KFC Sustainability Free Report Example

Free Report on KFC Sustainability

Introduction

The concept of sustainability has gained significance in the field of business and influences every aspect of operations. Several factors have contributed to the prominence of sustainability in business decision-making.  For instance, increasing consumerism has created a strain on available natural resources that organizations need to survive.  Consequently, businesses have sensed the danger of exhausting natural resources and thus terminating their operations. The outcome has been an evaluation of sustainability strategies to ensure current production while ensuring continuity of operations into the future. External forces such as climate change and global warming have prompted corporations into action to reduce their carbon footprint because the two forces threaten the survival of mankind on earth. Sustained activism by environmental conservationists and human rights activists has made it untenable for any business not to include sustainability in its strategies and operations. The concerted effort and focus have produced the triple bottom line approach that helps companies to track their sustainability performance. The elements of the triple bottom line model include planet, people, and profits. The purpose of this paper is to evaluate sustainability issues in the restaurant and food retail industry using the triple bottom line model and the company KFC. The paper will analyze at least two sustainability issues under each element of the bottom line framework, analyze how KFC has dealt with the issues compared to competitors, propose a concept of solving one of the identified issues, discuss problems KFC may encounter when selling the new concept to the customers and recommend solutions to the problems.

Sustainability Issues Facing KFC and its Industry

The restaurant and food retail industry in which KFC operates has several sustainability issues that touch on the planet, people, and profits. The sustainability aspects touching the planet relate to the impact of KFC and its competitors on the environment. The aspects under the people element relate to the interactions between the business and the society while those under profits relate to the financial impact of the operations on various stakeholders.

Planet

The first sustainability issue affecting the planet is the emission of greenhouse gases (GHGs). The restaurant and food retail industry emit significant GHGs because it uses non-renewable energy to some extent. For instance, according to Talia (2015), about 70% of the total allowable GHGs will originate from beef, dairy, and poultry farming by the year 2050.  Since beef, dairy, and poultry products are the main items that the industry sells, it will thus have a significant impact on the planet through GHGs.  The GHGs impact the planet by trapping excess heat, which creates global warming. Global warming affects human life by causing flooding, melting of ice, and desertification. The spread of deserts will reduce available farming land and thus impact profits because of raw material scarcity.

The second issue is the excessive use of natural resources. The production of raw materials used in the industry requires large volumes of natural resources that are also shared by communities around the world.  For instance, meat and dairy farming use about 10% of the world’s water flows (Talia, 2015). The raw materials also require large parcels of land on which to farm. The impact of the industry’s burden on natural resources is that there is a potential for overexploitation.  The increased use of water will make it unavailable to communities where raw materials are produced. Such communities are at risk of starvation because they often depend on water for subsistence farming. The increasing need for farming land to satisfy the industry will lead to deforestation. Deforestation will affect the planet by reducing rainfall and thus the availability of fresh water. When resource scarcity-related conflicts arise, they affect the food retail industry supply chains, which increases their operational costs, thereby reducing their profits.

People

One of the sustainability issues affecting people within the industry is the spread of obesity. The food retail industry, especially the fast-food sector, sells food items with high-calorie content that leads to overweight and obesity. According to Sisman and Uslu (2019), locations such as Montgomery city, which has a high concentration of fast-food restaurants, are ranked among the leading areas in obesity cases. Therefore, obesity is a sustainability issue for the industry because of its negative health effect on people. The impact of obesity is that it predisposes people to diseases such as diabetes and hypertension.  When obese people get sick, they are unable to work optimally to earn money for spending in the industry.  The industry’s profits thus suffer from the sickness.  Obese people are unlikely to be as productive as healthy ones.  An increase in obesity resulting from high-calorie food reduces the productivity of workers available to the restaurants in the industry, impacting their profits negatively.

The second sustainability issue is the use of antibiotics in chicken farming. Many farms selling chicken to the industry use antibiotics excessively. According to Talia (2015), more than 60 % of global antibiotics find some use in animal production.  The excessive use of antibiotics has been linked to a growing trend where many bacteria are becoming resistant to antibiotics, raising the risks of human deaths. Any death related to the use of antibiotics in farming will taint the reputation of the companies selling such farm products and thus reduce their attractiveness to customers. Consequently, their profits will suffer.

Profits

Low wages in the industry represent a significant sustainability aspect because of their impact on employees, and their families. According to Jones, Hillier, and Comfort (2016), the industry pays minimum wage with no additional benefits. Since most employees in the industry are part-time, the impact of low wages on their economic stability is worse compared to other people. The workers have limited purchasing power and thus cannot support other businesses in the community effectively. When local businesses fail because community members working in the industry cannot buy as much as they should, restaurants in the industry suffer as well because of reduced overall consumption.

