QUARTERLY
Association of Kentucky Fried Chicken Franchisees, Inc.
Winter 2023
The AKFCF 2024 Annual Convention in Las Vegas
The AKFCF 2024 Annual Convention
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CONTENTS
AKFCF QUARTERLY Winter 2023
16
28
20
FEATURES
DEPARTMENTS
GAC Report: Speaker 55 and Speaker 55.5 Announce 16 Their Retirements
4 From the Editor
By JoAnna Mueller Nineteen Democrats, thirteen Republicans have announced retirement. With a razor-thin majority in the House, this complicates the road to control the House of Representatives.
A New Year, A New Vision 20 By Emma Horn This year, your KFC Foundation is celebrating a big milestone — 25 years of changing lives for the better.
28 By Kelly Rodenberg
The Countdown Is On To AKFCF Convention In March!
6 President’s Report 10 NCAC Report 12 In the News 46
RSCS Member Programs
48
KFC Foundation
50 Regional Shorts 52 Executive Director Update 54 Legal Update By Ron Gardner 56 Looking Back
Things change fast in this system. In the blink of an eye, there are new opportunities and challenges facing us. Join us in Las Vegas where we will be reaching for the solutions, pathways, and concepts to meet $1 billion in sales.
On the Cover: AKFCF Convention Preview As we mark our 50th Anniversary, we also celebrate the possibilities ahead and the incredible power of AKFCF in shaping the next generation of KFC franchisees. We look forward to delivering an exceptional experience for our KFC Family in this milestone year and into the future. 2
AKFCF Quarterly Winter 2023
BETTER TOGETHER
PEPSI, PEPSI-COLA, the Pepsi Globe, and the Pepsi Pulse Design are trademarks of PepsiCo, Inc. Kentucky Fried Chicken is a registered trademark of the KFC Corporation.
FROM THE EDITOR
QUARTERLY Official Publication of the Association of Kentucky Fried Chicken Franchisees AKFCF QUARTERLY MISSION STATEMENT
GET REGISTERED! By Michelle Hunt As the 2024 Convention pre-registration deadline nears, I want to give you some helpful information to make the process as simple as possible. Registration for all attendees can be found at this URL: https://na.eventscloud.com/2024akfcfconv. Pre-registration ends on February 22. Anyone who registers after that date will pay the onsite rate. The registration refund deadline is January 31. If you’re not registered yet, click on “New Registration.” From there you’ll be able to select your category (Franchisee Family, Partners, or Vendor Partners). Franchisee Family and Partners (KFCC, NCAC, RSCS) will then select a sub-category based on your position within those organizations. Next, complete the attendee information. If you’ve registered through this platform for a previous event your information should pre-populate. Next, you will be able to review the agenda and select certain meals and events. Try to be as accurate as possible with your selections as it will help us prepare space and meal counts. The Dueling Pianos After-Party on Thursday, March 21 is currently sold out. If you signed up for this there will be a wristband in your badge at registration. That is your ‘key’ to the Dueling Pianos event. Drink tickets also will be pre-stuffed in your badges. Those who attended the Super Regional will remember we used red (day 1), white (day 2), and blue (day 3) drink tickets. We will do the same at the Convention. You can add additional attendees before completing your online registration. These additional attendees will be a part of your group, but you will be the primary attendee. Once complete, if you need to modify your group’s registration, simply return to the registration link and click on “Modify.” You will be prompted to enter the primary attendee’s last name and email address, then you can continue through to modify any of your attendees or pay a balance on your registration. Please make sure your registration is paid by the pre-registration deadline. Anyone registering after the pre-registration deadline will need to pick up their badges at the Onsite Registration Desk outside Bristlecone ballroom. All pre-registered attendees’ badges will be at the main registration in the foyer of Bristlecone ballroom. Remember, anyone can go back to registration and modify any of your attendees. You will only need to know the primary attendee’s last name and email address. You can change a name or selection, cancel, and make a payment. And lastly, make sure you have reserved your room at the ARIA! The hotel deadline is February 23, but you will want to book as soon as possible. If you have questions about the hotel, please reach out to Kelly Rodenberg, kelly.rodenberg@akfcf.com, or convention@ akfcf.com. As always, if you have any questions or if I can assist in anyway, please do not hesitate to contact me at michelle.hunt@akfcf.com. You will not want to miss this all-new upgraded event! See you in March! Warmest Regards,
4
AKFCF Quarterly Winter 2023
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 Manager Communications Chair Executive Director Past President
Justin Stewart Michelle Hunt Julie Mantlo Michelle Hunt Kevin Schlutz Kelly Rodenberg Keith Cole
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.hunt@akfcf.com Julie Mantlo 855 Lovers Lane, Suite 111, Bowling Green, KY 42103 Phone: (270) 783-8880 julie@rogmancorp.com
Zaira Guevara (International Liaison) 7750 NW 46TH Street PTY 1495 Doral, FL 33166 Phone: (305) 384-4242 (U.S.) (011) 506 2208-7828 (Direct) zguevara@caribla.com
Copyright ©2024 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.
AKFCF ADVERTISING AND EDITORIAL SUPPORT OFFICE
Send all advertising and editorial submissions for AKFCF Quarterly to:
NEW SOUTH PUBLISHING, INC.
9040 Roswell Road, Suite 210, Atlanta, GA 30350 Phone: 770.650.1102 President Vice President/Publisher Publishing Editor Art Director Advertising & Production Manager Account Executive Circulation Manager Accounting
Larry Lebovitz John Hanna Cory Sekine-Pettite Jack Simonetta Megan Willis Jamie Ryan Amy Fine Marilyn Walker
FROM THE PRESIDENT
NEVER STOP BELIEVING IN YOURSELF By Justin Stewart
I
n one of my previous articles, I mentioned that I would circle back and tell you about another time in our history that my brother and I came as close as you can get to bankruptcy. It was late spring/early summer of 2008, which now feels like forever ago, but the experience still resonates like it was yesterday. Much like the people who lived through the Great Depression, these experiences tend to stick with you and influence your behavior for decades to come, or even for the rest of your life. This period was somewhat similar to what we are experiencing now. We had just come off of two of the best years we had ever experienced in our business, and we were ending a cycle of remodels that needed to be completed by the end of 2007, which was 10 years after the 1997 settlement. Even though we had extremely profitable years in 2006 and 2007, we were remodeling as fast as we could to fulfill our obligations with KFCC, and unfortunately, we decided to relocate two old buildings to what we thought was a better part of town. To do all these things, we were utilizing sell-leasebacks, which was (and still is) a popular process to pull money out of your business to pay for expenses, remodels, and expansion. We felt that we were being conservative and not putting ourselves at risk by setting our leases at 7 percent of what our sales were. Many of the franchisees we spoke to at the time were choosing 8 percent of sales to get more money out of their business on the real estate side; some even went up to 10 percent. Most of those companies are no longer in the KFC business. It was July of 2008 and as most will remember, a fair number of macroeconomic shocks had happened and were still happening across the U.S. and around the world. At that time, my brother, Todd, and I had close to 35 restaurants and completed all of our remodel obligations, albeit by taking on a fair
6
AKFCF Quarterly Winter 2023
amount of debt and selling off all of our real estate (sell-leasebacks). Starting in 2008, the headwinds of what was happening around the country was showing in our sales to the tune of negative 10-30 percent. If you’re a company that has higher PRA’s and has a small amount of debt, you can overcome these types of sales decreases. The main risk with sell-leasebacks is after you do one and set the rent, you quickly can
One of my favorite quotes is from the movie “Shawshank Redemption.” In it, Andy Dufresne, who it appears has had all he can take and can’t take anymore, looks over at his friend Red and says, “I guess it comes down a simple choice really; get busy living, or get busy dying.” get into trouble if sales drop too much after you have locked in your lease amount. The last two restaurants we did sell-leasebacks on did $1 million is sales in 2007 and we pushed it and set our rents at 8 percent, which was $80,000 a year with percentage increases every five years after that. Unfortunately, as our sales declined over the following two years to the tune of 25 percent, these restaurants were only doing $750,000 a year. As a result, our leases were now almost 11 percent of
our sales. This might be tenable if you have margins in the 12-15 percent range, but as sales drop all of your fixed cost percentages become a bigger percentage as well. So, our previous 10-percent margins dropped to negative. Magnify that across 35 restaurants and what seemed like a business that would always support us and our families turned into real worries over paying our suppliers, making our payroll, etc. One of my favorite quotes is from the movie “Shawshank Redemption.” In it, Andy Dufresne, who it appears has had all he can take and can’t take anymore, looks over at his friend Red and says, “I guess it comes down to a simple choice really; get busy living, or get busy dying.” We had a decision to make: Either throw in the towel and give up on ourselves and all the people who had worked so hard for us or believe in ourselves and figure out a way to survive. Since you are reading this, we made the right choice! First up, we cut costs everywhere we could, except our employees’ pay. One thing we didn’t want to do was demotivate our employees by doing layoffs or reducing salaries. We needed everyone fully committed and dedicated to getting us back in the black. One thing we did do was slash our own salaries by two-thirds — and Kristy and I had five kids with one in college. Subsequently, Kristy and I had one of the toughest times in our marriage, as we quickly realized that we wouldn’t be able to afford to keep the dream house we had purchased five years before. As the housing market was in complete meltdown, we had no equity and made the decision to give our house to the bank. Before we did this, I needed to secure a rental house and make sure we had two cars that we could afford, and of course, financed while I still had good credit. If I hadn’t done this in the
continued on page 53
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NCAC REPORT
STAYING ORIGINAL WHILE DRIVING RELEVANCY FOR OUR CUSTOMERS By Jim McKenzie, NCAC Vice Chair
B
y the time you read this, the 2024 AKFCF Convention in Las Vegas will be right around the corner. I always look forward to seeing the entire KFC family at the Convention and this year is no exception. This year’s Convention will be another opportunity to come together, reconnect, focus on what’s most important at KFC and go back to our markets, teams, and restaurants with a renewed focus on what makes KFC a special, iconic, and beloved brand. Heading into the New Year, I want to update you on our final NCAC meeting of 2023, which occurred in early December. Once again, we met in Louisville in partnership with KFCC to focus on our Marketing, Beverage, Technology, Contracts and Facilities, and Operations-related Subcommittees, programs, and actions. We capped off the week with a holiday gathering and quarterly NCAC meeting. Your NCAC, in partnership with KFCC, is focused on transforming this great brand, attracting new, younger customers to drive
10 AKFCF Quarterly Winter 2023
sales, transactions, and growth. We must be able to show our new customers that we are a relevant, modern brand that offers our delicious KFC taste in modern, boneless formats.
