKFCF Quarterly Spring 2020
And man we’re just getting started, and we won’t ever stop Cause we’ve got belief for each other to take us to the top We do it for the Colonel To make him proud everyday We do it for the Colonel Banding together and leading the way Let’s do it for the Colonel To make him proud everyday Let’s do it for the Colonel Banding together, and leading the way
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2020 Convention Recap
Opening Remarks
O
ver the past five years, we’ve done a great job banding together to rebuild KFC as a brand and to make it relevant again,” said McKenzie during his opening address to the system. “We are back in the conversation with our customers. We are back in the faces of our competitors. Every person who is part of the KFC team — from corporate to vendors, from the RSCS to our ad agency, and especially every single one of our KFC franchisees — has made a difference. It’s only because we are all part of the KFC Family that any of us are significant. For without each other, we can’t exist. “Not only have we banded together as an organization; we’ve also listened to our customers with the intent of creating meaningful change,” McKenzie continued. “With KFCC and our many partners, we have truly banded together in a spirit of like-mindedness and trust, with a foundation of honest communication. It can only get better. After all, we’re all in this together. “Banding together feels really good. In fact, it has resulted in what we’ve called a ‘turnaround.’ Some of you may remember one of the questions on last year’s KFCC partnership survey: “How do you feel about the turnaround?” My answer to that question is the same now as it was then: I don’t want to talk about a turnaround anymore. We’ve righted the ship, and now I want to talk about how we are going to lead our brand to be the best in the industry! We know we are headed in the right direction; now we need to think and act like leaders! Our mindset needs to be that of a leader, pushing us to go after those things that will put us on top!” We really have banded together, after so much effort by so many. We now have the luxury, the privilege, and the responsibility to lead the way for our customers, our businesses, and our families, McKen-
24 AKFCF Quarterly Spring 2020
zie said as he continued his opening remarks before a packed house at the Gaylord Opryland hotel. The task at hand is not easy, he said, but the Colonel’s legacy prepared us for this fight. If something needs to be done the hard way, that’s’ a job KFC is ready for! “We all know the pie isn’t getting much bigger, but the competition is and we’re all going after the same customers,” he said. “So, we should be asking ourselves some important questions: What are we doing to make sure customers come to us more than they have
in the past? How do we consistently offer an excellent, predictable experience that results in happier customers? How are we leading new customer’s right to our door? “New products, new technology, new construction. As a business owner, that’s a lot to manage,” McKenzie continued. “Not to mention market forces and everything else you deal with on a daily basis. Always remember that AKFCF is here to help you through all of it, and to ensure that your
business thrives. The times are changing. We all know that. The AKFCF has adjusted our structure to reflect the changing needs of franchisees. With franchise operator consolidation, we are changing the way we
PGP_FA22802_AKFCFQuarterly_Fall_PrintAd_hi.pdf
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look at regions, including banding together on meetings, membership, and leadership. We are always working on new ways to be efficient, responsive, and reliable in this constantly shifting business landscape.” This is your association with a collective voice that makes a difference. It doesn’t matter where you are from or how many restaurants you have. It’s one franchisee, one vote. The AKFCF brings us all together, so we can truly lead the way.
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Spring 2020 AKFCF Quarterly 25
2020 Convention Recap
Keynote Speaker Shawn Achor
W
ith the energy and conviction of a preacher and the humor of a stand-up comic, Shawn Achor kicked off the Convention with his message that individuals and communities fueled by happiness and optimism have more successful outcomes “by every measure that we know how to test for.” Achor admitted that some find happiness “fluffy,” so he backed up his hourlong presentation by citing dozens of studies that he and others have documented across decades. He even had the audience participate in a little project, proving that it’s nearly impossible for one person to look into the face of another smiling person without it being contagious — at least for 95 percent of the audience. This, he explained, is because our brains are wirelessly connected to others through mirror neurons, which is why businesses ranging from hospitals to hotels are training employees to smile and make eye contact when they encounter others. Another key to changing outcomes is rational optimism, which he defined as a real-
26 AKFCF Quarterly Spring 2020
istic assessment of the current situation and the belief that behavior matters and that the problems can be fixed, rather than believing that challenges are insurmountable. Achor admitted that stress in the world of restaurant service is unavoidable. However, “the effect of stress upon us is not inevitable. Our mindset is what matters. Do you perceive a
set of stressful circumstances as a challenge or a threat?” he asked. He gave examples of leaders who bring their teams together to have a shared experience of a stressful situation similar to a boot camp where team members bond. Achor wrapped up his presentation by sharing the behaviors that he said have been proven to increase happiness in even the most entrenched, pessimistic brains. Taking a few minutes a day, every day for 21 days, to practice these behaviors will create positive brain changes. 1. Identify three new things each day for which you are grateful and describe why. 2. At the end of a day, choose a positive thing that happened and write about it in detail for two minutes. 3. Find a fun cardio activity to do for 15 minutes. 4. Meditate for two minutes. 5. Perform a conscious act of kindness. Achor suggested making the first task in the morning a two-minute e-mail thanking someone for something that they have done.
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2020 Convention Recap
AKFCF Awards Luncheon
T
his year, the AKFCF took a new approach to proudly recognize and honor a select group of outstanding franchisees and partners at our first-ever Awards Luncheon. This special event gave us the opportunity to honor inspirational people across the country who are doing exceptional work in advancing the AKFCF’s mission and demonstrating the Colonel’s core values every day in their workplace. And the winners are…
AKFCF President’s Award – Mike Kulp
The President’s Award recognizes and honors a member who has consistently worked to support this mission statement, going above and beyond what anybody would expect. Mike Kulp is exactly that person. Mike has dedicated himself to improving the brand in ways that benefit us all. Whether it be through negotiating tough terms on franchisee matters with our partners at KFCC, testing numerous new product initiatives, assisting in the deMike Kulp velopment of new restaurant processes and procedures, or being actively involved in almost every NCAC committee while also encouraging senior members of his team to play important leadership roles in the AKFCF, Mike has given 100 percent to this brand and to all franchisees. There are many franchisees and partners who have worked with Mike behind the scenes and have experienced first-hand his commitment to the betterment of each and every franchisee in the system. For nearly two decades, his passion for creating a great place to work, a great place to eat, and a great place to own has created a unique culture at KBP Foods. Through his leadership, the company has realized exceptional growth and helped dozens of key leaders
28 AKFCF Quarterly Spring 2020
to realize true equity ownership, reaping the benefits of their own hard work. Today, KBP’s footprint covers more than 25 states and employees 15,000 team members. Over the course of the past decade, Mike also has built an impressive track record of supreme performance and unparalleled outcomes, producing significant results for us all to be proud of. Mike is active in leadership roles within franchising. He serves on the NCAC Board, and is one of two members of the NCAC that makes up the Brand Committee — the committee created by the Acceleration Agreement. He is the sole U.S. member of the Yum! Global Franchise Council. He also serves on the National Purchasing Cooperative Board of Directors Additionally, Mike and his wife, Stephanie, are dedicated to supporting non-profit organizations in every market in which KBP operates, creating a connection between employees and the local community. Under their leadership, KBP and the Kulp Family Foundation donated more than $2.5 million and 40,000 volunteer hours to local charities in 2019 alone.
Colonel’s Legacy Award – Anne McKenzie Goodnight
The Colonel’s Legacy award recognizes a franchisee who embraced the wonderful gift of continuing a family tradition of becoming
Anne McKenzie Goodnight
a franchisee in our great brand! This year, we recognized a franchisee who has been on both the receiving and giving end of this gift! Anne McKenzie Goodnight is a second-generation franchisee from Indiana. Anne was thrust into the KFC system in 1974 when her father unexpectedly died. She became a franchisee in 1976, and sole owner of McKenzie Foods, Inc., in 1981. She started this phase of her life after she had raised her three children: Jennifer, John, and Jim. To sharpen her business skills, she went back to school to refresh her accounting and computer skills, and in 1983 she took over full operational responsibilities of the franchise. Anne was very committed to learning the business from both the corporate and franchisee leaders. Anne joined the Great Lakes Franchisee Association in 1983 and, among other regional and national roles, served nine years on her region’s board of directors and as the treasurer of the Indianapolis DMA Advertising Co-Op for 10 years. Anne was committed to serving her guests with excellent food, service, and accommodations. She was equally committed to creating a rewarding and friendly work environment. Her successes were demonstrated by sales increases and employee retention year over year. She has been honored for leadership and restaurant excellence, winning several awards including The Five Star Operating Excellent Award, The Promise Pride Award (five years in a row), and was named Premier Operator by KFC
in 1994. At the Convention in 2002, Anne was awarded THE Heart Award, and her West Lafayette KFC was honored in 2000 as Best of the Best in America. “Speaking of the West Lafayette location, Anne asked me to work with her to build this restaurant in 1991,” said Anne’s son and AKFCF President Jim McKenzie. “In 1996, Anne married Bud Goodnight, and he took over responsibility for the physical building and maintenance, and by 2002 all of Anne’s locations were remodeled to the new KFC image. “In 2008, I became more involved with McKenzie Foods,” Jim continued. “While I had built two of Anne’s restaurants, I had never been involved in day-to-day operations of the business. Mom and I developed a plan that eventually would lead to my taking over as McKenzie Foods President. Today, with Anne’s continued involvement and mentorship, McKenzie Foods has 17 restaurants in its portfolio.”