Investing in supplier development is the other sustainability issue affecting the industry. Suppliers play a critical role in sustaining business operations in the industry. Investing in their development and sustenance of relationships in the long term is a critical factor likely to support future operations. Food retailers who fail to focus on the welfare of suppliers suffer losses because they are likely to need new ones several times, which is costly.  Failure to invest in supplier development can lead to low-quality materials that can affect customer satisfaction. Low customer satisfaction can erode profitability because they are likely to buy from competitors.

Competitors and Sustainability Issues

Company Sustainability Issues  
  Greenhouse emissions Overexploitation of natural resources Obesity Use of antibiotics Low wages Supplier development
KFC Started using the Science-Based Targets initiative to evaluate and reduce GHGs (KFC, 2019). Committed to sourcing all palm oil from suppliers who are sustainable (Yum, 2017). Provide customers with nutrition information about their products (Yum, 2017). Sources chicken raised without antibiotics in the United States (Yum, 2017) No action to increase wages Establishes code of conduct and uses third-party auditors to ensure compliance (Yum, 2017)
McDonalds Committed to reducing GHGs emissions through efficient use of energy (McDonald, 2019) Collaborates with suppliers, governments and non-governmental organizations to enhance responsible forestry and sustainable agricultural practices (McDonald, 2019). Introduced salads and low calorie menu items Pressured suppliers to stop using antibiotics essential to human health (McDonald, 2019). No action to increase wages Collaborates with suppliers to create innovations that help them in quality productions and thus sustain relations in the long-term (Rowley and McMurtrey, 2016).
Burger King Offers alternative plant-based meats (Tangari et al., 2010). No significant and verifiable efforts to reduce resources’ overexploitation Offers nutrition information to customers for informed decision-making (Tangari et al., 2010). Committed to purchasing poultry whose rearing does not involve antibiotics (Tangari et al., 2010). No action to increase wages beyond the minimum Committed to improving supplier diversity and development through cooperation to enhance their performance (Tangari et al., 2010).
Subway Helps suppliers and franchisees to implement technologies that reduce GHGs emissions (Subway, n.d.). Promotes sustainable agriculture to reduce deforestation.

Sources materials from only suppliers using sustainable practices (Subway, n.d.).

Launched a global campaign against childhood obesity.

Committed to reducing sugar in its products (Subway, n.d.).

Aims to be 100% antibiotic free in the United states by 2025 (Subway, n.d.). No action to improve pay Committed to local sourcing to empower local suppliers economically (Subway, n.d.).

Overall Commentary

All four competitors have attempted to address the sustainability issues differently. KFC has performed fairly well compared to its competitors in all areas.  All four competitors have taken significant steps to reduce GHGs emissions. Their response to the issues of resources’ overexploitation has focused on engaging suppliers to observe sustainable practices. Burger King is the only competitor with no significant commitment to preventing overexploitation of natural resources. The responses of the four competitors to the issue of obesity have been conservative because they have focused on informing customers of the calorie content; offer a few alternative products and creating a global campaign against obesity.  However, they continue selling high-calorie products because they are core to their business.  All the companies have shown commitment to purchasing antibiotic-free poultry, at least in the United States. All the competitors have not taken any steps towards improving wages, which is an indication that wages represent a significant challenge to the corporations in the industry. The four competitors have focused on developing their suppliers effectively through different collaborative mechanisms. The obesity issue will be the most challenging to address fully because it will require significant alteration to their main offers, which may meet customer resistance and backlash.

Proposed Solution

The proposed solution involves reducing the portion sizes of food items that cause obesity, contribute to the highest level of GHGs emission, and consume significant amounts of natural resources. The proposal is for KFC to reduce the meat and French fries’ portion sizes in its serving and increase the salad portion sizes. Steve Blank’s XYZ model of value proposition requires a value proposition to identify those targeted by an offer, the solution proposed, and the means through which a corporation intends to fulfill the promise. The value proposition in this paper is to help customers of the restaurant and food retail industry avoid obesity and reduce the negative impact on the environment by minimizing their consumption of meat products and French fries while increasing their consumption of salads. According to Grinstein and Riefler (2015), modern trends indicate that consumers around the world are increasingly concerned about their impact on the environment through the products they consume. Media coverage of climate change and its negative impact on the future of humans and increased activism by various groups have sensitized clients across industries about their carbon footprint. Grinstein and Riefler (2015) argue that Americans are willing to consider sustainability in their purchase decisions more than before and may prefer corporations with the least impact on the environment in the future. Other stakeholders like shareholders are also concerned about how their investments in the restaurant and food retail industry contribute to environmental degradation and may prefer companies with the least impact on the planet. One of the consequences of not focusing on sustainability is that corporations with no elaborate sustainability measures will likely face backlash from society, which will create negative publicity. No investor wants to risk financial resources on a corporation likely to fail because of the customer and societal boycott.  The implication of the changing trends among customers and shareholders is that they are likely to accept a proposition that improves the sustainability of the planet and its inhabitants.  The findings on the potential support for sustainability measures may help predict whether the proposed solution will succeed or fail. Given the willingness of customers to purchase products manufactured sustainably, and the shareholders’ wish to associate with sustainable corporations, the proposal has a high chance of succeeding.