We must be able to show our new customers that we are a relevant, modern brand that offers our delicious KFC taste in modern, boneless formats.
Significant conversations occurred regarding being “radically relevant” and what needs to happen with our marketing assets, promotional calendar, innovation, testing media, and overall guest experience to have our customers notice, act, and come back to KFC more often. We also know that everyday value is imperative on both lowand high-end layers. We remain aligned on acting with a sense of urgency to drive profitable sales, transactions, and to grow our customer base and brand fans for our future. Value will continue to be important in 2024; we kicked off the New Year with a continuation of our 2 for $5 Wraps with flavor news, adding Honey BBQ and Spicy Mac and Cheese. In January, customers also can take advantage of a “Free Wrap in the App.” Continuing to offer value and relevant flavor news will be important elements of our marketing efforts in 2024 and beyond. You also can expect to see more sauce news and limited-time offer add-ons with desserts, sides, and beverages intended to have a meaningful impact on sales and transactions. In February, our Smash’d Potato Bowls hit the calendar — a delicious bowl that fits squarely in our wheelhouse and allows customers to easily trade up. Our $20 Family Meals for our high-end customers will be promoted, and we will remain relevant with national and targeted offers on our owned digital channels. The marketing calendar continues with Chizza joining the Smash’d Potato Bowl on the calendar in March for a limited time. Chizza is a unique KFC product featuring our delicious filet, marinara sauce, cheese, and pepperoni. It’s not a pizza, it’s Chizza! International KFC markets have seen incredible success with Chizza and we look to drive brand news
and buzz, driving customers to our doors and drive-thrus for a product they can only get at KFC. After customers told us just how much they loved our Blackberry Lemonade this past summer, it’s coming back with the Chizza and Smash’d Potato Bowls. This is part of the limited-time offer add-ons strategy, giving our customers what they want, staying relevant and, of course, original. As we continue to focus on value, boneless products, sauces, and meaningful high-end offerings, our merchandising and menus also must evolve to help tell our story to customers in an actionable way. Our menu must be easier for our customers and teams to navigate. Menus that drive sales, reduce complexity and unnecessary repetition, and ease the burden of constantly explaining our offerings must be in our future. I am certain you will hear and see more about our menus at the Convention.
Last year at the Convention, we heard franchisees loud and clear regarding their dissatisfaction with Guest Recovery efforts. Your NCAC, and specifically the Operations Excellence Committee, spent many hours over many months on interventions and action plans. Addressing response and call hold times, along with refund queues directly with the vendor, allowed for significant progress to be made. The partnership between franchisees, KFCC, and the NCAC
is an example of addressing a crisis head on and working together for a solution. There is more work to be done, but I wanted to let you know that great progress has been made. Hope you all had a wonderful holiday season filled with hope, happiness, peace, and of course, the spirit of all things original and wonderful at KFC. I look forward to our continued partnership as a KFC family, and I look forward to seeing you in Las Vegas at the Convention! n
Winter 2023 AKFCF Quarterly 11
In the NEWS
HOW KFC’S CHIEF INNOVATION OFFICER IS MAKING THE MENU MORE RELEVANT
V
ijay Sukumar has been very busy lately. KFC'’s chief food innovation officer has been charged with making his chain’s menu more relevant to younger consumers — no small feat for a 70-plus-year-old brand that earned its legacy through buckets filled with bone-in chicken. But he knows it’s a necessary task as consumer preferences change at an accelerated pace. “Our focus is not only being relevant to core consumers, but also attracting new ones and that means going into formats that interest them,” he told Nation’s Restaurant News in a recent interview. “Boneless is clearly a faster growing category that appeals to younger consumers.” And so in the past three years, KFC has introduced a swift cadence of boneless products, starting with its updated signature sandwich in 2021 that initially yielded more than twice the volumes of the brand’s previous chicken sandwich iterations. The sandwich was followed by new wraps, new nuggets, and chicken sandwich variations. Thus far, these sequential rollouts have done what they were intended to do; Sukumar said KFC is, indeed, gaining younger consumers. “One of the best successes for us this year was the launch of our wraps. It was pushed as a transaction driver that provided value at an easy price point and that’s what it’s done,” he said. That said, KFC’s innovation team isn’t just rolling out products based on consumer research favorability. The products must adhere to the brand’s standards, which makes things “extra hard,” according to Sukumar. “My primary role falls into two buckets. One is to maintain the code, and make sure the products we sell are best in class and consistent,” he said. “Second, I also need to innovate and when you do that, you want to make sure you don’t lose the core DNA.” KFC recently began testing new Original Recipe chicken tenders, which could bring the brand’s unique flavor to more products soon. Such differentiation is more critical than ever, as the competitive landscape of chicken intensifies from both legacy players and non-traditional players, like McDonald’s and Taco Bell, sharpening
their focus on the popular protein. Sukumar doesn’t consider the growing competition to be a threat as much as an opportunity. “If brands not traditionally known to be strong in the chicken space are coming into the chicken space, that must mean there’s something happening in the chicken space,” he said. “In my opinion, it’s driven by the consumer. They want more chicken. They want more fried chicken. I think that’s a great thing. It’s where we have an early advantage. We have a ton of experience and a key ingredient in our ‘OG’ to play with.” The consumers are in the driver’s seat As it turns out, the world becoming a smaller place has been the biggest driver for changing consumer preferences. Sukumar said younger demographics prefer spicy, globally inspired flavors much more than their predecessors, for instance. They also like crunch and texture, which is why the Spicy Slaw Wrap, launched earlier this year, performed well. “It was surprising for us on a wide acceptability basis. We know younger consumers don’t normally accept coleslaw as a side. But this product wasn’t about the coleslaw as much as it was about the heat and texture. When you marry good texture with a flavorful spicy sauce, that gives you a very different eating experience,” he said. This lens is what is informing the KFC innovation team now as they contemplate spicy flavor profiles translating to products like mac and cheese, or anything that can work in a bowl or wrap. Sauces have become a bigger part of the strategy as well, as they’re a simple ingredient addition that creates variety, Sukumar said. “If we can build meaningful variety without complicating operations, we’re paying a lot of attention to that,” he said. “We don’t want to play on every single flavor because it has to marry well with our core, but the idea is to establish platforms and keep innovating those platforms through flavors and textures because that’s what consumers want. We’re making food the hero now.” Source: NRN.com
Condolences: Adelio Di Franco, 68, beloved husband for 45 years of Elena, cherished father of Tania Marie Murton (husband Michael) and Alessio Adelio Di Franco (wife Stephanie), devoted nonno of Gabriella and Michael Murton, and Karli and Matthew Di Franco, passed away in November 2023. Adelio started to work at Kenny Kings (KFC) at age 14, moving up to manager, supervisor, district manager then owner, and franchisee of KFC. He retired in 2014. Adelio was President in 2010 of Great Lakes Association of KFC, President in 2004 of the Forli del Sannio Social Club, and member and past Vice President of Club Molisani.
12 AKFCF Quarterly Winter 2023
KFC CHINA OPENS ITS 10,000TH STORE
O
n December 15, Yum China Holdings, Inc. celebrated the opening of KFC China’s 10,000th store, marking a significant milestone in KFC’s 36-year growth journey in the country. Situated in Hangzhou, the new restaurant is located on the banks of the Beijing-Hangzhou Grand Canal, a historically important link connecting northern and southern China. Since opening its first store in Beijing in 1987, KFC has grown into the country’s largest QSR brand in terms of system sales. This growth has been underpinned by a world-class in-house supply chain management system developed over three decades. “As the first western QSR restaurant brand in China to reach this incredible milestone, KFC China’s 10,000th store opening is a proud moment for all of us, demonstrating the brand’s deep bond with Chinese consumers across generations for
over 36 years. Strategically positioned for sustained growth, KFC China stands to benefit from its large and rapidly expanding store network, substantial economies of scale, and access to an even broader customer base,” said Joey Wat, CEO of Yum China. “Presently serving just one-third of China’s population, our goal is for KFC China to reach over half by 2026. By leveraging our solid foundation of success and tremendous untapped potential for future growth, we are confident that KFC China will continue to be China’s leading restaurant brand for many years to come.” “In pursuit of our ambitious growth targets, we are committed to establishing KFC China as the preferred daily choice for an increasingly diverse customer base,” said Warton Wang, General Manager of KFC China. “KFC China remains at the forefront of pioneering new formats and groundbreaking
concepts to accelerate store expansion into untapped cities, while also staying ahead of evolving consumer preferences and emerging consumption trends. Going forward, KFC China will continue to offer a diverse array of innovative meal choices across price ranges, ensuring that consumers can enjoy KFC anytime and anywhere.” Source: Yahoo Finance
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Winter 2023 AKFCF Quarterly 13
In the NEWS
KFC LAUNCHES FRIED CHICKEN FRAGRANCE IN SPAIN
K
FC capitalizes on the classic aroma of its top-secret 11-spice fried chicken recipe in a limited edition fragrance launch, available to customers in Spain as an add-on purchase. The Eau D’uardo perfume references a viral internet meme started by Spanish KFC’s marketing team in Christmas 2021 that ascribes Spanish names to mundane objects, like “Eduardo” to a chicken drumstick, which then became a Christmas ornament — an item after which the fragrance packaging was modeled. While its advertising alludes to fragrance notes inspired by the classic Colonel Sanders’ blend of spices, Eau D’uardo is noted for its essences of geranium, mandarin, bergamot, and a hint of pink pepper. “It is the scent of an icon,” remarks Rubén Sánchez, creative director of PS21, the agency behind the marketing. The fragrance formula harkens to KFC New Zealand’s Valentine’s Day fragrance gift launch last year, which was named No.11 Eu De Colonel and infused “top notes of spicy black pepper, sage, and botanical extracts.” A video campaign parodying luxury perfume ads accompanies the launch. It was created by Madrid agency PS21 (Jungle) and directed by Curro Urellana. Shot in the dunes of Macaronesia, the advertisement features models in golden brown suits play-fighting and dancing around a bottle of Eau D’uardo sticking out of the sand. Even in its satirical debut, KFC’s limited edition fried chicken perfume is unveiled at a time when many luxury beauty brands are feeling the impact of high inflation. Fine fragrances have been a silver lining though, helping boost balance sheets with “particularly strong” growth, as noted by scent house Givaudan.