I left high school 15 years ago without a diploma.
John R. Neal Award – Pete Wasilevich
The AKFCF annually awards the John R. Neal Award to a franchisee who has made exceptional contributions to our system through their service or affiliation with the NCAC. Pete started in the KFC business almost 50 years ago when he was hired as a cook by franchisee Ken Monroe at the age of 15 in Kenosha, Wisconsin. From 1971 to 1983, Pete worked as a cook, AUM, RGM, market coach and general manager for his franchisee. He acquired his first KFC in 1983 and began a long and impactful career as a KFC franchisee. By 1999, between new builds and acquisitions, Pete and his then-partner Terry Robinson grew their business to a total of 41 restaurants. It was at about the same time that Pete began devoting almost as much time to the NCAC as he did to his own business. Pete has been a member of the NCAC for 17 of the last 23 years. He has served on every permanent committee that has ever existed on NCAC, including terms on the Operations Committee, the Operations Excellence Committee, the Brand Committee, and the Audit Committee, as well as serving terms as the chairman of the Contracts and Facilities Committee and the National Marketing Subcommittee. There is no one on the planet who knows more about the marketing strategy behind selling the Colonel’s chicken than Pete Wasilevich. Pete is a founding member of the KFC Foundation, and served as one of the “three amigos” in negotiating the agreement that turned our brand around — the Acceleration Agreement. Every franchisee owes a debt of gratitude to the amount of time and effort Pete has spent negotiating, planning, and taking Pete Wasilevich
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Spring 2020 AKFCF Quarterly 29
2020 Convention Recap care of the business of KFC with a focus on the profitability of each and every one of us.
Lifetime Achievement Award – Terry Rogers
The Lifetime Achievement award recognizes an individual who has given decades of outstanding service and voluntary leadership spanning a career in franchising. An individual who has dedicated him or herself to serving all of us! Terry is a true Kentucky boy, born in Campbellsville in 1950, he also began dating his wife, Janet, in high school in the mid1960s. She was literally the “girl across the street.” Terry was a hard worker from the start. He worked at Rack’s Roast Beef to put himself through college at Western Kentucky University where he majored in history and was part of the Army ROTC. 1972 was a big year for Terry, as he married his high school sweetheart and was commissioned into the Army after graduating from college. He was then deployed to Korea for a year as a supply officer. After leaving the Army in 1977, he began working with his in-laws, Hubert and Mable Mays, running their KFC restaurants in Franklin and Russellville, Kentucky. He soon took over the business, and in his more than 40 years in the business, expanded to 17 Taco Bell and KFC restaurants in Kentucky and Tennessee. He and his family, including his children Chris and Julie, now operate 10 KFC and Taco Bell restaurants. Terry’s contribution to the KFC system reads like a book. He served as the president of the Southeast Region in 2001 and president of the AKFCF in 2011. He has served on the NCAC, the Cross-Concept Distribution Committee, and was the Vendor-Li-
Terry Rogers 30 AKFCF Quarterly Spring 2020
aison for the AKFCF for current roles, Allen and seven years. Additionally, Scott are responsible for Terry served on the convenEcolab’s cleaning, sanition planning committee for tation, and food safety seven years, as well as servprograms in KFCs across ing on multiple “relationthe United States. Allen Lelesch and Scott ship-building” committees “The continued Hessey of Ecolab between the AKFCF and success of our brand KFCC over his many years depends on the relaof service. He also served as the finance tionships we cultivate with supply partners chair of the AKFCF and as director on the who share our commitment to providing RSCS Concept Board. Terry was recognized the most outstanding products or services to by the NCAC in 2011 with its prestigious our customers,” McKenzie said in presenting Hard Way Award and has received multiple the awards. “We ask a lot of our suppliers, Shining Star Awards over the years. and they go to great lengths to deliver the While this is an impressive list of conhighest quality products and services we tributions, his greatest gift is more difficult challenge them to deliver. Allen and Scott to quantify. For decades, Terry has shared represent the very best in our system. We’re his wisdom, insight, strategic thinking, and grateful for their drive, true partnership, and guidance to colleagues and mentees on the commitment to growing our brand.” AKFCF Board. And he has always done it with a smile, his infectious laugh, and some Hard Way Award – Tom Slater of the best jokes you have ever heard. So, Every year during the Convention, the while Terry was never shy when it came NCAC presents its Hard Way Awards to to making the hard decisions,and doing some of the brand’s most dedicated supportthe hard work, he also knew how to make ers who demonstrate their commitment to everyone feel comfortable with a friendly the Colonel’s values. According to the Colsmile and a little humor when the moment onel, the Hard Way means “the keeping of was right. promises, the deliverance of value in goods, in services and in deeds, with sound merit Outstanding Partner Award – and good ethics.” This year, newly appointed Allen Lelesch and Scott Hessey NCAC Vice Chair Tom Broome presented of Ecolab the award to outgoing Vice Chair Tom Slater. The AKFCF Outstanding Partner Award “We are better as a brand, as an association, recognizes an individual who is not a KFC and as franchisees because of Tom,” said franchisee, but has made a substantial AKFCF President Jim McKenzie. contribution to the success of our system. Congratulations to all our winners! This award honors those who have provided us with best-in-class product, support or service, or one who has made an exceptional impact across the system. Allen began at Ecolab in 2002, and during his 17-year career, he has held a variety of positions on QSR field and marketing teams and in sales as an account lead for both Taco Bell and KFC. Scott began at Ecolab in 2007, and during his 12-year career, he has worked in various roles on their field and sales teams as an account lead. In their Tom Slater
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2020 Convention Recap
KFCC Presentations
K
FC U.S. President Kevin Hochman, and NCAC Vice Chair Tom Broome sat down with McKenzie to talk about updates on key brand results, insights into strategic plans, and where these true leaders are going to take us in the coming year. Hochman kicked off the KFCC presentation with a look back at 2019 and how we’ll use our learnings to be stronger in 2020 and grow much faster in the next five years. He invited the KFC U.S. Leadership Team and key franchisees to join him on stage to discuss how the system will get to $1.5M AUVs through four building blocks — Innovation, Pricing and Menuboard, Digital, and Assets. KFC U.S. Chief Financial Officer Trip Vornholt and franchisee Michael Fulenwider kicked off the panel discussions with an overview of the new iLumen tool and how it will give us a better understanding of our programs’ impact on profitability. Then, KFC U.S. Chief Marketing Officer Andrea Zahumensky talked about how marketing and operations will support profitability with menuboards to drive trade-up. She also discussed bringing in new offers that are designed to drive check, while finding the right balance so we don’t lose core customers who love $5 Fill Up. Similarly, KFC U.S. Chief Operations Officer Monica Rothgery discussed the sales upside to delivering a great experience in our restaurants.
32 AKFCF Quarterly Spring 2020
Zahumensky covered how we’ll apply three principles to our innovation program in 2020. First, KFCC will improve productivity on core products, which includes improving tenders and upgrading our chicken sandwich to a more premium item. Second, Corporate is designing more innovation such as the new chicken & donuts, Beyond Fried Chicken, and new fries to sell more chicken and bring in new customers. Finally, KFCC will innovate on value to grow transactions. Zahumensky and Rothgery talked through the new menu vision — a simpler menu, focused on what customers want today and makes us look and feel like a more modern brand. During the same presentation, KFC U.S. Chief Technology Officer Chris Caldwell outlined big areas of digital we’ll deliver on in 2020 — growing our mobile and delivery footprint, upgrading our own delivery channels with the launch of our new e-commerce platform, and the first-ever KFC app, which will help us gather first-party data and establish a performance marketing program with the goal of doubling digital sales by the end of 2020. Rothgery and Caldwell dis-
cussed how we’re going to make it easier for restaurants to manage online ordering and delivery. They also covered back-of-house technology available now like the Mobile Inventory App, and testing of a new RFID technology to make inventory counts even easier. KFC U.S. Chief Development Officer Brian Cahoe and franchisee Mike Kulp joined Hochman on stage to discuss remodels and new builds. American Showman now represents 55 percent of KFC restaurants. In 2019, we built 67 new restaurants — the most in over a decade. New builds continue to average $1.5M for all ground-up new builds and replacements and, when combined with our industry-leading new 2020 restaurant incentive, they can deliver a compelling return and payback. They talked about the importance of growth and how KFC needs to consistently be building to start to grow the brand again. Cahoe also highlighted progress on new designs, non-traditional locations, and new formats. Zahumensky wrapped up the general session with a “variety show” format that featured a few specials guests — Ethan Brown from Beyond Meat, country music entertainer Clint Black, and NFL Hall of Fame players Deion Sanders and Tony Gonzalez. They all came on stage to talk about their excitement for the KFC and Beyond Meat partnership. Zahumensky closed out the show with a sneak peek of some upcoming pop culture integrations.