The features of the proposition include the reduction of meat and French fries in each serving and increasing the number of salads per serving. The proposed solution has numerous benefits to both the health of the clients and the environment. For instance, the reduced portion sizes ensure the amount of calories the customers take is minimal and thus unlikely to lead to obesity. O’Kane (2012) has termed obesity as a serious health risk to people, especially Americans because they are the most overweight in the world. O’Kane (2012) attributes the high rate of obesity and overweight condition to the fast-food industry and the consumption of high-calorie food. Therefore, there is an urgent need to minimize obesity by addressing the causes.  The current concept thus promises to help solve the obesity crisis. Salads are healthier alternatives that promote the customers’ health.

The second benefit of the proposal is that it can also address issues related to the environment. Apart from being a healthy alternative, the production of fruits and vegetables that make up salads emits significantly low levels of GHGs compared to meats. According to Talia (2015), a substitution of meats and dairy products during breakfast has been found to reduce resource consumption by about 44% while meatless dinners increase the quality of the ecosystem by about 88%. The numbers attest to the fact that reducing or eliminating meat-based meals can have a significant effect on the environment. The reduction in meat portion sizes will minimize the demand for meat production in various farms. Consequently, fewer animals will be reared, which will mean a reduction in the emission of GHGs. Meat and dairy farming are projected to contribute the largest amount of GHGs by the middle of the century (Grinstein and Riefler, 2015). Such high levels of emission are against the requirement by scientists to reduce emissions to ensure people can survive on the planet in the future. The proposed solution has the potential to contribute to global GHGs emission reduction goals. When meat portion sizes are minimal, fewer resources will be required from the environment by the restaurant and food retail industry. Therefore, water and forest resources will be preserved for future use, which can minimize the potential for resource-based conflicts. When corporations in the industry minimize the demand for meats, limited antibiotics will find their way into human bodies because only a few animals will be slaughtered for consumption. Consequently, the impact of antibiotics on humans will decrease. Therefore, customers will become healthier while empowering the planet to meet current and future needs.

Challenges of Implementing the Solution

The first challenge that KFC will face when trying to implement the new concept with reduced calorie content is a boycott by those who do not value sustainability.  Those who purchase fast foods do not do so because they do not understand the food may have environmental or health implications. They often choose to consume them for personal reasons such as convenience and taste and lifestyles. Reducing the meat and French fries’ portions will thus meet resistance from people who have chosen to eat high-calorie content food regardless of its effects. People in developed countries prefer to use their freedom of choice to make decisions affecting their lives, no matter the outcome.  Introducing the new portion sizes may appear to interfere with personal choices and thus create resentment. The consequence of such resentment is the boycott of KFC products in favor of competitors’ offers.  Therefore, there is a high risk that KFC may lose some of its customers for attempting to provide sustainable food items on the menu.

The second problem likely to affect KFC’s introduction of the new proposition is the cost of the new menu items with large portions of salads. Among the clients that KFC serves, there are people who consume products, not because of choice but affordability.  Fast foods sold at restaurants such as KFC are among the cheapest in the world compared to other food items.  As such, KFC has a large customer base among poor people. Any introduction of salads is likely to be accompanied by additional costs. Any significant increase in the demand for plant-based products will require KFC to rethink its supply chain strategy because most of the current suppliers sell meat-based raw materials. Any engagement with new suppliers will increase costs considerably because it will involve the creation of new supply chain networks and relationship management. KFC will be forced to pass on the costs to the customers in the form of increased prices, which may impact those who cannot afford the new menu items. Such customers may resist the new concept regardless of its health and environmental benefits because their primary concern is affordability.