Colonel Sanders’ cosmetics This is not KFC’s first leap out of the fryer. Promoting SPF protection from “crispy” summer skin, the fast-food giant released a limited run of Extra Crisp fried chicken-scented sunscreen in 2016. The “overwhelming” consumer response likely incentivized the fast-food giant to launch the fragrance. Initially, KFC promised 3,000 bottles of Extra Crisp sunblock, but 9,000 bottles were requested in two hours, with 5,000 of those requests in the final 10 minutes. “We had no idea there would be such a demand for fried chicken-scented sunscreen,” said Kevin Hochman, chief marketing officer for KFC US, at the time of launch. Source: Food Ingredients First
KFC JAPAN DEVELOPS FRIED CHICKEN DESIGNED TO TASTE GREAT WITH BEER
I
n November of last year, KFC Japan started selling a spicy miso version of its signature dish. They’re not done innovating yet, though, as there’s yet another fried chicken innovation. The company also launched its new Ninniku Crispy, which is specifically seasoned to taste great when eaten with beer and other alcoholic drinks. Ninniku Crispy is based on the chain’s Colonel’s Crispy recipe, but with extra garlic (ninniku in Japanese) and soy sauce flavoring, and is finished with an additional coating of garlic-flavor oil sauce. The resulting flavor, KFC says, makes an excellent pairing with alcoholic beverages, and they launched as Japan entered the season for end-ofthe-year parties, which in Japan tend to involve at least a moderate amount of stiff drinks. According to KFC, a lot of work went into getting the flavor just right, as early prototypes tasted more like eating a hunk of raw garlic, but in the end they’re promising a flavorful but properly balanced
14 AKFCF Quarterly Winter 2023
taste. They’re so confident that Ninniku Crispy and alcohol are a perfect pair that they’re even offering a “Kanpai Barrel,” or Cheers Bucket, with three pieces of Ninniku Crispy and four of Original Recipe fried chicken for 1,680 yen ($11.20). Alternatively, if you want Ninniku Crispy and only Ninniku Crispy, individual pieces go for 290 yen or you can get a three-piece pack for 600, making the third piece almost free. Source: Japan Today
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
IAYF International Association of Yum Franchisees (formerly known as the IAKFCF, International Association of KFC Franchisees)
QSR
Quick Serve Restaurant
REC Restaurant Economics Committee
KFCC Kentucky Fried Chicken Corporation
RGM
Restaurant General Manager
RMI
Restaurant Margin Improvement
NAC National Advertising Cooperative (merged with NFAC to become NCAC)
ROCC Restaurant Operations Compliance Check
NCAC National Council and Advertising Cooperative
ROI
Return on Investment
RSC
Restaurant Support Center
AUM
Assistant Unit Manager
BOGO
Buy One Get One
BOH
Back-of-house
BSC
Balanced Scorecard
COB
Chicken on the Bone
NFAC National Franchisee Advisory Council (merged with NAC to become NCAC)
COGS
Cost of Goods Sold
NMS ational Marketing Subcommittee
SBRA Supplier Business Relationship Agreement
DMA
Designated Marketing Area
NPC National Purchasing Cooperative (i.e., KFC NPC)
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
POS
Point of Sale
FA (Or F/A) Franchise Agreement FIT
Food Innovation Team
FSC
Food Safety Consultation
GAC
Government Affairs Committee
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Winter 2023 AKFCF Quarterly 15
GAC Report
Speaker 55 and Speaker 55.5 Announce Their Retirements
16 AKFCF Quarterly Winter 2023
End-of-year political update By JoAnna Mueller
Winter 2023 AKFCF Quarterly 17
Flickr/NASA/Bill Ingalls
Nineteen Democrats and thirteen Republicans have announced retirement. With a razor-thin majority in the House, this complicates the road to control the House of Representatives.
F
ormer Speaker Kevin McCarthy has ended his time in Congress. He announced his retirement in December, and December 14th was his last day. This is not altogether surprising as when he lost the speakership, many assumed he would start looking to the exits. The timeline was perhaps quicker than some expected, and it does mean that there will be a special election in the new year for his congressional seat. The silver lining for Republicans is that this is a safe seat and the special election will likely only be contentious during the primary. The eventual Republican nominee will almost certainly win the election. Rep. Patrick McHenry also announced his retirement. You will likely remember him as the Speaker Pro Tempore. He is affectionately known as “Speaker 55.5.” He has had various roles in Republican leadership and currently heads the Financial Services Committee. It is a very influential role and the race for his successor will be closely watched. Rep. McHenry will serve out the rest of his term so there won’t be a
18 AKFCF Quarterly Winter 2023
special election for that seat. He came to Congress in 2005. Nineteen Democrats and thirteen Republicans have announced retirement. With a razor-thin majority in the House, this complicates the road to control the House of Representatives. The party committees will have to spend money defending these open seats when they would rather be on offense. Redistricting litigation is in progress in over a dozen states. We won’t be able to handicap the likely House margin until more of the maps are decided in those states. The math is more favorable for Republicans in the Senate. The Senate map heavily favors Republicans – 23 of the 33 seats in play are held by Democrats and Independents. Seven Senators are not seeking re-election in 2024 (five Democrats and two Republicans). Notable departures include Sen. Joe Manchin (D-WV) and Sen. Debbie Stabenow (D-MI). We believe that West Virginia, Ohio, and Montana are likely flips from Democrat to Republicans. The Democrats only hold the chamber by one seat.
On the presidential side, the Republican primary is still in full swing. The Iowa caucus will be when rubber hits the road for many of these campaigns. Trump is likely to win and it seems it will be a race for number two. It will take place on January 15. There is still some question of whether Biden will be the Democratic nominee. For now, all signs still point to yes. And, of course, we’ll hear lots about government funding in the new year. They pushed off the more complicated elements of the funding battle into 2024. The razor-thin majorities and split control of the chambers don’t make this easy. Speaker Mike Johnson is no longer in the honeymoon phase either. The Senate joined the House in recess after wrapping up the year with votes on judicial and executive branch nominees, as well as a short-term reauthorization vote for the FAA. While negotiations continue on an immigration and border policy deal that would be acceptable to many Republicans on foreign aid for Ukraine and Israel, legislative text is still a way away. n
Stay Involved, Donate to the AKFCF PAC
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 running for Congress, or incumbent members seeking reelection. You may make your 2024 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 Amber Peoples of Polaris Consulting, LLC (apeoples@polariswdc.com).
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Building Better Air Winter 2023 AKFCF Quarterly 19
A New Year,
20 AKFCF Quarterly Winter 2023
A New Vision By Emma Horn, KFC Foundation Executive Director
Winter 2023 AKFCF Quarterly 21
T
his year, your KFC Foundation is celebrating a big milestone — 25 years of changing lives for the better. The KFC Foundation’s focus has evolved considerably over the past 25 years, which many of you have witnessed firsthand. It all started with supporting early education and funding childcare centers across the United States. In fact, one of the original Colonel’s Kids childcare centers still operates with that name in Columbus Junction, Iowa. In 2006, the KFC Foundation began to offer four-year college scholarships to graduating high school seniors through the Colonel’s Scholars program. Some of you may remember going to high schools to surprise the winners with their big check! The recipients of these scholarships are now doctors, teachers, engineers, epidemiologists, business owners, app developers and more, changing the world with support from your KFC Foundation. In 2013, the KFC Foundation’s Board of Directors voted to shift the non-profit’s mission to supporting the people who bring your business to life day in and day out — KFC restaurant employees. And, as they say, the rest is history.
We are now including “our communities” in our mission, not only to encompass Kentucky Fried Wishes, but also to recognize that impacting one person’s life means impacting the greater community.
22 AKFCF Quarterly Winter 2023
This deep focus on serving the people who serve your guests has enabled the KFC Foundation to grow to where we are today. And to kick off our 25th year, we’re launching a new strategic plan, along with a new vision and mission statement.
Introducing our New Vision and Mission
So, what does that mean? Our new vision statement recognizes that your KFC Foundation is a unique part of the KFC family that sparks goodwill and compassion throughout every restaurant and every community. Being the secret recipe for good means that we’re changing lives and communities for the better, one GED recipient, one scholarship, one Kentucky Fried Wish, and one case of fries at a time. Your employees can only get this secret recipe for good through KFC and the KFC Foundation. We have a unique combination of ingredients — heart-led, life-changing programs — that will be a force for good to them personally and will create ripple effects of goodness to those around them. It’s also a call to each of us to be the secret recipe for good, empowering people, their families and their greater community to show up, support, and serve joy to everyone. We reach our vision by delivering on our mission every day. We continue to provide resources to KFC
restaurant employees as they work hard every day to serve their communities. We continue to expand the support systems we have in place to meet every restaurant employee where they are. We are now including “our communities” in our mission, not only to encompass Kentucky Fried Wishes, but also to recognize that impacting one person’s life means impacting the greater community. One person earning their GED makes their community stronger and better. One person receiving financial support during a time of crisis makes their community stronger and better. One person’s life changing for the better has profound and lasting impacts on everyone they know and meet. Adding “communities” into the mission also reflects the incredible work done by your teams when they volunteer or prepare meals for their
24 AKFCF Quarterly Winter 2023
communities. We know all of you are deeply embedded in your communities and we want to honor that impact as well. We also have an exciting announcement and addition to our community giving pillar for 2024 — the Harvest program is moving under the KFC Foundation umbrella. We will still work with the incredible team at Food Donation Connection to administer the program. Adding Harvest as a community giving program alongside our Kentucky Fried Wishes program enables all of you to create even stronger ties in your communities. You may have seen a post on KFC Strong that really brought this connection full circle. RBD’s Team in Los Angeles, California nominated My Friends House for a Kentucky Fried Wish in 2022 (which they won!), and then began working with the organization as their Harvest donation partner. The team brought Thanksgiving dinner to over 1,000 community members. This is what the secret recipe for good looks like in action!