Women’s Breakfast
Led by one of our first female franchisee, Anne McKenzie Goodnight, and KFC U.S. Chief Operations Officer, Monica Rothgery, the all new Women’s Breakfast was a resounding success. More than 200 women participated in this first-ofits-kind event. Guests gathered for a great meal, shared their experiences with the brand, offered business and management advice, and heard from Anne on her personal experience as a woman, mother, and KFC franchisee.
AKFCF Trading Post
Franchisees each received a $25 voucher to use at the Trading Post. It was a fun way for attendees to mingle, shop, and get excited about being in Nashville. Shoppers spent just over $10,000 on boots, hats, clothing, and jewelry from local vendors.
AKFCF Trade Show
One of the attendees’ favorite events during the Convention each year is the trade show, where the KFC family has a dedicated time and place to meet with all of the suppliers to the system. With 225 booths, this year’s show didn’t disappoint! From Sweet Lighting in the Pepsi booth to the New Secret Recipe Fries and KFC’s Beyond Fried Chicken nuggets in the KFCC “Kitchen” to the RSCS Alley, new products were debuted and tried-and-true items reinforced.
Spring 2020 AKFCF Quarterly 33
2020 Convention Recap Nashville Hot Party at the Wildhorse Saloon Attendees kicked up their heels during the Nashville Hot Party at the world-famous Wildhorse Saloon. Horses on the ceiling, country music on the stage, moonshine at the bar, signature smokehouse favorites on the dinner buffet and the sound of heals tapping on the floor — all of this made for an amazing night of entertainment for the KFC family. The highlight of the evening was a private performance by country music artist Lee Brice. Brice performed all of his top hits, including “Parking Lot Party,” “I Drive Your Truck,” “Hard To
Workshops
AKFCF Education Committee Chair Rob Rianna and his team put together an unforgettable collection of workshops and panels for the Convention, including the Leveraging Technology to Stay Relevant Workshop and the Drive Growth Workshop. All of the programming was designed to help franchisees keep up with technological advancements, to learn new management skills, and to navigate the legal landscape of running a KFC franchise. For a complete rundown of the workshop results, see Rianna’s column on page 55.
34 AKFCF Quarterly Spring 2020
Love,” “Love Like Crazy” and his first No. 1 “A Woman Like You.” With each note and guitar string strung, he seemed to effortlessly steal the stage and the hearts of many. Even if you were not a country fan, you were a Lee Brice fan by the end of the night. The compassion behind his words and the sincerity in his voice made the connection between him and the audience that much stronger. Brice definitely had the crowd on his side during their night out in downtown Nashville.
KFC Foundation Silent Auction
The KFC Foundation’s Silent Auction raised just over $25,000! All proceeds support the KFC Foundation, which provides a spectrum of charitable assistance programs to KFC restaurant employees, helping them earn their GED, go to college, make it through a hardship or crisis, learn important money management skills, and even receive their wish come true. Thank you to all who bid and congratulations to the winners.
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2020 Convention Recap Many Thanks to our Convention Committee
Jim McKenzie AKFCF President
Brandon Robertson AKFCF 1st VP
Alessio DiFranco AKFCF Finance Chair
Kelly Rodenberg AKFCF Executive Director
Deb Newton AKFCF Administrative Director
Leslie Sharp AKFCF Vendor Liaison
Rob Rianna AKFCF Education Committee Chair
Zaira Guevara Caribla Marketing and Administrative Coordinator
Thank you, Sponsors DIAMOND
PLATINUM
GOLD
SILVER Bunge
Accuserv Airgas ArcVision Inc. Atlas Sign & Awning Company Auspex Capital, LLC Benjamin Moore & Company Brakebush Brothers, Inc Capitol Light Case Farms CH Guenther
Cinnabon/Focus Group Lyons Magnus Claxton Poultry CraftMark Bakery Delaget Flower Bakeries General Mills Georgia Pacific Professional Graphic Packaging International
36 AKFCF Quarterly Spring 2020
BRONZE
Griffith Foods Grubhub Gycor International Idaho Pacific Corp InfoSync Services Kraft Heinz MarJac Poultry McCormick & Company, Inc. Orkin Pest Control Pacific Premier Franchise
Capital Par Technology Parapet Studios LLC Pattison Sign Group ProGroup Contracting Rational USA Revenue Management Solutions, LLC RJP Consulting Group Service Management Group
Simmons Prepared Foods Skechers Tetley Harris Food Group The Bama Companies, Inc. Waste Management National Accounts Wells Fargo Westrock Yelp
Behind Every Great Manager is a Great Leader Panel We have some amazing above-restaurant leaders (ARLs) in our brand! To change up the highly-successful Best of the Best panels from the last couple of years, the Education Committee decided this year to look to KFC ARLs who lead some of our best restaurants. Attendees discovered ways they support their managers and best practices that ARLs can apply to encourage their managers and teams to be their best selves! Rob Rianna and Cheryl Van Allen moderated this highly interactive session of panelists who included the following participants: • Enrique Bosch, Area Coach, AmFoods LLC • Heather Bowling, Director of Operations, Dunn & Bowling, Ltd. • Amparo Elenes, Area Coach, Polly’s • Glenn Barnes, Region Director, JRN
coming back through our doors, it’s going to change our industry for years to come. But we are banded together, and we’ll lead the way. As the song says, “we’re just getting started, and we’re not going to stop!”