The third problem is intense competition from restaurants that have segmented their offers to cater to the needs of the health-conscious clients exclusively. The increasing call for fast food restaurants to add healthy offers created new opportunities that some investors decided to exploit. Consequently, restaurants that focused on healthy choices emerged and established their presence and reputation. Given that fast-food restaurants like KFC have a history of unquestionable practices in their operations such as paying poor wages and exploiting workers within their supply chain, KFC will have a hard time convincing customers that the promised offer will have the indicated nutritional value. KFC’s customers will thus question the rationale of purchasing the healthy food items from the company, instead of switching to restaurants with a proven record for offering highly nutritional food. KFC will thus need to invest in advertisement to convince its customers to trust it with the new concept and not switch to competitors that are already selling sustainable food items.

Recommendations

The recommendation for KFC to address the boycott problem is to segment its market where it introduces the new offer while continuing with the old menu items. The company should then market the new concept aggressively to draw attention to it and make potential customers aware of its existence. Segmentation will help KFC to introduce the new concept without interrupting the old menu items. Therefore, in the meantime, KFC should continue selling its normal menu items to other customers until the trend for healthy food items become acceptable to all. It is essential to acknowledge that although it is critical to embrace sustainability, restaurants cannot force their customers to purchase products they do not want. Losing the current customers by not addressing the need to choose whatever they eat may compromise the company through lost revenues and profitability. Consequently, KFC may not have enough capital to introduce additional sustainable products in the future due to scarcity of finances. Offering the new and the old menu items is ideal because it will help the company to retain its current customers while offering an opportunity for them to discover the value of the new products.

The solution to the increased cost problem within the new concept is to use advertisements to highlight the cost of the products versus the cost of poor health and a destroyed environment. According to Sisman and Uslu (2019), most people in areas with high concentrations of fast-food restaurants are obese and are poor.  Therefore, they cannot afford expensive treatment for ailments that may result from eating unhealthy food. Highlighting the possible costs of diseases arising from obesity may convince them to agree to spend some extra dollars on the new healthy offer and avoid ailments that will strain them financially. Framing the advert in terms of current and future costs can resonate with the clients whose main concern is cost. Another cost aspect KFC should include in its adverts is the cost of losing future generations to a destroyed environment. Living things, including people and animals, have a natural instinct to propagate their genetic line and ensure their future survival. KFC’s customers are not any different and may wish their generations to continue surviving in the future. Demonstrating to the customers that one of the costs of their current eating habits is the extinction of the human race can be convincing enough for them to accept the limited additional cost in the new concept and save the future of mankind.

KFC can deal with the challenge of competition from restaurants selling healthy foods exclusively by leveraging its location to offer convenience. The restaurants selling healthy food options have not established as many location networks as KFC. Therefore, although they may have experience in the products they sell, they cannot match the location convenience that KFC can offer to its clients. According to Sisman and Uslu (2019), fast food restaurant customers prefer them because they are easily accessible from where they live and the cost is affordable. KFC can appeal to the customers’ need for convenience through targeted adverts to highlight the benefits of remaining with KFC. The adverts need to reinforce the fact that the customers can depend on KFC to deliver nutritional value to justify any additional cost related to the new products. Leveraging on location can help KFC deter its current customers from switching to competitors and thus ensure profit sustainability while helping preserve and protect the environment.

Closing Comments

The most significant sustainability issues facing the restaurant and food retail industry include GHGs emissions, resource overexploitation, obesity, antibiotics, low wages, and supplier development. KFC and other competitors in the industry have addressed the issues fairly but using different approaches.  However, none of the companies has addressed the low-wage problem. The new proposal has the potential to succeed because it can reduce emissions, resource overexploitation, and obesity, which as critical aspects of sustainability in the industry. Therefore, KFC should implement it according to the recommendations listed above to resolve potential problems and thus ensure success.

References

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Jones, P., Hillier, D. and Comfort, D., 2016. Sustainability in the hospitality industry: some personal reflections on corporate challenges and research agendas. International Journal of Contemporary Hospitality Management, 28(1), pp.36-67.

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Sisman, M.Y. and Uslu, H., 2019.  The role of social and economic factors on fast food restaurant chains. Journal of Global Analysis, 9(2), pp.108-121.

Subway, n.d. Our plan: learn about our policies and commitments on environmental impact, helping the community, promoting well-being, and beyond. [online] Subway. Available at: <https://www.subway.com/en-US/AboutUs/SocialResponsibility/OurPlan> [Accessed 7 May 2021].

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Tangari, A. H., Burton, S., Howlett, E., Cho, Y., and Thyroff, A., 2010. Weighing in on fast food consumption: The effects of meal and calorie disclosures on consumer fast food evaluations. The Journal of Consumer Affairs, 44(3), pp.431-462.

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