A Look Inside Our New Strategic Plan Our strategic plan lays out our four big goals for the next three years:
1. Deliver our mission through programming This is what your KFC Foundation team wakes up every day focused on doing. In this new plan, we want to be more intentional about identifying gaps in our current programming and solutions that could help fill that gap. This is a balance of addressing basic and emergent needs for team members while also helping them reach for their dreams and become the best versions of themselves. We also want to dig deeper into the impact our programs make on the lives of the recipients. We’ve started an evaluation process with our scholarship winners and have heard responses like “receiving a scholarship increased my confidence.” Imagine the stories that we can tell customers when we have data showing one of our college scholarships increases confidence and self-efficacy in young people. We know customers want to purchase from brands who do good in their community and delivering our mission
Called to Care
through programming is the secret recipe for good. And watch out for a new texting service that allows team members to ask questions about programs in the way they want to communicate most! 2. Grow funding to $12 million annually In 2024, we hope to raise almost $9 million and based on our last financial audit, 95 percent of all funds raised go back to programming. Imagine
what other opportunities we can provide or how many more team members we could support with another $3 million annually! But before we start finding new ways to raise funds, we need to show you the impact your support makes. Under this goal, we plan to launch a new reporting tool that allows each franchise organization to see real-time distribution of funds by program to your team members. This will allow us to dial in our own communication
We know customers want to purchase from brands who do good in their community and delivering our mission through programming is the secret recipe for good.
Winter 2023 AKFCF Quarterly 25
To grow funding, we need to boost our brand awareness by telling our story in bigger and better ways to your guests and your communities — as well as continue to raise awareness and engagement with your restaurant teams to create further impact. to your restaurants and provide resources to boost awareness of specific programs as needed. We see restaurants with dozens of scholarship winners over the years but not a single person helped through the hardship assistance program. The new reporting tool will allow us to highlight these gaps and offer solutions to engage more employees. 3. Build brand awareness To grow funding, we need to boost our brand awareness by telling our story in bigger and better ways to your guests and your communities — as well as continue to raise awareness and engagement with your restaurant teams to create further impact. As part of this, we’ve examined our brand identity — design elements, logo, voice, tone, etc. — and are refreshing our brand standards to ensure we’re effectively conveying who we are to our key audiences. You’ll start seeing these changes implemented throughout our website, TeamKFC, emails, and more in the coming months. This goal also includes partnering closely with KFC Marketing to better communicate the KFC
Youth Services System
Foundation’s purpose and impact to your guests and the public, evaluating our current communication channels and identifying new ways to reach our key audiences, and equipping our stakeholders with the ability to tell our story. 4. Enhance organizational capacity All strong organizations need to take a step back and evaluate how they operate — which is what we plan to do. We want to ensure we have the best solutions for team members so they can more easily access our programs when needed. We want more of our applications to be mobile-friendly so restaurant employees can ask for help in the moment, not when they get back home or go to a library to work on a laptop. This goal also includes streamlining how we operate as an organization so we use our time as effectively as possible. As one example, we’re looking at a grant management system to streamline the review process for Kentucky Fried Wishes so we can recognize and celebrate your outstanding community partners in a more efficient way.
Kentucky Fried Wishes is going quarterly!
Jeremiah Tree Foundation
26 AKFCF Quarterly Winter 2023
Speaking of Kentucky Fried Wishes, we are going to offer this program quarterly beginning in February 2024! Each quarter will have a theme, such as access to education and training or access to food and shelter. You can find the key dates and quarterly themes at kfcfoundation.org/wishes.
We plan to grant $1 million in Wishes throughout the year — 25 non-profits will be selected as winners each quarter. Your restaurants will receive five Kentucky Fried Wishes referral cards every quarter to fill out and give to non-profits in their community. If your team’s referred non-profit is selected, they get the opportunity to deliver the giant check and surprise the staff with the amazing news! As you can tell, we have a lot of exciting work planned for 2024 and beyond, including celebrating and recognizing our 25th anniversary during Convention and throughout the year. Be on the lookout for a special 25th anniversary logo to commemorate the milestone, as well as feature stories of 25 people who’ve been impacted by, or have helped shape, the KFC Foundation since
As you can tell, we have a lot of exciting work planned for 2024 and beyond, including celebrating and recognizing our 25th anniversary during Convention and throughout the year. 1998. We wouldn’t be celebrating 25 years of changing lives without you. We are so grateful for your ongoing support and can’t wait to see what the next 25 look like! n
Winter 2023 AKFCF Quarterly 27
28 AKFCF Quarterly Winter 2023
n w o d t n u o C The Is On To AKFCF Convention In March! By Kelly Rodenberg
Winter 2023 AKFCF Quarterly 29
The countdown is on to the AKFCF Convention!
I
t’s where ambition is amplified. Where skill is finetuned. Where a panoramic view of brand objectives and goals pairs with zoomed-in education and a wave of emerging tech and tools. All within reach. Things change fast in this system. In the blink of an eye, there are new opportunities and challenges facing us. Join us in Las Vegas where we will be reaching for the solutions, pathways, and concepts to meet $1 billion in sales. As we mark our 50th Anniversary, we also celebrate the possibilities ahead and the incredible power of AKFCF in shaping the next generation of KFC franchisees. We look forward to delivering an exceptional experience for our KFC Family in this milestone year and into the future. For the full, updated Convention schedule and more details, go to the AKFCF website. In this article, we want to focus on a few things that will be new and different at the 2024 Convention.
30 AKFCF Quarterly Winter 2023
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Lunch and Learn Labs – New This Year at Convention! Wednesday, March 20 12:00 – 2:00 p.m. Learning Labs are fast-paced sessions using unique presentation formats (think lightning rounds and Ted-talk style), interactive technology, audience participation, and more. Each lab will be 25 to 45 minutes in length. The 25-minute labs will be presented three times and the 45-minute labs twice. Grab food as you arrive and during the breaks in-between sessions. Learning Lab Formats are Designed to Engage You! • New trends, products, and ideas come to you live or in video format. • Speakers take the stage to share their perspectives on a topic and then take questions. • Expect a free-flowing mini-town hall atmosphere, live demonstrations, open Q&A with industry experts and more during these informal, interactive, and often impromptu sessions!
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Why Attend? Unrivaled Expertise: Gain access to a diverse lineup of industry experts who share their expertise, best practices, and insider tips. Learn from the very best and stay ahead of the curve in a rapidly evolving franchise. Cutting-Edge Topics: Immerse yourself in sessions covering a wide range of relevant and forward-thinking products/services. From product trends to emerging technologies and operational strategies, our Learning Labs will have you reaching for more.
Your employees could win up to
20,000 in scholarships
$
Networking Opportunities: Connect with other franchisees, thought leaders and potential partners from around the country. Share ideas, exchange experiences, and build valuable relationships that can shape your restaurant and business. Tailored Learning Paths: Choose to attend one or several, each carefully curated to meet your specific needs and interests. Whether you’re a large operator, a one-store owner or just starting out in the brand, you’ll find labs that cater to your interests. Exclusive Previews: Get an exclusive sneak peek at the latest products, technologies, and innovations shaping the future of the KFC brand. Stay ahead of the competition and discover cutting-edge solutions to propel your business forward.
Trade school College Grad school
Application Window: Feb. 1-29 *Franchisee must participate in the KFC Foundation’s Annual Donation Program for employees to be eligible ©2023 Kentucky Fried Chicken Foundation, Inc. The Kentucky Fried Chicken Foundation is a non-profit, 501(c)3 organization. Employees must meet eligibility criteria for each program.
Winter 2023 AKFCF Quarterly 33
AKFCF 2024 Awards Dinner and Celebration Thursday, March 21 KFC franchisees, partners, and vendors are in for a treat with the 2024 AKFCF Awards Dinner and Show, which will take over Las Vegas at the ARIA, Thursday, March 21. It’s known as AKFCF’s biggest night, and you can be in the house to see live performances from some of Las Vegas’s best talent AND country music artist Tyler Hubbard who has twenty-one No.1 singles on country radio, countless awards, and sold-out tours will close out the night. You also get the bonus of some humorous banter between hosts Justin Stewart and Emcee DJ Will! The highly anticipated awards show will bring the best of an old Las Vegas Supper Club and end with the energy of a country music night club. We are teaming up with our new production partner Clarity Experiences to transform the program into an immersive experience at the ARIA. It will be an event that will hit all your senses. You will walk the red carpet, sip on champagne, and participate in some amazing photo opps. There will be assigned seating for dinner, and you will be able to select your seats as we get closer to the event. There is a dress code for this event; it is black tie optional. Fancy cocktail wear is acceptable. For those of you who like to take fashion to the next level, there will be a prize for the most uniquely dressed guest or couple! We encourage you to come in an “Original Recipe” look or get “Extra Crispy!” But the most important part of this evening will be the recognition of the award winners. In the AKFCF family, there is no shortage of individuals, organizations, and groups doing remarkable things to grow the KFC brand and change lives through the continued efforts made over the last year. It is likely your life has been touched by those special individuals and organizations going above and beyond. All the AKFCF, KFCC, NCAC, and RSCS awards will be presented during this show.
34 AKFCF Quarterly Winter 2023
Tyler Hubbard
Trade Show – Where Business and Fun Get Done This year, you will have not two, but three days to visit with your favorite vendors. Like the rest of the meeting space, this show floor will not look or feel like the ones of past Conventions. The look will be open concept, no pipe and drape, and a more modern vibe. Plus, each day will have a fun, interactive theme. On Tuesday, you will experience an 80’s themed glow party! Bring your 80’s attire to make the night even more rad. On Wednesday, the trade show goes country with live country artists on stage, a mechanical bull, and other cowboy attractions. Don’t forget to pack your denim, boots, and hats! On Thursday, you’ll join the vendors for lunch and one last walk through the aisles. We will end the trade show with a special runway fashion show of the new KFC apparel line. See some of the best models in the industry strut their stuff.
Winter 2023 AKFCF Quarterly 35
See the Sights!
Like this year’s Convention, Las Vegas is a city that is always reaching and has something new to offer every year. There are several new attractions that have opened in Las Vegas in 2023. Here are some of the highlights:
The Sphere at the Venetian: This spherical concert arena has a wraparound video wall and digital screens plastered on the exterior. It has internet access at every seat and sound beamed individually to each spectator. The Sphere is generating headlines around the world with a debut residency by U2. Another presentation, “Postcard from Earth” is a 50-minute movie from Academy Award nominated director Darren Aronofsky, which shows immersive scenes from the globe’s seven continents with science-fiction touches.
Cheri Paris: The rooftop lounge known as Chateau is transforming into Cheri. Guests will still enjoy sweeping views of the Bellagio fountains, drinks from two bars and decorative garden-themed scenery and timeless chandeliers. The image will be more modern, however, with live musicians and dancers augmenting DJ performances. The 9,000-square-foot venue is managed by JRS Hospitality (the team behind neighboring Beer Park) with a sophisticated design by Campbell House that mixes elements of Paris and Las Vegas for one unique experience.