In wrapping up the 2020 Convention, AKFCF President Jim McKenzie reminded us that following is easy, leading is hard. But we are strong enough to believe in each other and bold enough to trust each other. We can change our turnaround mindset to a leadership mindset. We have already seen this in so many initiatives already. As we transition from contender to leader, it’s going to feel a little scary because we have to take risks, he said. We’ll learn from our mistakes and we’ll celebrate victories. As we unlock the potential of our employees and make KFC a great place for people to work, it’s going to challenge our commitment to dig deep and invest in relationships. As we honor the Colonel’s legacy by making one great meal at a time for happy customers who keep
Spring 2020 AKFCF Quarterly 37
2020 Convention Recap 2020 AKFCF Convention Exhibitors 3M Accuserv ADP ADT Commercial Air Care Experts AKFCF Government Affairs Alconox, Inc. Ameritech Facility Services Anchor Packaging ArcVision Architects & Engineers ARYZTA LLC (Sweet Life, Fresh Start) AT&T Atlas Sign & Awning Company Auspex Capital Aviko B.V. Awningtec USA, Inc. AyrKing Corporation Bama BARCO Uniforms Barnett & Associates Basic American Foods Benjamin Moore & Company Beyond Meat BMO Harris Bank Brakebush Brothers, Inc Branch Brother Buccaneer Container Corp Budderfly Bunge Oils Cadence Bank Café Valley Capital Light Carlisle Foodservice Products Case Farms Cavendish Farms CHG Guenther LLC Cinnabon/Focus Brands Cintas Citizens Bank Claxton Poultry CMI Comcast Business Conagra Brands CraftMark Bakery Craig Specialty Advertising Crescent Franchise Solutions Crew Cummings Resources LLC 38 AKFCF Quarterly Spring 2020
Custom Seating Dallas Group of America Dart Container Corporation Delaget Delphi Display Systems DoorDash Dr Pepper DS Smith Rapak Duro-Last Roofing Eagle Eye Networks Ecolab Electro-Matic Visual Envysion Enzyme Solutions Essity Everbrite, LLC Facility Concepts Farm Frites FBD Partnership, LP Flowers Bakeries FMP - Franklin Machine Products Fountain FranBiz Network Franke Foodservice Systems Fullerton Building Systems, Inc. General Mills Genpak George’s Inc. Georgia-Pacific GetUpside GFX GLMV Architecture GOJO Industries Inc Golden State Foods Graphic Packaging International Griffith Foods Grubhub Gycor International, Ltd. Henny Penny HME Hobart/ITW Huhtamaki Huntington Bank Hyginix Idaho Pacific Corp InfoSync Services Insight Intalytics, Inc. InterMetro Industries
International Cold Storage Intrepid Direct Johnson Controls Security JR Simplot KFC Foundation KFCC KineticoPRO Total Water Care Kitchen Brains Koch Foods, Inc. Kraft Heinz Lamb Weston Sales LDI Lennox Loomis Mar Jac Poultry McCain McCormick & Company, Inc McLane MidCap Financial Middleby Corporation Multi-Site LED National Franchise Sales Nautical Furnishings, LLC NCR NCR Caribla NDA Netchex Netspend OK Foods On Display Oracle Food and Beverage Orkin Pest Control Pacific Premier Bank Parapet Studios LLC ParTech, Inc. Pattison Sign Group Paychex Paycor Peco Foods, Inc People’s United Bank PepsiCo International PepsiCo Performance Foodservice Pilgrims Pinnacle Commercial Capital Plaza Street Partners Pride Signs Procter & Gamble ProGroup Contracting
Quail Digital R.F. Technologies, Inc. Rational USA Realty Income Corporation Restaurant Solutions, Inc. Restaurant Technologies, Inc Restaurant365 Revenue Management Solutions RJP Consulting Group RSCS Connection Partners RSCS Dev. & Equip. RSCS Member Programs Ruggles Sign Scot Young Research Security Source Service Management Group Sharp Electronics Corporation Shoes For Crews Silikal America Simmons Prepared Foods Skechers Snagajob Spellbound SRS Real Estate Sterling Summit Innovations, Corp Summit Properties Sysco T&S Brass and Bronze Works Tavo Packaging, Inc. Tetley Harris Food Group The Microsoft Corporation Trane TREDSAFE / Wal-Mart Trinity Capital LLC Tyson Foods Inc. U.S. Bank Uber Eats Unbridled Capital Unified Brands Valassis ViaTech Publishing Waste Management Welbilt Inc Wells Fargo WestRock Winston Foodservice Wintrust Franchise Finance Yelp n
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Meet this year’s Shining Stars
40 AKFCF Quarterly Spring 2020
2019-2020 Shining Stars Ryan Androes Tom Broome Nancy Franco Lesley Hottinger Vijay Patel Shannon Prendiville
By Cory Sekine-Pettite
E
very year, the AKFCF makes an effort to acknowledge individuals who exceed expectations in the volunteer work they do for our franchisee family. We honor these folks with a Shining Star Award. There isn’t a definitive checklist of tasks or acts of kindness that Association leadership can turn to when seeking to recognize someone’s contributions to our family; we just know outstanding work when we see it. The recipients of this year’s awards proved that their tireless, unselfish commitment to the Association goes above and beyond the norm. May you be inspired by their leadership, knowledge, and talents — and the many ways they support the franchisee community.
Spring 2020 AKFCF Quarterly 41
Ryan Androes Ryan’s star has been shining brightly since he started on his path to becoming a KFC franchisee. He started his career with Yum! at Taco Bell in 1986 when he was hired in the Dallas/Fort Worth area as an assistant manager, but was promoted quickly to RGM within three months. “I had no idea what I was doing, but I tried hard and learned as fast as I could,” he said. At Taco Bell, Ryan held the positions of RGM, market training manager, area coach, market coach and DMA operations leader. He spent 25 years with the Yum!, learning the ins and outs of the business, before joining Ampex Brands in January of 2014 as a director of operations. Ryan says he first met Ampex Founder Tabbassum Mumtaz in 2010 when Mumtaz bought the DFW KFC Corporate restaurants. They kept in touch through the years, with conversations often leading to Ryan’s desire to own restaurants. “He kept saying he could help me achieve my dream of owning restaurants and that’s why I came to work for Ampex Brands,” Ryan said. In April of 2018, he was promoted to regional vice president. He is responsible for the company’s Texas KFC Market of 67 stores. And after more than six years years with Ampex, Ryan also is now a KFC franchisee, partnered with Mumtaz in six restaurants. “I have been blessed throughout my career to have worked with some of the best people in the business,” he said. “My 33 years in the restaurant business have all been within the Yum! system and it has been a very rewarding career, and I wouldn’t change it for anything.” In addition to his new responsibilities, Ryan has begun working his way through leadership ranks as the 2nd vice president of the Southwest Region. He also works on various committees for the region, including the Recognition Committee, which ironically recognized him at the fall Super Regional last year in Savannah, Georgia. “I was supposed to be on a conference call and I kept getting texts that I needed to come to the last meeting of the event,” he recalled. Finally, he made an appearance, only to learn that he was being honored with a Shining Star Award. To Ryan, this award means that the work that is done behind the scenes is appreciated by franchisees. “The SW Region has great leadership, with Roger Sparks, Scott Duke, and Kelly Spring, [they are all] mentors for me,” he said. “They have helped me grow in the leadership role of the Southwest.”
Tom Broome Tom Broome isn’t just our new NCAC vice chair, he’s also a Shining Star. He was surprised at the SEKFCFA fall meeting last October with his Shining Star recognition. “It is a great honor always to be recognized in front of your peers,” Tom said. He has been a franchisee for 13 years, and has volunteered in various capacities for the Southeast Region and the national organization. For example, Tom was director for the SEKFCFA for four years, and he has been on the NCAC representing Region 4 since 2012. Like most entrepreneurs, Tom has been working since he was a kid — specifically age 11 when he spent summers working on his family farm and in the family farm equipment business throughout high school. In 1980, he started his restaurant career with Scottish Food Systems as an Area Supervisor. His career with KFC started in 1994, first as a multi-unit manager, and then working his way up to region director and vice president. In 2007, Tom became president of Scottish Food Systems, Inc. and Franchisee of Record for KFC. During his tenure with the NCAC, Tom chaired the Operations Excellence Committee and served on both the Executive Committee and the Marketing Subcommittee. In his spare time, he is an avid golfer and fisherman, and loves spending time with his family, his wife of 39 years, Beth and daughter, Brooks. 42 AKFCF Quarterly Spring 2020
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Lesley Hottinger Lesley is a third-generation franchisee from Ohio who many of you may know from her work with the AKFCF Political Action Committee. Currently, she is chair of that committee, and she is the government affairs representative for the Great Midwest Region. “I have been doing this for 13 years. I have also served as president of the Great Lakes and been involved with our vendor committee,” Lesley said. Her maternal grandfather, Jake Jacobs, started in the KFC business in 1964 after attending a Chicago restaurant convention where he met Colonel Sanders. Previously, Lesley’s grandparents had owned and operated five restaurants called Jakes in Ohio. In the mid- to late-1950’s they closed all the Jakes restaurants and opened another dining establishment called The Hi-Boy in Heath, Ohio. It was a full-service restaurant with car hops. So after becoming fast friends with the Colonel, Jake and his wife, Velma, soon would have him in their restaurant cooking his famous Original Recipe chicken. The chicken was a huge hit at The Hi-Boy restaurant, so Lesley’s grandparents decided to open their first Kentucky Fried Chicken restaurant in Newark, Ohio. Growing up, Lesley says she has many fond memories of the Colonel. He would visit the family’s restaurants and go to their house for dinner. “I remember shooting a commercial with him when I was about four or five years old,” she recalled. “We filmed it at a local park, and I got to invite all my friends to be in it as well, because it was a picnic with Kentucky Fried Chicken. How cool is it to say you knew Colonel Sanders and that you were in a commercial with him?” By the time Lesley reached high school, the family owned 13 KFC’s in Ohio, but following her parents’ divorce, the family sold most of its restaurants. Today, however, Lesley owns and operates two KFC locations with her mother, Diana Myers. She said she found out about receiving the Shining Star Award at the Super Regional Meeting last Fall in Savannah, Georgia. “It was a great surprise and I was thrilled to be recognized for my hard work and dedication to the brand,” Lesley said. “This brand is my family and it is important to me that I do my part.” Additional awards she has earned from the AKFCF include the Colonel’s Legacy Award in 2014, past president’s award for the Great Lakes, and the Guts Award for the Great Lakes.
