Now that real wage growth has finally taken steps to combat low household disposable income, retail chains are increasingly deciding to invest in growth so as not to miss the predicted boom in consumer spending. This has been especially true of high street food and drinks retailers, which are channelling a lot of funds into expanding their presence nationwide.
Fried chicken specialist KFC has become the latest to reveal investment into a five year plan, with the retailer confirming it has set aside £21 million for the first year’s push alone. Under the expansion plan, KFC intends to open a further 150 outlets, bringing its total restaurant portfolio to over 1,000 branches.
32 of these openings will occur before the end of 2014 – a move which will create around 1,300 jobs and increase the brand’s workforce in the UK and Ireland to 25,300. Furthermore, 220 existing branches will undergo refurbishment works at a cost of £40 million in order to appeal to a wider consumer pool, potentially creating further jobs due to an increase in demand.
KFC UK and Ireland managing director Martin Shuker believes that the growth plan laid out by the brand is entirely achievable and realistic.
He says; “The reality is that we could absolutely keep growing at this rate for the next five years and longer, because there’s demand for KFC in geographies where we are not yet present.
“We also have the opportunity to evolve our restaurants to offer greater convenience and access to the brand.
“If you were to take the trajectory of what we’ve done in the last five years and fast forward, that would not be misleading in terms of what we want to do in the next five years – it’s a line of good, consistent growth.”
Since taking charge of the brand’s UK and Ireland operations in 2006, Mr Shuker has seen eight consecutive years of sales and profit growth. Furthermore, in the past decade overall revenues from UK and Ireland stores have almost doubled, going from circa £500 million in 2004 to the just shy of £1 billion forecast this year.
With an annual store portfolio growth of around 30 restaurants per year, run mainly in the form of franchises, KFC seems to be learning from the rapid expansion mistakes of others – Starbucks, for example, struggled hugely with rents after expanding too quickly only a few years ago. By aiming to maintain growth momentum, rather than pushing for unachievable goals, KFC can remain relatively secure in a competitive market without risking missing out on opportunities growth can bring.
Mr Shuker agrees that steady growth is best, saying; “Other quick service chains have many more restaurant outlets than we do, so as long as we can keep growing and make sure that our offering is appealing to customers, I think the ceiling is quite a long way away.
“The opportunity we have is about whether we can innovate in different restaurants that might hopefully be successful as well and could allow us to increase our rate of growth; that’s what we’d like to do.”