36 AKFCF Quarterly Winter 2023
Atomic Range at The Strat: Atomic Range is a massive, 99,000-square-foot complex that covers four floors and has more than 100 bays. It is a social activity that mixes booze, food, and entertainment. Order drinks from one of six bars and further test your golf skills with 10 putting bays. Book a luxury suite for large parties on the top levels and view the action on a four-story, crystal-clear digital screen.
Awakening: After taking a few months off for retooling, Awakening is back at the Wynn. The show replaced Le Reve, a water-based spectacle that ceased operation during the pandemic. Gone are the synchronized swimmers and high divers. Instead, Awakening is a tale of separated lovers, borrowing elements of Cirque, and even touches of science fiction while following the main heroine on a journey that includes colorful costumes, puppetry, and advanced special effects. No expense has been spared, from a high-tech sound system to create 3D-like sonics to enlisting Academy Award-winning actor Anthony Hopkins to voice the narration. Performances are Friday-Tuesday at 7 p.m., with an additional 9:30 p.m. performance on Fridays, Saturdays, and Tuesdays. Check ticket prices and availability.
Princess Diana – A Tribute Exhibition: A 10,000-square-foot exhibit hall dedicated to the legacy of Princess Diana is on the top level inside the Shops at Crystals. The attraction by SBX Group and SEE Global Entertainment brings together historical artifacts, designer fashions, and personal items curated over more than 45 years. It’s one of the largest collections of British Royal memorabilia in the world. Guests can explore 12 themed rooms, including “Wedding of the Century,” “Fashion Icon” and “Gone Too Soon: A Memorial.”
The Mad Apple: Cirque du Soleil unveiled Mad Apple as its first new Las Vegas production since the pandemic. The show, based on the nightlife and entertainment scene of New York City, took over the old Zumanity theater at — appropriately enough — the New York-New York resort. The show is a hybrid of sorts, smaller in scope than traditional Strip productions with live musicians performing pop music staples and comedians (including established names like Brad Williams) doing traditional stand-up routines. You’ll still see a few acrobats, but not as many as in your average Cirque production. Check ticket prices and availability.
Swingers: You’ve heard of mini golf. Now it’s time for “crazy golf.” The provocatively named Swingers golf course is set to open at Mandalay Bay, offering a fun adults-only take on mini golf with five themed courses over three levels in a 40,000 square foot space. The idea first became a hit in London, featuring caddies that deliver craft cocktails and street food available for purchase near various holes. Two other U.S. locations are in New York and Washington, D.C.
Get ready to reach with us at the 2024 Convention in Las Vegas! For more details on the event and how to register go to www.akfcf.com. Winter 2023 AKFCF Quarterly 37
2024 Schedule at-a Glance (subject to change)
MONDAY, MARCH 18 6:30 a.m. – 3:00 p.m.
Colonel’s Classic Golf Scramble
Bear’s Best Las Vegas
9:00 a.m. – 4:00 p.m.
Registration Set Up
Bristlecone Reg Desk
3:00 p.m. – 8:00 p.m.
Exhibitor Registration & Move- In
Bristlecone Reg Desk
11:00 a.m. – 6:00 p.m.
Attendee Registration
Bristlecone Reg Desk/Foyer
12:30 p.m. – 4:30 p.m.
Workshops (3)
Primrose
TUESDAY, MARCH 19
Two KFCC workshops for 75 minutes each with 15 breaks One AKFCF Session with Scott Greenberg – 60 minutes 5:00 p.m. – 8:00 p.m.
Welcome Reception/Trade Show
Bristlecone
80s theme/DJ/Glow Party WEDNESDAY, MARCH 20 8:00 a.m. – 9:00 a.m.
Networking Breakfast
Primrose
9:00 a.m. – 10:15 a.m.
AKFCF Opening/Ben Nemtin
Pinyon
Opening Video/Justin Keynote 10:15 a.m. – 10:30 a.m.
Break
Pinyon
10:30 a.m. – 11:00 a.m.
Sabir Sami – KFC CEO Keynote
Pinyon
11:00 a.m. – 12:00 p.m.
Ken Muench – Yum! CMO Keynote
Pinyon
12:15 p.m. – 2:00 p.m.
Lunch
Primrose
2:15 p.m. – 3:15 p.m.
Scott Greenberg Keynote
Pinyon
3:15 p.m. – 3:45 p.m.
NCAC/RSCS Updates
Pinyon
5:30 p.m. – 8:30 p.m.
Vegas Goes Country/Trade Show
Bristlecone
7:30 a.m. – 8:30 a.m.
Grab and Go Breakfast
Primrose
8:30 a.m. – 10:30 a.m.
KFCC Presentations
Pinyon
10:30 a.m. – 10:45 a.m.
Break
10:45 a.m. – 12:30 p.m.
KFCC Presentations
THURSDAY, MARCH 21
38 AKFCF Quarterly Winter 2023
Pinyon
12:30 p.m. – 2:00 p.m.
Lunch in Trade Show
Bristlecone
2:15 p.m. – 5:15 p.m.
Regional Meetings
6:30 p.m. – 8:30 p.m.
Awards Dinner – Black Tie
Pinyon
8:30 p.m. – 10:15 p.m.
Entertainment/Foundation Auction
Pinyon
10:15 p.m. – 12:00 a.m.
Dueling Piano Speakeasy
Primrose Veranda
8:00 a.m. – 9:00 a.m.
Grab and Go Breakfast
Primrose
9:00 a.m. – 10:15 a.m.
Greg Creed keynote
Pinyon
10:30 a.m. – 11:30 a.m.
GAC Update
Pinyon
11:45 a.m. – 1:15 p.m.
Legal Update
Primrose
Board Meeting
TBD
FRIDAY, MARCH 22
Box Lunches 1:30 p.m. – 3:00 p.m.
Winter 2023 AKFCF Quarterly 39
Workshops (Tue., March 19)
(Each workshop will be presented once) Join us for three workshops focused on team members and customer experience. We’ll explore how to deliver an exceptional, service-focused guest experience and how great guest service is made possible when our Team Members are welcomed and supported in a people-first, inclusive culture.
Can’t-Miss Presentations Opening Keynote Speaker Ben Nemtin
• Workshop 1 — Team Member Experience and Culture led by Karen Adams and Justin Patton. Emphasis: Retention, 1 on1’s, how to build/develop team members • Workshop 2 — Stop the Shift Show with guest speaker Scott Greenberg. Cracking the code to work with today’s hourly employees — connect and turn into a top performing team. Emphasis: Recruiting, Retention, Leadership, Coaching. • Workshop 3 — Putting It All Together: Ops Routines for A World Class Guest Experience led by Shawn Brady and Justin Patton. Emphasis: The core routines that every restaurant should know and how to build an “Every Guest Every Time Mentality.”
Karen Adams
Justin Patton
Scott Greenberg
Shawn Brady
40 AKFCF Quarterly Winter 2023
Ben Nemtin is the #1 New York Times bestselling author of “What Do You Want to Do Before You Die?” and a star of MTV’s highest rated show ever on iTunes and Amazon called “The Buried Life.” As the co-founder of The Buried Life movement, Ben’s message of radical possibility has been featured on The Today Show, The Oprah Winfrey Show, CNN, FOX, and NBC News. An acclaimed keynote speaker, Ben has headlined business conferences and Fortune 100 leadership teams around the world. In this personal keynote, Ben weaves the remarkable story of how The Buried Life grew from 100 impossible dreams into a global movement and connects his lessons to the fabric of our daily lives.
Can’t-Miss Presentations Afternoon Keynote Speaker – Scott Greenberg The Resilient Leader: How to Bounce, Change, & Thrive When Faced with Adversity Meet Scott Greenberg: one-part business game-changer, onepart motivational leader. Fueled with more than 10 years’ experience as a multi-unit, award-winning franchise owner, Scott has written two books on what it takes to transform businesses from average to extraordinary. We’re often told during tough times to “make lemonade.” But sometimes there’s value in the lemon itself. Scott learned this firsthand. While a graduate film student at NYU, he was diagnosed with cancer. Inspired by his grandmother, a “Schindler’s List” Holocaust survivor, he beat the disease and went on to run a marathon; perform stand-up comedy; run multiple, award-winning franchises; write books; and beat cancer again. These accomplishments weren’t despite his challenges — they were a result of them. Scott will teach us the three factors that determine the outcome in any business situation. He’ll outline the difference between problem-solving and resiliency and share tools for living and working with more strength and courage. Because ultimately, it’s less about the climb, and more about the bounce.
Aria Convention Center
A Lasting Partnership Built On Success. We thank all the KFC franchisees for the many years of supporting our products. KochFoods.com Winter 2023 AKFCF Quarterly 41
Can’t-Miss Presentations Closing Keynote Speaker Greg Creed, Chairman Emeritus, Collider, and Retired CEO, Yum! Brands, Inc. Leadership & Culture Fuels Results Greg Creed was the CEO of Yum! from January 2015 to December 2019 and served as a Director of the Board from November 2014 to May 2020. Greg retired after a successful 25-year career with the company. He has more than 40 years of extensive global experience in marketing and operations with leading packaged goods and restaurant brands. Since retiring from Yum!, he has started a small unconsulting company called Creed UnCo focused on helping companies with brand building, franchising, culture, and leadership. Greg will share his unique perspectives on leadership and culture, and how to obtain the best results in your restaurants.
Greg Creed
AKFCF Government Affairs Committee Update Join us for the Government Affairs Committee update to hear from Dan Gans, Principal & Founder at Polaris Consulting in Washington, D.C. Dan will be discussing the current political landscape, including key policy initiatives, the upcoming 2024 election, and potential impacts on franchisees. The GAC and our partners at Polaris tirelessly advocate for legislative outcomes in the interest of AKFCF membership. This will be an important and timely update you won’t want to miss.
Grateful to the KFC Franchisees for their continued support and partnership.
©2022 Tyson Foods, Inc.
42 AKFCF Quarterly Winter 2023
Can’t-Miss Presentations Annual Legal Update – Ron Gardner *Red Badges Only Through a tumultuous year of transition and big swings in sales performance, lots of things have been achieved and are in progress! Come listen to Ron tell you about the intricacies of where we are on our journey to bring technology into your restaurants at an affordable price, how your franchisee leaders are working to make remodels and new builds more affordable, and how the legal landscape is changing thanks to changes in governmental regulations surrounding franchising. This and a whole lot more await you in the highly anticipated Annual Legal Update.