Vijay Patel Vijay Patel became a KFC and Taco Bell franchisee in 2011. Prior to that, he was an experienced restauranteur, having run a Dunkin’ Donuts franchise since 1996. Vijay joined the AKFCF in 2018 as 2nd vice president of the Upper Midwest Region (now the Great Midwest). In 2019, he moved up to vice president of the region. Additionally, Vijay has been a member of the Chicago Co-op since 2015, and he still participates every quarter. As another first-time honoree, Vijay said it was a total surprise to receive a Shining Star Award this year. “I was humbled by the honor,” he said. “I am so proud that I can assist others so we can all better our brand to be the best of the best. I am so deeply honored that my peers respect me [enough] to award me with this [Shining Star].” 44 AKFCF Quarterly Spring 2020
Shannon Prendiville The Prendiville family has been involved with KFC as franchisees since the 1960’s in Southern California. Shannon and her husband, Mark, were second-generation franchisees for 15 years with two restaurants in Northern California. They sold their restaurants about six years ago, but haven’t left the AKFCF Family altogether. “After we left the business, two of my brothers in-law continued to operate stores, and I heard through them that the NW KFC Franchisee Association was looking for an executive secretary to set up the region’s fall, spring, and summer meetings and general office support,” Shannon said. “It seemed like a good fit for me. I get to work with some wonderful people and travel! It has been professionally and personally satisfying to be a part of this organization. It is the people that I get to work with that make this such a great job. Shannon was surprised to receive her Shining Star Award at the Northwest Region’s fall meeting in Palm Desert, California. “The NW Executive Committee was very secretive and I think I was too busy organizing to realize that I was not in the loop about who was the Shining Star this year,” she recalled. “When I did ask, they told me to not worry about it; they had it covered and then I kind of knew.” This is her first major award from the AKFCF, but likely not her last. Shannon said that she is honored to be selected for this award, saying that it is a great feeling to know that people recognize her dedication and conThe Prendiville family from left to right: tributions to the organization. n John, Mark, Matthew, and Shannon.
Spring 2020 AKFCF Quarterly 45
KFC 2020 Franchisee Service Awards Thank you for your years of service and dedication to the KFC Brand.
Editor’s note: Interviews compiled from new and previously published AKFCF Quarterly material.
46 AKFCF Quarterly Spring 2020
Edited by Cory Sekine-Pettite
W
e all know that our businesses thrive because of the support we receive from our families. For many KFC franchisees, this family connection runs deep — generations deep. To recognize this longevity, the AKFCF presents its Service Awards each year to those franchisees who have served their communities for 40-plus years. On the following pages, you can read brief profiles of some of these franchisees and learn their secrets to success.
Spring 2020 AKFCF Quarterly 47
Service Award Honorees
KFC 2020 Franchisee
Kris Stuebner on behalf of the Estate of Joseph F. Desmond, 60 years Wallace Fowler Sr., 55 years Robert Fulmer, 55 years Peter Roubekas, 55 years Stamatios Varias, 55 years Donald Lopes, 50 years Tyrone Neal on behalf of the Estate of John R. Neal, 50 years J. Mike Davis, 45 years Ishai Hizami, 45 years James Morgan, 45 years Robert Bedard, 40 years Frederick Gallant, 40 years Donald Robinson, 40 years Steven Saunders, 40 years
Wallace Fowler Sr. Raising three sons in Dallas, Texas, in the early 1960s, Wallace Fowler frequently stopped by KFC to feed his family. So when they moved to Jonesboro, Arkansas, in 1965, he sought out the KFC restaurant in their new town. He was in for quite a surprise. “It was a shack. We bought the store and closed it the day we bought it. We tore it down and built a new one,” he said. “We controlled this market for many years. Church’s came here and left and Popeye’s never came.” For the next 20 years, Fowler bought franchises all over a six-state area, joining with Dick Cahill and Fred Bauer. “At one time, we were the third-largest franchise in the system,” said Wallace, with 93 locations. Eventually, Cahill and Bauer purchased their own franchises. Today, the Fowler family has more than 80 restaurants in its operation. All three sons that were fans of KFC as children are working in the business today: Wally Jr., Mark, and Chris. “It’s definitely a family operation,” Wallace said. A third-generation, grandson Aaron, also has joined
David Sparks, 40 years
“I’ve had the privilege of serving on practically every committee and [as a] chairman of practically all of them at one time. [The Colonel] came to lots of our manager meetings in either Little Rock or another central location. It was fun to be a part of that back then." Wallace Fowler Sr.
48 AKFCF Quarterly Spring 2020
Service Awards the company and worked his way up to area manager. “I’ve had the privilege of serving on practically every committee and [as a] chairman of practically all of them at one time,” said Wallace, whose franchise was the first recipient of the White Glove Award. “[The Colonel] came to lots of our manager meetings in either Little Rock or another central location,” he recalled. “It was fun to be a part of that back then,” he said of the earlier years in the business. Robert Fulmer Living in Birmingham, Alabama in the early 1960s, Robert Fulmer started seeing KFC restaurants open their doors. Through a family friend who operated two KFC restaurants in Florence, South Carolina at the time, Robert learned how successful he could be as a franchisee if he worked hard.
Therefore, he flew to Shelbyville, Kentucky, signed up to be a franchisee himself, and eventually moved to Connecticut to open the first of five restaurants in 1965. By the 1990s, Robert also was operating in South Carolina with his son as a partner. Robert has since semi-retired, but still keeps an eye on his South Carolina operations. (He sold the last of his Connecticut restaurants in 2014.) He credits his five-plus decades of success to hard work and a great product. And as far as what he likes best about his work, Robert says, “Making money and the many compliments from my customers.” Stamatios Varias As a Greek immigrant who jumped ship at 18 years old and worked a number of jobs before buying out the partner
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KFC 2020 Franchisee of a restaurant, Stamatios Varias’ father was determined to make his own way in this country, eventually operating his own KFC restaurant in Shamokin Dam, Pennsylvania, of which Stamatios is now owner. Since the 1960s, this restaurant has gone through many changes, remodels, and upgrades, but Stamatios believes that the company has a bright future if they sustain the perception of value the restaurant offers. He is hoping for new and exciting products or variations of products that he believes will keep bringing people into the restaurants. Donald Lopes Donald Lopes has been a franchisee for 50 years, and for more than 40 years he operated four KFC restaurants in the Northeast. Currently, he owns two Rhode Island restaurants, one in Providence and one in Warwick. Lopes was awarded his
first KFC option in 1968, making him the first African American KFC franchisee. It would take about two years for that first restaurant to open, and even though that time in America was full of turmoil and uncertainty, Lopes remembers fondly his early days as a franchisee. “Back in the day, all new franchisees got to have dinner with the Colonel at his home,” Lopes recalled. “At 32 years of age back then, I was truly excited to meet and have dinner with Colonel Sanders! It was a historical moment of time in my life. Years later, I brought the Colonel to Providence to open a new KFC restaurant and he took pictures with my mom and then made me go back in the kitchen and make gravy the way he made it!” All in all, he says, because of his franchisee status, Lopes has been able teach leadership skills to many of his employees of color and to give them inspiration and encouragement to become business owners themselves. “They can give their
families a better quality of life, hope for the future, and a real chance in their quest for the American dream,” he says. Peter Roubekas Peter Roubekas got his start operating a diner in 1960 in Marquette, Michigan. Eventually, he became aware of KFC and the potential it held as a business. He explored the KFC concept and was convinced it was a viable option for him. Although he met the Colonel, Roubekas got into the business just as John Y. Brown obtained ownership of KFC. He credits his success to a great product and a steady stream of repeat customers. He still owns a KFC restaurant in Marquette. J. Mike Davis Kentucky-based franchisees Mike and Teresa Davis began their adventure with Kentucky Fried Chicken in the late fall of 1974, when Mike was asked to drive
“Back in the day, all new franchisees got to have dinner with the Colonel at his home. At 32 years of age back then, I was truly excited to meet and have dinner with Colonel Sanders! It was a historical moment of time in my life.” Donald Lopes
50 AKFCF Quarterly Spring 2020
Service Awards a family friend to the Louisville airport from Berea, Kentucky. At the time, Mike was a supervisor at a manufacturing plant and Teresa was an elementary school teacher. The man that Mike took to the airport was a KFC franchisee in Junction City, Kansas. His name was Bentley Cummins. He had moved to Kansas to open a KFC a few years earlier and was very successful. Cummins “talked up” the chicken business to Mike that day. Little did Mike know that his life would change from that day on. It wasn’t long before Mike and Teresa were securing a location and attending “Chicken University” in a corporate restaurant in New Albany, Indiana. They opened on Oct. 29, 1975 and hit the ground running. “The first week was hell,” Mike recalled. “When we got into bed at night around 2 a.m., we said to each other, ‘what the hell have we gotten ourselves into?’” But the couple stayed with it and eventually settled into running their business. “I would be remiss if I didn’t include how much we appreciated my fatherin-law in this journey,” Mike said. “Paul Upton, a pharmacist and businessman from Berea, Kentucky, gave us financial backing in our plans. Through him we
were able to purchase the franchise and secure a loan. He was a silent partner that offered guidance without judgement. We were fortunate that we could buy him out within the first three years.” By the summer of 1983, the Davis’s had secured franchise rights and property for their second KFC restaurant, this one in Dry Ridge, Kentucky, which is about 30 miles from their home. Around that same time, they decided that their first restaurant in Cynthiana, Kentucky needed a drive-thru window. So, they purchased property across the road from the original location, adjacent to the Walmart, and built a new restaurant in 1985. Mike said they immediately felt the benefit of a drive-thru window. In 1995, Yum! approached Mike regard-
ing a new program that offered franchisees an opportunity to purchase a Taco Bell license for a five-year period with renewal options. In this program the franchisee was responsible for all costs of remodels and upgrades. “We were the first within the corporation to couple two concepts within the same building,” Mike said. “We opened as a KT in winter of 1996 in Dry Ridge, Kentucky. Then we remodeled and opened in Cynthiana the following year. This added a new customer base to our businesses. We later purchased the Taco Bell franchise for both locations. And, we operate as a KT to this day.” Throughout the years, Mike says his business has seen many changes that enhanced operation, from buffets, to remodels. “Even though we have only two
Spring 2020 AKFCF Quarterly 51
KFC 2020 Franchisee locations, we have had many blessings,” he said. “We have had thousands of employees over the 45 years. We are fortunate that many have stayed with us for years. That is a big reason for our success. If you treat your people well, they will treat you well. We appreciated the opportunity to go to work, bring pleasure to a person’s day, help the community by giving back, and making the Colonel proud. We are hopeful that our son [who now is part of the business] will have this same opportunity. “We have been in business a long time. We owe a huge debt to our son who has been instrumental in allowing us to step back,” Mike continued. “He is the ‘go-to’ person and we are so grateful. We now have four grandsons with another grandchild due in August. So, we have managers in the wings!”
Ishai Hizami When someone says the American Dream no longer exists, one needs to look no further than Ishai Hizami for evidence to the contrary. A man who came to this country with little in his pocket in 1961, Hizami is living the dream, so to speak. Throughout his life, Hizami — known as “Jesse” to his friends — did odd jobs to make ends meet for his family, saving his money and waiting for the right opportunity to arise. One day, as he was driving through Los Angeles on his way to purchase a liquor store operation, Ishai noticed a KFC that was for sale. This KFC, located in a very tough neighborhood, was in complete disarray. However, after a short discussion with his wife, Jesse decided to purchase the restaurant. Once taken over, the KFC immediately started to improve. With a great management team, Ishai knew that
this restaurant would lead him to his own American Dream. He was right. As a matter of fact, the turnaround was so successful that his restaurant became known as the “Olympic Store” in 1984. Ishai’s business success also helped put his two children through college and even one through law school. His hard work has allowed him to realize that anything is possible if you put your heart and soul into it. His famous slogan “give the people what they want,” is something Ishai feels is the cornerstone to his longevity and success in the business. “The American Dream is still possible,” he said. “Without KFC, I wouldn’t be where I am today. I have to go to work; it’s who I am!” James R. Morgan James Morgan began his KFC career while still in middle school, working at a local
“We have had thousands of employees over the 45 years. We are fortunate that many have stayed with us for years. That is a big reason for our success. If you treat your people well, they will treat you well. We appreciated the opportunity to go to work, bring pleasure to a person’s day, help the community by giving back, and making the Colonel proud." J. Mike Davis
52 AKFCF Quarterly Spring 2020
Service Awards restaurant in Rochester, Minnesota. He continued working through high school and college, and learned all facets of the business. After graduating, James moved to Chicago and went to work for KFCC, concentrating on the distribution segment of the business. He then transitioned to field services and transferred to Minneapolis, where he assisted franchisees by visiting restaurants, conducting training, and other duties. In 1975, Morgan and his wife, Sharon, bought a KFC from an existing franchisee in Winona, Minnesota. Moving to the operation side of the business was an easy transition. “Everyone is committed to doing the right thing,” he said. He also met Colonel Sanders during his time in
the field and “doing everything the way it was supposed to be done” was something he remembered from that meeting. In 1984, the Morgan’s bought several more KFC restaurants in Rochester; today they operate three. “I still love the work,” he says, adding that he thinks the system has been energized from the corporate, franchisee, and employee level, and that the future for KFC looks bright. Steven Saunders Like many young Americans that came before him, a young Steven Saunders needed a job in order to maintain his car. In 1967, the 18-year-old college freshman took a job at KFC and never looked back. For more than 40 years, the St. Paul,
Minnesota franchisee has been serving up Kentucky Fried Chicken with a persistent, consistent drive. Speaking of persistence, Steven spent more than a year making offers on the property he wanted to purchase for his first restaurant — a former doughnut shop in Forest Lake. His tenacity paid off, and by 1987 he was open for business. The rest, as they say, is history. Steven said he was fortunate enough to have spent a great deal of time with Colonel Sanders. He even accompanied the Colonel on business trips. “We talked at least once a week on Fridays around 7 p.m.,” Steven said. “[He called] to see how my business was doing.” After more than 40 years, it’s safe to say that business is just fine. n
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Spring 2020 AKFCF Quarterly 53
REGIONAL SHORT
GREAT LAKES TO GREAT MIDWEST – ADJUSTING TO OUR NEW REALITY By Kevin Schlutz
P
lease join us in adjusting to a new name, the Great Midwest. Yes, the Great Lakes and the Upper Midwest regions have merged to form the Great Midwest. It’s going to take some time for everyone to adapt to that change. Please bear with us as after more than 45 years, it takes time to make all the necessary adjustments to, well, everything. At last count, the newly merged region consists of over 90 franchisee members and 785 restaurants. It spans from western Pennsylvania to the western edge of Nebraska and the Dakotas. From northern Michigan and Minnesota to Iowa, Illinois, Indiana, and Ohio. America’s heartland. From the Upper Midwest side, we don’t take lightly the responsibility of not only taking on our fellow Midwesterners as equal members with the greatest care, but also being the model for any future regional mergers that may happen in the future. We want to take our time and do it right for the benefit of all. Before going any further, I would like to highlight the tremendous history of the Great Lakes Region, the many exceptional servant leaders who have served all of us well as AKFCF presidents, national committee representatives and board members.
We want to make sure none of that rich history is ever lost in this consolidation. Also, to those that worked together with us to get to this point of merging, Alessio DiFranco, Dana Pennell, John Kovach, and of course Mary Beth Hamilton and Cinda Summa, all deserve a tremendous amount of thanks for diligently working through this with us. I guess as the last Secretary standing, so to speak, I am accepting the responsibility of working through the transition, learning all the former Great Lakes members that I didn’t already know, and trying to build on the trust and care that they enjoyed with Mary Lou, Mary Beth, and Cinda for so long. Selfishly, I was hoping to work with them for a while longer. We had such a great partnership working on the Super Regionals and Communications committee, but I wish them well and they have agreed to help through the transition, however long it takes. I believe this merger is not only because of the member consolidation that we have both experienced, but the result of the trust built through working together for decades on the Super Regional and the AKFCF Board. Of all the regions, I believe these two were the most alike and like-minded, and while the organizational transition may
At last count, the newly merged region consists of over 90 franchisee members and 785 restaurants. It spans from western Pennsylvania to the western edge of Nebraska and the Dakotas. From northern Michigan and Minnesota to Iowa, Illinois, Indiana, and Ohio. America’s heartland. 54 AKFCF Quarterly Spring 2020
take some time, I don’t believe the actual coming together of like minds will take that long at all. In fact, it started some time ago, when the Great Lakes joined the Upper Midwest and Southwest to participate in the Super Regional. This merger is just the end result of our efforts working together for almost 15 years. Going forward, we will be meeting to amend our bylaws as needed, form a new Board of Directors starting with a combination of both former boards, and start working together on future meetings and initiatives. The one area we must work to gain consensus on is Spring RGM meetings, which are best held within driving distance from a travel cost perspective. With the new larger geographic area, it will be hard to find a location that works well for everyone. As we were doing previously, we’ll try to move the meeting around from east to west to make it easier for everyone at some point to attend. We feel that the RGM meetings are one of the most important things we do for our members. Unfortunately, many of our larger members have their own meetings and don’t wish to participate, which makes it that much more important for the smaller operators, who could never put on the type of meeting we are able to provide, to take the opportunity to participate. Our most important leaders are definitely worth all the necessary efforts to hold these meetings. The AKFCF has a committee now that is working on ideas to make the spring meetings easier to host, with more collaboration between the regions that hold them and helpful processes for building the agenda and the content. We look forward to building on the legacies of both former regions as we combine for a bright future together as the Great Midwest. n
EDUCATION COMMITTEE REPORT
CONVENTION WORKSHOP WRAP-UP By Rob Rianna
A
s the chairman of the AKFCF Education Committee, I am pleased with all the support of and strong attendance during our slate of workshops at the National Convention in Nashville. The preparation process that takes place to make sure the workshops are a success, starts each year in May. Our committee’s goal is to make sure our members participate in relevant workshops that allow our operators to take actionable ideas back to their restaurants. We also want to provide our franchisees tools that can help them make decisions that will assist them in running their businesses. Our 2020 Convention began with two workshops on the first day. Our Leveraging Technology to Stay Relevant and Drive Growth Workshop previewed all the new and exciting tools coming to KFC in 2020. Some of the most impactful changes are improvements to the Mobile Manager Platform, the ability to now be able to complete Mobile Inventory on an iPad while walking around a restaurant, the future potential to use RFID to inventory an entire restaurant in under two minutes, and the introduction to kiosks for customers to input their own orders. The Technology Team used a different approach to lead this workshop. They utilized the “Incubator,” a Shark Tank-type idea to introduce future technology that will be coming to the KFC System. Also, on day 1, the KBP team presented many key ideas to consider relating to profitability in our restaurants. They talked about pricing, $5 strategies, day-of-the-week specials, and couponing along with different thinking to drive transactions in our restaurants. The KBP team was able to share many ideas about how they look at their business using data to help make profitable business decisions. During the “KFC Brand Day” at the Convention, we had two dynamic workshops. Driving Heart-Led Leadership in Our