Ron Gardner
Winter 2023 AKFCF Quarterly 43
To register for the Convention and its events, go to www.akfcf. com. Regular Rate — $399 Register by February 22nd 2024 On-Site Rate — $499
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Great for a MINI MEAL DEAL! Call Andrew Boyer 479.721.3133 cell aboyer@cafevalley.com www.cafevalley.com
44 AKFCF Quarterly Winter 2023
Hotel Information: ARIA Resort and Casino 3730 S Las Vegas Blvd. Las Vegas, NV 89158 www.aria.mgmresorts.com *AKFCF group room rates vary during the week. Starting at $139 - $289 per night, plus a $40 resort fee and 13.38% tax rate. Resort Fee includes Property-wide high speed wireless internet access, unlimited local and toll-free calls, airline boarding pass printing, and fitness center access. To Reserve Online: https://book.passkey.com/go/SKFC0324AR The deadline for hotel reservations at the group rate is Feb. 23, 2024, at 5:00 p.m. pacific time.
Winter 2023 AKFCF Quarterly 45
RSCS MEMBER PROGRAMS
PICTURE YOUR SAVINGS WITH RSCS MEMBER PROGRAMS & EMPLOYEE PERKS O
ur goal at Restaurant Supply Chain Solutions is to provide a competitive advantage to our members. Through RSCS Member Programs, we offer discounts on products and services used to run your business, and we don’t stop at waste & recycling, pest control, and CO2 services. We have programs with Cintas to help with many of your facilities’ needs.
Member Programs Spotlight: Cintas Cintas Corp (Cintas) provides corporate identity uniforms through rental and sales programs. It offers an array of products and services to businesses including uniforms, mops, mats, cleaning and restroom supplies, first aid and safety products, fire extinguishers and testing, and safety courses. The company caterers its products and services to industries such as gaming, healthcare, hospitality, food service, automotive, government, and education. More than 800 Yum! Brands locations are currently using Cintas for various services. RSCS perks for partnering with Cintas • Special discounted pricing, up to 25 percent off local Cintas pricing • No service charge • $25 minimum stop charge compared to the standard $50 minimum • National Account support structure • Dedicated brand manager with RSCS and Yum! Brands experience.
46 AKFCF Quarterly Winter 2023
How can Cintas help your franchise? • Vendor consolidation • One-source provider • Cost savings • Managed first aid and safety programs keeping your restaurant in compliance • Time savings for your staff • Weekly service with items/quantities that can be adjusted with your changing needs • Cintas can manage supplies for all areas of your business, including mats, mops, cleaning chemicals, restroom supplies, first aid and safety supplies, and so much more. To learn more about the benefits of partnering with Cintas, call Wes Stoddard at 615.305.4703, or email the national service
Be sure to check out our new website at memberprograms. rscs.com to learn how you can save THOUSANDS on services for your restaurants.
team at nationalserviceteam@cintas.com. Visit memberprograms.rscs.com for more information. In addition to Cintas, we have renegotiated our rates with UPS, saving you up to 80 percent on NDA letters and 25 percent on ground shipping, so double-check to be sure your account is linked to our RSCS rates by emailing us at memberprograms@rscs.com. Other Member Programs include: • Energy management with Choice Energy • Security systems with Armor Security • Oil management with Restaurant Technologies • Slip-resistant shoe payroll deduction programs:
YOU CAN
• Shoes for Crews • Skechers • SR Max • Careismatic You can access our complete list of programs at memberprograms. rscs.com. Utilizing our Member Programs Directory, you will find comprehensive details about each program we offer, including available discounts and contact information. This ensures that you can take advantage of the discounted rates provided by RSCS. We recommend consulting your designated account manager (listed on our Vendor Contacts page) to ensure you receive the most favorable rates through RSCS. Employee Perks: Save on vehicles, electronics, vacations, and more! To help with retention, we proudly offer our KFC Employee Perks program through Abenity. Team members can save on a wide range of products and services from popular retailers, rental cars, movie tickets, oil changes, hotel rooms, theme parks, electronics, mortgage services, and so much more! Visit memberprograms.rscs.com > Employee Perks to download our latest flyers. n
DISCOUNTS ON
SAVE
Cellphone plans, electronics & everyday essentials
with KFC EMPLOYEE PERKS Find weekly coupons & Win exclusive giveaways!
SCAN & SAVE today!
STEPS STEPS TO TO SAVINGS SAVINGS
11 Scan the QR code 22 Create an account Browse thousands of 33 discounts & coupons! rscs.hrdiscounts.com/GO
A Yum! Brands Co-Op
$1,856 Estimated annual savings per store 1
STORE
$ -2002
Weekly Service Fees
10
STORES
$ -20,020
New lower weekly fees and shorter renewal terms! No capital investment Lower insurance premiums (up to $1100/yr/store) Remote oil monitoring ensures delivery before you run too low Safer, easier work environment (no heavy lifting of JIBs) Cleaner, more efficient kitchens More sustainable, less waste (reduced waste pickups) Improved food quality and consistency Web-based oil management tools & reporting
Used Cooking Oil Credit **
$ 2,415 $ 1,443
$ 24,150 $ 14,430
Total estimated savings per year
$ 1,856
$ 18,560
Fresh Oil Savings Yr. *
* Due to packaging and delivery method, bulk delivered oil is less expensive. Estimates based on forecasted 2023 forecasted oil pricing. ** Used Cooking Oil Credit estimates are based on the Q2 2022 actual credits. Estimates provided are based on an average fresh oil usage of 387 lbs/wk and UCO of 85 lbs/wk.
Winter 2023 AKFCF Quarterly 47
KFC FOUNDATION
HELPING YOUR EMPLOYEES DURING A CRISIS AND BEYOND By Liz Gulick, KFC Foundation Communication Manager
Y
our KFC Foundation is committed to supporting, empowering, and serving joy to KFC restaurant employees and your communities through education accessibility, financial & crisis assistance, and community giving programs. Let’s dig into the financial & crisis assistance programs we offer. Imagine any of the following scenarios: You get a call from Jamie, an RGM. Her house just burned down along with all her family’s belongings. The wife of your team member, Roger, just passed away. She didn’t have life insurance, and he’s having a hard time coming up with the money to give his wife the funeral and burial service she deserves. Shift supervisor, Alex, has been battling drug addiction and is making the brave and hard decision to enter a rehabilitation facility. She is unsure how to pay for it all, but she knows it needs to happen. The KFC Foundation’s hardship assistance program exists to
help your employees in moments like this (and more). Since 2015, your KFC Foundation has disbursed over $1.7 million to more than 680 restaurant employees to support them in times of crisis and hardship. Imagine: RGM Grant has been having panic attacks and is feeling overwhelmed by many elements of his life. Team member, Taylor, just lost her younger brother and is feeling terrible grief, anger, and depression. Shift supervisor, Miguel, has seemed off lately. Instead of his usual cheery demeanor, he’s been distant, sad, and closed off. The KFC Foundation’s partnership with Crisis Text Line exists to connect your employees with free 24/7 text-based mental health support. They don’t have to talk to someone on the phone or make an appointment; they can text “Fries” to 741741 anytime, anywhere to chat with a compassionate, trained Crisis Counselor.
Since 2021, your KFC Foundation has disbursed more than $147,000 to over 700 restaurant employees to boost their savings and build their money management skills.
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Since 2022, more than 500 conversations have taken place between restaurant employees and Crisis Counselors. Imagine: Team member, Anthony, has never felt confident with money. Budgeting, saving, credit… they’re all foreign concepts to him. He can’t seem to get ahead and doesn’t know where to start. Shift supervisor, Kayli, wants to start a savings account. She’s always spent her paychecks as they come in, but she knows she could and should save money for future goals. The KFC Foundation’s $1 for $1 savings match program is perfect for your employees who want to improve their financial picture. Since 2021, your KFC Foundation has disbursed more than $147,000 to over 700 restaurant employees to boost their savings and build their money management skills. Top Things to Know Employees are eligible for ALL the KFC Foundation’s programs starting day one of employment. Hardship Assistance 1. Qualifying hardships include, but are not limited to: • Car accident (not at fault) • Death in the immediate family • Domestic violence • House fire • Medical emergency (including dental) • Natural disaster caused damage to house or car • Substance abuse treatment • Victim of crime 2. The qualifying incident must have happened within the last 90 days and created a financial hardship for the individual. The applicant must also provide documentation to support and validate their situation. 3. The application cannot be completed on restaurant Wi-Fi, and must be completed on a computer, not a phone. 4. The entire process — from application to final approval — typically takes 3-10 business days. This varies based on the nature of the case and how quickly the necessary information and documentation is provided. 5. If we cannot help an employee with their situation, our programs team will do their best to connect the employee with another resource that could be of assistance. Crisis Text Line 1. Crisis Text Line is a 501(c)3 non-profit organization that provides free 24/7 text-based mental health support and crisis intervention. 2. All messages with Crisis Text Line are completely confidential. The conversation stays between the texter and the Crisis Counselor unless sharing it with emergency services is necessary for the texter’s safety or the safety of others.
3. Members of the KFC family can text Fries to 741741 to chat confidentially with a compassionate, trained Crisis Counselor anytime, anywhere. $1 for $1 Savings Match 1. Our savings match program partner is QUBER, and the program operates on their user-friendly mobile app. 2. For six months, participants can save $40/month and get a $40 match from the KFC Foundation. Plus, they get a $20 bonus for simply signing up for the challenge. At the end of the six-month period, we verify their employment and the $260 in match money is then theirs to keep! 3. Your employees can participate in this program indefinitely. Every six months they participate in the challenge, their match money will be disbursed to their QUBER vault, given they’re still employed at a participating KFC restaurant. 4. Within the app, participants can win additional cash prizes from QUBER and read tips and blogs to help them improve their money management skills. 5. Employees can apply and start saving at any time! Remember, these are just a few of the KFC Foundation’s programs available to your restaurant employees. More information and application links available at kfcfoundation.org. Questions? Email foundation@kfc.com. And if you’re looking for items to help showcase the KFC Foundation’s programs and spread awareness, head to The Market Place (accessible via TeamKFC) and search “Foundation.” n *To be eligible for the KFC Foundation programs, employees must work at a restaurant participating in the KFC Foundation Annual Donation Program.