Big-Hearted Brand taught us about emotional intelligence, managing relationships, coaching, and delivering feedback. This workshop drove home the point about how our actions can have a lasting effect on our teams. Our leadership plays a big role in our teams’ willingness to stay with our brand and to provide the level of service that our guests expect. The KFCC team also spoke about the success of the “Heartstyles” programs and shared the results from some of the organizations that have participated in the program over the past year. If you would like to learn more about Heartstyles, please reach out to your KFC training team and they can discuss some options for RGMs to participate in this impactful program. We also had the opportunity to participate in our Leading our Number 1 Leaders Workshop, which focused on many key attributes where our ARLs have a big impact on how our RGMs lead their teams. Two of the big takeaways of this workshop were helping to teach RGMs the art of delegation so that they could dedicate one hour per week to accomplish tasks that may be more beneficial for the restaurant such as staffing and recognition. With this process, ARLs and RGMs can learn to prioritize tasks that can help them run better restaurants. To further the focus on ARLs, on the final
day of the Convention, we assembled an ARL panel, “Behind Every Great RGM is a Great Leader.” The panel consisted of four ARLs, Amparo Elenes, an area coach from Polly’s; Glenn Barnes, a regional director from JRN; Heather Bowling, the director of operations from Dunn & Bowling LTD; and Enrique Bosch, area coach from AmFoods LLC. These ARLs shared with the audience some of the tools, beliefs, and processes that they use to help provide their RGMs the opportunity to succeed in their markets. The ARL panel also highlighted possible tools to use for recognition and how they scheduled meetings with their teams to maximize their time and to provide goals for their restaurants. Overall, we had a wonderful Convention from a workshop perspective, and hope that we provided you with new tools or ideas to take back to your restaurants. The Education Committee now has shifted its focus to partner with KFCC to bring workshops and training to the AKFCF Regions for future meetings. Like the National Convention, we want to make sure that the content that is provided for your RGMs will be impactful for them while they lead their restaurant teams. Please let us know if there is anything that the Education Committee can do to serve you better. n
The Education Committee now has shifted its focus to partner with KFCC to bring workshops and training to the AKFCF Regions for future meetings. Like the National Convention, we want to make sure that the content that is provided for your RGMs will be impactful for them while they lead their restaurant teams. Spring 2020 AKFCF Quarterly 55
KFC FOUNDATION
WHAT THE COLE SLAW DONATION PROGRAM MEANS TO YOU By Elizabeth Edrington, KFC Foundation Communication Coordinator
C
• KFC Family Fund: provides financial aid to KFC employees during a hardship, crisis or natural disaster; • Rise with GEDWorks: supports KFC employees in earning their GED through all-inclusive prep and testing program; • REACH Educational Grant Program: helps KFC employees go to college through competitive grant opportunity; • MyChange: equips employees with essential money management skills and tools; • Kentucky Fried Wishes: grants life-changing wishes to employees who have overcome or are currently facing a hardship. Thanks to the support of participating franchisees and KFCC, the KFC Founda-
56 AKFCF Quarterly Spring 2020
Photo courtesy kfc.com
hances are, your franchise organization participates in the 2020 Cole Slaw Donation Program (92 percent of KFC franchisees participate). But what does that mean for you and your restaurant teams? It means that your organization has chosen to donate a portion of their cole slaw sales to the KFC Foundation and thus make their restaurant team(s) — RGMs, AUMs, shift supervisors and team members — eligible for the KFC Foundation’s charitable assistance programs, including:
tion will positively impact more than 1,000 restaurant employees and their families in 2020. Here are some of their stories: Siblings Kou, Angel, Nikki and Stephanie, who work together at a KFC in Minnesota. Their father passed away suddenly last November, leaving a financial burden on the family, on top of the emotional pain they were all feeling. Kou applied for and received assistance through the KFC Family
Fund toward their father’s funeral expenses. “To have such a large company like KFC care so much about the people who work for them is truly amazing. I don’t know of any other company like ours and I truly am grateful and beyond proud to work for such an amazing organization,” said Angel, KFC RGM. “Thank you so much for all the help you provide to everyone in need. We are very blessed to work for KFC — #kfcfamily.”
Shift Supervisor Maritza, who learned from the What’s Important Now bulletin that she could earn her high school credential for free through Rise with GEDWorks, a comprehensive and flexible program which offers unlimited GED prep and testing and a personal advisor. After graduating from the program and earning her GED in Spring 2019, Maritza now has her sights set on college. “It feels really good to know that the company that I work for truly cares about me,” she said. “I’m really grateful for the Rise with GEDWorks program and what the KFC Foundation does because they’re really changing lives. I know Colonel Sanders would be extremely proud.” KFC Team Member Nathaniel has worked at his KFC for more than three years. In fall 2018, he won a REACH Grant to study biology. Nathaniel’s mother, who recently passed away, went to nursing school while working a full-time job and raising two young boys. “Seeing her be so passionate about her job and so hard-working made me want to go into the medical field,” he says. “She’s what motivates me to keep going, no matter how tough it gets. “Receiving this grant means so much to me,” he continued. “It helps me pay for school
and gets me one step closer to my dreams. And for that, I am very, very grateful.” Amelia, a KFC shift supervisor, graduated from a substance abuse treatment program and is continuing in a different program to maintain her sobriety. She and her infant son were functionally homeless, staying in shelters, in her car and with family. With all that she has been through, she found it difficult to find an apartment she could afford for the two of them and her fiancé, even with being approved for some assistance through the government housing authority. The KFC Family Fund was able to help Amelia secure a home for her and her family, and give her the stability she needs as she continues her recovery. This work is possible because of you. Your support is making life-changing impacts on KFC restaurant employees across the country. Thank you for being a KFC Foundation donor. Key things to know about the KFC Foundation’s programs There is a mobile app available that connects restaurant employees directly to the program they need. Search “KFC Foundation” on the App Store or Google Play. There is no waiting, period — all pro-
grams are available to all eligible employees as soon as they start working at a participating KFC restaurant. All Foundation offerings are completely charitable in nature and are provided at no cost to the restaurant employee. Rise with GEDWorks, the KFC Family Fund, and MyChange are non-competitive and offered year-round. The REACH Grant and Kentucky Fried Wishes are competitive programs and offered during specific application windows each year. • There are two REACH Grant applications per year and hundreds of grants are up for grabs. Franchisees will be notified of winners from the Spring application period in late May. The next application period is Aug. 3 – Sept. 24! • In an effort to best meet franchisee’s and employees’ needs during the COVID-19 outbreak, we have redirected our resources that were dedicated to this year’s Kentucky Fried Wishes program. Stay tuned for news on Kentucky Fried Wishes in 2021. KFC Foundation programs are only for employees at KFC U.S. restaurants participating in the current year’s Cole Slaw Donation Program; if you do not support the KFC Foundation through the Cole Slaw Donation Program, your employees cannot benefit from the KFC Foundation’s programs. Reach out to us anytime at foundation@kfc.com. n
Spring 2020 AKFCF Quarterly 57
EXECUTIVE DIRECTOR UPDATE
WOMEN LEADING OTHER WOMEN By Kelly Rodenberg
F
or the first time ever at Convention, a breakfast was held just for the women of the AKFCF Family. The breakfast was led by one of our first female franchisees, Anne McKenzie Goodnight and KFCC Chief Operations Officer, Monica Rothgery. Attendees were able to connect and share ideas with other women in and around the brand, and they heard from Anne on her personal experience as a woman, mother, and KFC owner. Attendees listened to other women share their amazing stories of challenges overcome and lessons learned while they connected and grew in the business. More than 200 women participated in this event!