Winter 2023 AKFCF Quarterly 49
REGIONAL SHORT
NORTHWEST UPDATE: FALL SUPER REGIONAL WAS A COMPLETE SUCCESS! By Shannon Prendiville
T
he Northwest KFC Franchisee Association recently returned home from the Fall Super Regional. It was the first time the NW participated in this event and it was a complete success! We joined the SE, NE, SW, and Great Midwest regions at the Loews Midtown in Atlanta where our franchisees and ARLS experienced a packed program. The Fall Super Regional had a great turnout from all the participating regions. The NW was well represented as we made the cross-country trek to experience the Super Regional for ourselves. The content was top-notch. Two great workshops were presented to franchisees. The first presentation covered Industry Trends that Impact Franchisees, presented by Sebastien Pavy of Bain. The second presentation covered Reducing Bottom Line Erosion and Improving Profits, presented by Micheal Fulenwider, Jonathan Ojany, and Sean Roberson. For the ARL crowd, Justin Patton presented Emotional Intelligence and Karen Adams (KFCC) and Shawn Brady (Harman Management) presented Culture 101: Trust. There was something for everyone. As expected, NCAC, AKFCF, Legal, RSCS, KFC Foundation, and GAC groups presented their latest updates to the regions. Tarun Lal, KFCC President, and his Leadership Team arrived in person and presented their vision going forward. The regions held their board and membership meetings. In addition, we managed to squeeze in a golf tournament at Stone Mountain Golf Course. Several awards were presented to our Northwest group. Most notable was the AKFCF Shining Star Award presented by AKFCF President, Justin Stewart. This year’s Northwest recipient was Chris
50 AKFCF Quarterly Winter 2023
Basinger of Northwest Restaurants. Chris has consistently contributed to the NW, most recently six years as our RSCS Representative. In addition, the NW region presented our Vendor of the Year Award to Dan Ball of McLane Tracy DC. Dan was unable to attend as he recently retired, but Russ Craddock accepted the award in his honor. Congratulations to you both! Let’s not forget our amazing vendor partners. We had an incredible turnout of support in Atlanta. There were three opportunities to visit with the vendors and we topped it off with our tribute to our partners at the Vendor Appreciation Dinner complete with the talented and entertaining Kinchafoonee Cowboys Band. The Southeast region also shared with us their Door Prize Breakfast tradition, which was a hoot or rather a “hootie hoo!” The next event for the NW region is our Spring Meeting 2024. We are excited to join forces again with the Southwest Region. We’re returning to the Flamingo Hotel in Las Vegas- May 6-9, 2024. We’re working to provide an exciting and informative program for all our franchisees and their teams. We’ve
Left to Right: Jeremy Dimick, Jay Shoffner, and Paul Cantrell.
already secured Justin Patton as our keynote speaker, and we are going to have so much more. You don’t want to miss this opportunity to keep your teams informed and engaged. Event Registration and Vendor Sponsorship Opportunities coming soon! Please visit our website at nwkfc.com for meeting information and registration links. n
NWKFC Vendor of the Year: Jeremy Dimick (R) NW President; Russ Craddock (L), McLane.
AKFCF Shining Star Award Recipient: Chris Basinger, Northwest Restaurants (R) & AKFCF President Justin Stewart (L).
REGIONAL SHORT
NORTHEAST UPDATE: THE LEGACIES OF PAST PRESIDENTS By Tony Cameron
A
few months ago, I was asked to go through our Past Presidents List to come up with a nominee for the AKFCF’s National rotation. To my surprise, the list was very long. To my dismay, the number of Northeast Past Presidents that are still active in the system was very short. However, I could not help but remember the lessons I had learned under the tutelage of great franchisees who have passed away or who have exited the system. Franchisees, such as Percy Fennell, who was the first franchisee to receive a perfect score on what we now call the ROCC. Other franchisees — hoping to see what his magic formula was — came from all over the Clinton Lewis (L) and Don Lopes country to visit his stores in New Jersey. He would always tell them, “It’s very simple; take care of your people and your people will take care of you.” Rest in peace, Percy. I remember the grace and style of Darlene Pfeiffer who served two terms as Northeast President. She never stopped fighting for the franchise community right up until the time she exited the system. As one of the founding members of the Northeast Franchise Association and the KFC Foundation, her legacy will live on. Rest in Peace, Darlene. I can hear the wise and calming words of John Marsella. As the discussions in the closed franchisee meetings would start to heat up, John would have a way of bringing common sense and reasoning back to the conversation. We were so fortunate to have him in the room. Thank you, John. I can’t forget the lessons I learned from Pat Dempsey. A schoolteacher by trade, she brought her passion for educating to her role as AKFCF president. Every minute spent with her was like being in
her classroom. Under her leadership, we updated our association’s job roles and bylaws. And we wrote our first Strategic Plan, and helped rewrite the Northeast Manual we are still using today. Thank you, Pat. I remember Ken and Rob Rianna, a father/son team from Rhode Island. Ken served as NE president in 1999 and Rob served two terms in 2012 and 2013. Thanks guys; well done. These are just a few of the past presidents who gave their time and energy to the Northeast Association. Although Percy and Darlene have passed on and the others are no longer active, their wisdom and guidance has gotten us to the place we are now. There are so many more who served and are continuing to lend their time and talents to the Northeast. Franchisees such as Mike Houston, our Immediate Past President, who served two terms and put on two of the best Spring RGM Meetings we have ever had. Denise Springer who, after serving as past president, was elected as the NCAC Representative for the Northeast. Keith Cole, who continues to serve the Northeast as well as the AKFCF. We still receive wisdom and guidance from Northeast past presidents who are still active, including Larry Starkey, Ray Aley, Don Lopes, Dave Evans, Chuck Peterka, and Dale Moulton. There is one more past president who is very active. He serves as the current treasurer of the Northeast as well as serving on the NCAC Op’s Sub Committee, while running stores in New York, Michigan, Connecticut, and Maryland. The past president the Northeast choose to put up for consideration on the AKFCF rotation is Clinton Lewis. Clinton brings a passion and determination that we in the Northeast know all too well and that the rest of the country will soon see in action. Good luck Clinton, The Northeast is 100-percent behind you! n
Winter 2023 AKFCF Quarterly 51
EXECUTIVE DIRECTOR UPDATE
THE STORIED HISTORY OF AKFCF By Kelly Rodenberg
A
s we begin a new year, I find myself thankful for another year serving as the Executive Director for the AKFCF. Whether it has been collaborating with the board, staff, committee chairs, partners, or supporters, I am fortunate to be in the company of such compassionate and knowledgeable leaders. Even more inspiring is the energy each of you continues to give in the face of so many of the brand’s current economic, labor, and technological challenges. While the hlidays allowed many of us to pause and reconnect with family, friends, and most importantly ourselves, I am encouraged at the prospects that 2024 will bring for AKFCF
The people who founded AKFCF were strong leaders when they started carrying the torch. Now we have people who are going to carry that torch strongly into the future.
52 AKFCF Quarterly Winter 2023
and the regions we serve. My enthusiasm is bolstered by all the life-changing work our members do daily. Among these monumental efforts are those we feature (and will continue to do so) in this magazine, our E-newsletter, and in person at meetings. Congratulations to those who were recognized and presented with Shining Stars this year by AKFCF President Justin Stewart. They included Roger Sparks, Michael Fulenwider, Dan Whitney, Chris Basinger, Tony Lambos, Shawn Shariff, and Austin Felker. In 2024, AKFCF will celebrate its 50th Anniversary. We will commemorate this milestone with initiatives and history that reflect on the advances and contributions made by individuals, the regions, and the AKFCF. Even as we celebrate our past, we need to look to the future. The idea here is not “50 and we’re done,” but rather that we’re going to be carrying on the voice of today’s franchisees. The people who founded AKFCF were strong leaders when they started carrying the torch. Now we have people who are going to carry that torch strongly into the future. AKFCF has taken several shapes throughout its storied history. As we step into our 50th year, our hope is to underscore the one thing that has remained since its inception — that we are a family. We are thrilled to share the evolution and magic of this incredible Association with you all in 2024 through magazine articles, interviews, at regional meetings, and at the 2024 Convention. In closing and in the same spirit of appreciation, I am reminded of how times can be stressful for all of us in different ways. But by keeping a positive mindset, there remains hope. This hope is rooted in the triumphant human spirit exhibited by the dozens of people we engage regularly who themselves serve thousands nationwide. Therefore, when we return at the start of the calendar year, we will be ready to do even more. We will be looking for our current members, plus new ones, to help us collectively build and strengthen the AKFCF. We will REACH IMPOSSIBLE. n
FROM THE PRESIDENT continued from page 6 correct order, we would have been subjected to horrible interest rates and never would have made it through the following seven years without declaring bankruptcy. Luckily for Todd and Jodie, she was still working at her job as an MRI technician to help them continue to pay their bills. I’m going to shorten up this story but suffice it to say, just like Andy Dufresne, Todd and I crawled through five football fields of the nastiest stuff you can think of to get to our freedom. The next couple of years were as tight as they could be. I focused on running the best P&L’s we could and Todd was proactive with our lenders to keep them included and feeling like they were our partners. In 2011, we had one payroll that we barely squeaked by on, and this was the catalyst that pushed Todd and I to re-evaluate our strategy. At that time, there were many bankruptcies happening across the country — not just in our brand but in a lot of other brands, too. The common denominator was franchisees that had over-leveraged themselves by selling off real estate. Not only was the residential housing market correcting itself, but the commercial real estate market was going through a reset as well. I know you all have heard the phrase, “Sometimes the best defense is a good offense.” Well, Todd and I took this to heart and decided we were going to expand out of our troubles. You heard me right! Expand out of our troubles — again! It worked the previous time, so why not again, right? In Las Vegas at the casinos, this strategy is called, “doubling down” on the Blackjack tables, or going all-in on the Poker tables. Our plan was to acquire restaurants that were in bankruptcy, negotiate rents down to less than 6 percent and pay rock-bottom prices for them. If we got enough of these into our portfolio, we figured we could deleverage ourselves and get back to being a profitable company sooner. One big sticking point: We still didn’t have any money. Over the years, we had made some great contacts, whether it was through real estate or through people we met through business. One thing our dad taught us in business was to be honest and fair with everyone you do business with because you never know when you might need a favor. As a result, we had formed a relationship with a person who had inherited a media empire that was investing in commercial properties to diversify. He had previously purchased some of our properties and liked how completely honest and transparent we were with him as we went through the hard times. We decided we had nothing to lose, so we brought him a bankruptcy deal that was 42 restaurants for $17.5 million. We then showed him that the real estate alone was worth more than that; the lender just wanted out! This is when Todd and Justin learned the meaning of arbitrage — doing a deal without coming up with any money yourself! We would sign all new leases with him to cover the $17.5 million with a decent cap rate locked in and set rent at 5.5 percent of current sales, not the 7-8 percent we had been doing before the meltdown. Lesson learned! If everything went as planned, we would get the business for free! It was a wing and a prayer, and all we had was our reputation of being trustworthy, and KFCC’s representation that we were great restaurant operators. I would like to tell you that we finalized that deal and we all lived happily ever after. Unfortunately, this deal ended up going to court
We called our unnamed investor group to give them the news and they said something to the effect of “As they say on ‘Shark Tank,’ we’re out.” Can you believe it? Back to the drawing board.
and the bankruptcy judge sided with GE Capital and gave Popeyes the restaurants for $13.5 million. I’ll let you make your assumptions here, or you can ask me about this over an Old Fashioned sometime. So, there we were having gone “all in” and lost. When I say, all in, we had hired the #1 bankruptcy attorney out of Beverly Hills to represent us to get this done, and his fees along with all the due diligence added up to more than $300,000! The moral of this story kids: Don’t gamble; the house always wins! Ok, you’re right, this can’t be the end of the story. After the court case, we had lunch with our attorney who not only couldn’t believe we lost, but that Todd and I weren’t acting like the world was ending. Yes, we were disappointed, but we were still playing offense. This game wasn’t over! We knew that GE still had 14 restaurants that Popeyes didn’t want, and they were going to have to put money into them just for the “de-image” requirements. These were properties that were too close to existing Popeyes so they didn’t want them. We decided since the “double down” and “all in” strategy didn’t work, it was time for — you guessed it — a “Hail Mary!” Within a few days, Todd made the call to the lawyer at GE and said we would give them $1 million dollars for the remaining 14 restaurants and save them about $700,000 in de-image costs. They said “done!” We were saved! We called our unnamed investor group to give them the news and they said something to the effect of “As they say on ‘Shark Tank,’ we’re out.” Can you believe it? Back to the drawing board. Now for the tragic, or epic conclusion. Exactly one year earlier, our cousins and uncle who had up to six KFC’s at one time were going through bankruptcy themselves. My uncle had borrowed $400,000 from a good friend to hopefully stave off filing for bankruptcy a year before that. Most of their locations were in Arizona, and that state was hit even harder than most by the economic downturn. It was at that time our uncle reached out to us and asked if we would buy one restaurant out of bankruptcy. But along with that, take over payment on the loan from his friend? We said, sure, why not? So, not only did we save our uncle’s friendship, but we also provided a job to our cousin. Back to the story at hand: My uncle heard about our possible deal with GE through my father and suggested that his old friend may be interested. I’m way over my allotment of words for this article, but one thing led to another and we ended up creating a new company with my uncle’s friend at 50/50 with a capital infusion that led to us growing from 35 to now 128 locations over the following 11 years! Now for the real moral of the story: Don’t ever stop believing in yourself. If you don’t believe in yourself, why should anyone else? See you all at Convention! n
Winter 2023 AKFCF Quarterly 53
LEGAL UPDATE
2023 – OH, WHAT A YEAR! By Ron Gardner
A
s I write this column, it is the middle of December. Christmas plans are in full swing, and I am in full-scale reflection of the year. While 2023 has certainly seen its fair share of challenges — particularly as it relates to sales and transactions, both in the QSR space generally and in the KFC System specifically — I always think it is worth the time to reflect on the positive things that we accomplished over the last year. As I began writing my list, it got longer than I ever expected. 2023 was quite a year! Here are a few of the highlights. Last January, the System overwhelmingly passed and agreed to the Advertising and Asset Deferral Agreement (AADA). Beyond setting the Ad contribution rate at 4.5% for January 2023-December 2026, the Agreement also provided almost everyone in the System with a one-year asset deferral; the right to buy years to “sync-up” your agreements with those deferrals; and a requirement that KFC test and share the results of the new POS/KDS/ED systems before they were rolled out. More importantly for franchisees’ immediate needs in 2023, the Agreement provided a two-month Ad fee contribution holiday. The value of this holiday put an average of $10,000 to the bottom line for franchisees last year. And while I am talking about things that I am thankful for — a big shoutout from me (and all of you) to Denise Medlock at the NCAC. The
I always think it is worth the time to reflect on the positive things that we accomplished over the last year. As I began writing my list, it got longer than I ever expected. 2023 was quite a year!
54 AKFCF Quarterly Winter 2023
accounting burden this holiday put upon her was far more onerous than any of us expected. However, through it all, Denise did it with a smile, extraordinary professionalism, and competence. We really appreciate you, Denise! Later in the year, we completed the “three-legged stool” of technology agreements by also agreeing to the Technology Acceleration Agreement (TAA) and the Restaurant Technology Acceleration Agreement (RTAA), to go side-by-side with the AADA. Under the terms of the Technology Acceleration Agreement (the agreement between KFCC, NCAC, and AKFCF) there is confirmation of a right that also exists in the AADA — the right to have all technology issues reviewed by the Technology Committee and a requirement that KFC test the new restaurant technology. The TAA also contains provisions that prevent KFC from making a profit on any money charged to franchisees for technology (i.e., they can only collect money on a passthrough basis) and the NCAC retains audit rights to make sure that KFCC is expending your money in the way it represents. Finally, the RTA is the agreement that you all signed this year that replaces the old Merit Agreement. This agreement gives you access to KFC’s technological services and the support that comes with it. The big win in the RTA is that KFCC has agreed to take on the responsibility of making sure that your systems are PCI compliant. Of course, you still will have to comply with KFC’s System Standards as it relates to the protection of customer data. In sum, and over the long haul, perhaps the biggest win here is the seat at the table. We all know that technology will change — and is changing at such a swift pace now that there would be no way we could possibly write into this Agreement all the things that franchisees will need to competitively run their restaurants in the future. However, making sure that franchisees have a voice in what technology is selected, the price at which they can and will pay for that technology, and otherwise be-
ing able to provide direct feedback — rather than just accepting edicts from on high — is a real big win for the KFC franchisees. Lastly, as it relates to activity that was primarily at the NCAC, we negotiated and have rolled out the most generous new-build incentive ever, along with a long overdue decoupling incentive, for the System. The new-build incentive gives franchisees the possibility to build new locations and receive literally hundreds of thousands of dollars, with no floor or cap in some instances, to “juice” the development pipeline. I hope you have had an opportunity to look at it if you have any inkling that you might build in the next year or two. Additionally, to help those who are facing the potential of a Taco Bell non-renewal, or just feel like their marketplace is ready for both a standalone Taco Bell and KFC unit, we negotiated with Taco Bell a lucrative incentive agreement to allow franchisees to decouple their KTs. I have details on all of that if you need them. Turning over the AKFCF side, we made some strides there too. First, while we said goodbye to our long and beloved Trade Show Manager, Deb Newton, we have been so fortunate to have made a complete transition to our new Trade Show Manager, Jen Thomas. The vast majority of the Southeast are going to know Jen as one of the Shelton kids, someone who grew up in the business watching Bill and Bonnie Shelton over the years and having run the business of Bacon Enterprises along with her brother, Marcus, and sister, Debbie. Jen has hit the ground running, after serving the Southeast in their board seats, and then, once the Shelton’s sold their restaurants, as the Southeast Executive Director. We are extremely lucky to have Jen as part of our senior staff at the AKFCF — something I think you will agree with once you get to this year’s Convention; her first full year as our standalone Trade Show Manager. The AKFCF also made great strides this year in continuing to build a relationship with KFCC. For the first time, we had a “Top to Top” meeting in Louisville, where we were able to give the KFCC leadership team in its entirety an overview of the history of the AKFCF, who we are, and what precisely our role is in representing franchisees. For their part, KFCC welcomed our presentation, asked us a lot of interesting and relevant questions, and suggested that we might need to give this
same presentation to the entire KFCC staff so they too could understand how the KFC System was strengthened and enhanced by the power of the AKFCF. I want to thank Tarun Lal and his team for their time and receptiveness to understanding our role. Finally, just in the last couple of weeks, and certainly not to finish off a list that could be much longer (but to finish this article), we made progress in clarifying some ambiguity that has arisen around renewals for those of you that have the “5/15” Agreement. As you may recall, the 5/15 Agreement does not allow for any renewals. In 2016, we had negotiated an amendment that would allow holders of 5/15 Agreements, who are otherwise qualified, to renew their agreements for one, 10-year term. However, due to some ambiguity in the way it was written, the question arose of whether or not that only applied to those signed 5/15s after 2016, or anyone with a 5/15, including those that signed between 2008 (when they were created) and 2016 (when the amendment was finalized). After some serious conversations, and digging through the history, we were able to come to prompt agreement with KFCC that all otherwise qualified 5/15 franchisees would be eligible for a 10-year extension at the end of their term. I want to send out a special shoutout to Kate Ward and Sarah Osborne Hill in the KFC Legal Department for working through this issue with me in good faith and showing the same collegiality and professionalism that they show me on a day-to-day basis. I could go on, but there is a limit to the number of words they give me every quarter in this publication. So let me finish the year with these: 2023 was quite a year. I am so extraordinarily grateful to consider myself a member of the KFC family and I want to thank you, the members, for allowing me to be of service. It is the greatest part of my professional calling. My very best to all of you (make that all of us), for an equally spectacular 2024! 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.
Ad index 13
Auspex Capital
39
Bama Companies
44
Café Valley Bakery
43
Case Farms
C3
Dr. Pepper Snapple Group
5
Ecolab Kay Chemical Company
27
Genpak
7
Gycor International
35
Hour Work
33
KFC Foundation
1
Kitchen Brains
41
Koch Foods
19
Lennox Commercial
C2
Magnesol
15
NDA, Inc.
23
Partstown
3
PepsiCo
25
Pilgrim’s
8,9, 47
Restaurant Supply Chain Solutions
32
Rubicon Technologies, LLC
42
Tyson Foods, Inc.
31
Welbilt
C4
Winston Industries
11
Workstream
Winter 2023 AKFCF Quarterly 55
Photo Courtesy of Scott Kinhg
LOOKING BACK
56 AKFCF Quarterly Winter 2023
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