58 AKFCF Quarterly Spring 2020
Below are just a few takeaways from the breakfast roundtables: For women in the system, it helps to lead by example while being open, supportive, and collaborative with others. Look for, bond with, and become role models for other women to follow. With advancements like the #MeToo movement, discussions have been ignited, but there are still many barriers to overcome in the workforce. Natural attributes normally assigned to women can be big differentiators as leadership qualities in the workplace. Women can help others set goals and attain them, emphasize teamwork, and invest time in
training, mentoring and personal development. Women are less likely to have the “lone wolf ” or “leader of the pack” mentality, lending themselves naturally to developing and helping others. When women create a holistic and teambuilding environment for their teams and employees, it has long-lasting implications. It improves employee retention, creates stronger team players, and develops the next generation of female role models. As each woman in the workplace does her part to work toward gender equality in her workplace, the gap will slowly but surely close over time. It isn’t a matter of the different strengths that men and women bring to their careers, but instead how we accept the meshing of those strengths to drive our brand forward in meeting goals and setting new ones while achieving individual success. Leaving our comfort levels can help pave the way for us to take advantage of opportunities that never would have arisen otherwise. Women should not miss out on opportunities that come their way because of fear. They need to put themselves in a position to have those opportunities; know when one is facing you and take it. More and more women in leadership positions are pushing the boundaries of gender equality by utilizing their strengths and leadership qualities — in skill, knowledge, experience, and emotion. They are pursuing the things they want from their job and their career, not waiting for it to come to them. The key is confidence in all your resources and abilities, not just those represented on paper. The big challenge is to keep our perspectives top of mind in conversations at the corporate level, and also among team members and friends, so the mindset shift can happen. If we remain resilient, that change will come! n
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Spring 2020 AKFCF Quarterly 59
LEGAL UPDATE
IN TIMES OF CRISIS – FAMILY By Ron Gardner
T
his may be the most difficult Quarterly article I have ever had to write. While there is nothing difficult about what I am about to say, trying to figure out what to say now, knowing that this will not come out for at least a few weeks after I write it, all in a world that is changing by the minute, makes saying something helpful today difficult. As I write this, it is St. Patrick’s Day, March 17. The President declared a State of Emergency on Friday, and just yesterday, businesses began really feeling the impact of the “social distancing” people are beginning to practice as part of avoiding the coronavirus. Governors across the nation are imposing restrictions on the daily hours and methods
60 AKFCF Quarterly Spring 2020
of operation for all your restaurants, and new information seems to be coming by the minute about other further recommendations from health officials. Add to that the enormous volatility of the stock market, the drop in sales and transactions that is unprecedented, and the sense of panic that many people are feeling, and you have the beginnings of what may be a real prolonged crisis with outcomes that none of us can imagine. In the short term, I am sure all of you are focused, first and foremost, on the health of your families, your crews, and your customers. That is as it should be. But following closely behind is the economic health of your business, and the
impact this crisis will have on you and your restaurants. Cash flow is paramount, as business owners of all sorts, including KFC owners, begin to contemplate how it is that they will pay their bills, pay their employees, and weather this crisis. By the time you read this, things may be better — or they may be worse. Not surprisingly, none of us have a crystal ball. How long this situation lasts, and what society and the economy look like when we emerge, are unknowns. Of course, it is everyone’s hope that we can quickly rebound to the way things were before the crisis broke — none of us know for sure. But, in these most uncertain times, there are some things that we actually do know.
We grieve together over the harm this crisis is inflicting on our fellow family members. But in our grief, we find encouragement in knowing that we are all in this together, and that every franchisee, from the largest to the smallest, is invested in helping each other through this. First and foremost, we know that we care about each other because we are family. Unlike many of my other clients, the members of the KFC community deeply care about one another. We care about one another’s health and the health of our families. We rally around each other when someone is sick or disabled. We hold them up in thought and prayer, not as business colleagues, but as dear friends. That is something that this virus cannot destroy — and something we desperately need to hold onto in these trying times. We know that we take care of one another when our livelihoods are threatened. And while we have never been in times as uncertain as they are today, with potentially
everyone’s livelihoods threatened at the same time, it is our sense of community, caring and concern that will lead us to solutions that will help support as many of us as possible, while easing the fall for those who decide that they simply cannot endure. We grieve together over the harm this crisis is inflicting on our fellow family members. But in our grief, we find encouragement in knowing that we are all in this together, and that every franchisee, from the largest to the smallest, is invested in helping each other through this, working with our KFCC family members to find a solution where possible, and, working with Yum!, RSCS, the NCAC, and all the other members of our community to ease the burdens that this is creating upon all of us. My job as your legal counsel is to help guide you when you face business-threatening disputes. Frequently, I can write about system-wide issues and encourage or otherwise direct people toward the steps they might take to preserve and enhance the value of their businesses. I continue to be here for that purpose. As you work through the many ways the crisis is affecting you on the day that you read this article, please feel free to reach out to me for guidance related to any of your business issues. And one last thing, know this — when you call, you will be treated like part of my family — as you all have welcomed me into yours. Stay safe, stay strong, and stay healthy. n This column is for the general information of members of the AKFCF and should not be relied upon as legal advice. Please see your own attorney or professional advisor for questions concerning your franchise agreement. Ronald K. Gardner is General Counsel of both the AKFCF and the NCAC.
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Spring 2020 AKFCF Quarterly 61
BEST PRACTICES
A MESSAGE FROM AKFCF GENERAL COUNSEL RON GARDNER AND AKFCF PRESIDENT JIM MCKENZIE
A
s the AKFCF continues to monitor the effects of the COVID-19 outbreak on the KFC business, the first priority for everyone has been dealing with the operational changes that are necessary in order to keep employees and customers safe and healthy. Critically important, however, is the ability of franchisees to maintain the financial stability of their businesses throughout this crisis, however long it may last. As sales and transactions slide downward, access to cash will be the most critical part of surviving this downturn. And while everyone’s situation will be different, and the order in which these steps should be taken and/or the need for any or all of them, may vary, here are some “best practices” we encourage you to think about as you navigate the situation. • If you have not done so already, talk to your banker. For those of you who have outstanding loans, you should begin a conversation about forbearance, or interest only payments, that would be acceptable to your lender in order to free up cash to run your business. • If you have a credit line, it may be in your best interest to draw as much cash as you can on that credit line now, before financial institutions begin tightening up credit and while interest rates are so amazingly low. Again, you should be looking for ways to increase the amount of cash that you have access to in order to keep your business running. • Open a conversation with your landlord about rent abatement, forgiveness, or reduction for the next several months. Rent is a fixed expense that can be controlled. • Talk to your vendors. Your vendors are the lifeline of your business and you need to make sure you maintain those relationships, even during difficult times. If you find you are getting into a position where you are having a difficult time paying a vendor, you will be in a much better position if you had opened a conversation earlier
62 AKFCF Quarterly Spring 2020
about the possibility of that, and had gotten a sense for what your vendors’ abilities to make concessions for you may or may not be. • As a general rule, do everything you can to stay current with your F&P suppliers. If you fall behind there, and supply is cut-off, you are likely facing closure. That said, focus on “essential-only” spending, postponing expenditures that are not absolutely essential to meeting your business and contractual requirements. This would mean postponing or cutting back on services that are not required while dining rooms are closed. In short, conserve your cash by being smart in spending on activities, services, and purchases. • Talk to your legal advisors. While it may be a sad reality, the only way to maintain the business during this crisis for some may be through the bankruptcy courts and the filing of a Chapter 11. Chapter 11 (as opposed to Chapter 7), allows businesses to continue to operate while they reorganize their debts and figure out how they are going to structure themselves going forward. This, obviously, is a last-resort solution — but is something that some of you may need to think about. Since the crisis began, we have worked hand in hand with our corporate partners to ease your cashflow burdens. Yum! has provided royalty deferments and is paying for financial counseling, and KFCC has extended all remodel and new build obligations by six months. The AKFCF GAC has been a major player in fashioning the federal relief response through the Paycheck Protection Act. And your franchise leadership continues to work on other avenues of relief through the RSCS and our vendor and distribution partners. And these efforts will not stop until we have our family safely through this crisis. If you have any questions or concerns, please feel free to let us know. We are here as a resource to try and will try to help you as best we can. n
LOOKING BACK
Spring 2020 AKFCF Quarterly 63
LOOKING BACK
64 AKFCF Quarterly Spring 2020