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K i n g s t o n B u s i n e s s S c h o o l , L o n d o n

Presented to

Dr. Fatima Annan-Diab & John Logan

Module – Responsible Management

Student id –K1359395

Kingston Business School, London

2015

A Report on the Corporate Social

Responsibility of KFC.

We invest to deliver a better tomorrow

Contents Executive Summary .................................................................................................................................... 2

Introduction ................................................................................................................................................... 2

PETA in a state of negation and war with KFC ................................................................................ 2

The Sadistic Abuse- Uncovered by PETA ....................................................................................... 3

Critical Analysis of KFC Initiative for Animal welfare .................................................................. 3

External Consultation ............................................................................................................................. 3

International Focus ................................................................................................................................. 4

KFC CSR Campaign to end hunger: Wall of Hope ....................................................................... 4

Corporate social responsibility of KFC – Carroll’s model ........................................................... 5

McDonald’s - A potential competitor of KFC .................................................................................... 8

Recommendations ....................................................................................................................................... 9

Conclusion .................................................................................................................................................... 10

References .................................................................................................................................................... 11

1. Appendix-1-KFC Awards and Recognitions ........................................................................... 12

2. Appendix-2- KFC Funds raised from charity ......................................................................... 14

3. Appendix-3-KFC in news ................................................................................................................ 15

4. Appendix-4- KFC CSR Goals .......................................................................................................... 15

5. Appendix-5-McDonald’s Open farms ........................................................................................ 16

6. Appendix-6- KFC Charities and donations ............................................................................. 18

7. Appendix-7- KFC Educational Grant Program ...................................................................... 19

Executive Summary This report analyses the CSR initiative launched by one of the world’s leading fast food restaurant,

KFC to maintain a heathy and transparent supply chain. KFC has been criticized by PETA on its

animal cruelty and unethical practices which had led to a decline in the sales, profits and

reputation. The company was in limelight for many odd reasons which are discussed in the report.

The company worked with Tyson Foods which was accused of routine cruelty and random sadism

to chickens in the slaughterhouse at Tyson Foods. KFC did face allegations for working with

unethical suppliers.

The study also evaluates the company’s CSR using Carrolls 4-part model which provides a picture of

the company’s current CSR position in the industry. It details out the economic, legal, ethical and

philanthropic responsibilities of KFC. Also a comparison study has been done on its potential

competitor, McDonald’s which did face the same issues of animal welfare in the past and how the

company worked on the CSR to improvisation on animal health, nutrition and welfare and also

contribute to the community.

The study shows the unethical usage of antibiotics which is an alarming situation for the brand as

well as for its shareholders and stakeholders. This would have a major impact on its sales and

profits. The suggestions in the report are made on the basis of providing various allegations faced

by the brand. Be it unethical supply chain in china or unhygienic outlets in Australia.

The report was designed by studying and researching various articles from newspapers and books

on operation management and operation strategy. Finally the report ends with conclusion and a

summarization of recommendation.

Introduction KFC Corporation, a subsidy of Yum!, based in Louisville, Kentucky, is one of the world's largest

chains of fast food restaurants, operating in more than 115 countries and serving more than 12

million customers around the world. The brand was founded by Harland Sanders in 1930 and is

known fried chicken which has been an order winner in market. Its enjoyed great success until the

turn of 21st century when the fast food has been criticized of animal welfare record, its links

to obesity and its environmental impact.

KFC enjoyed promotional tie ups and corporate sponsorships till early 2000 till, the People for the

Ethical Treatment of Animals (PETA) protested against KFC’s poultry suppliers worldwide(Wall

Street Journal, 2013). This had a great impact on the brand value and its sales.

PETA in a state of negation and war with KFC Since 2003, KFC faced worldwide protest from People for the Ethical Treatments of Animals

(PETA). PETA claimed KFC to work with unethical suppliers who were not only cruel with their

treatment but also were highly unskilled and untrained. They conducted many undercover

operations to expose and uncover the truth behind the brand’s success. Sadly, the main ingredient

to make a bucket full of fried chicken was cruelty.

More than 700 million chicken raised for KFC was treated like meat machines, not animals. They

were crammed by the tens of thousands into sheds. Their throat was burnt when the inhaled the air

filled with ammonia fumes generated from accumulated waste.PETA has asked KFC to make simple

changes in the way it treats the chicken, yet KFC refused to even do the bare minimum to spare the

birds the needless sufferings. Despite KFC claims, parent birds on supplier farms have their beaks

chopped soon after they are hatched. This painful procedure made eating excruciating for weeks,

and the shock of it sometimes killed the birds. The pain went on for weeks and resulted in slow

starvation.

The broiler chickens were bred and drugged in an unnatural fast pace, the birds become so fat so

quickly that their bodies cannot keep up. Their hearts, lungs and other organs find it difficult to

support their massive size which led to lameness. PETA exposed the catching process of birds to

slaughter was extremely harmful to them when done by poorly paid and poorly trained workers.

They grabbed 4-5 birds together and violently hurl them into crates, breaking their legs and

bruising. The birds were further manhandled at the slaughterhouse where they were snapped into

metal shackles and electric stun bath and finally dumped into boiling water for feather removal.

Few of the birds were still alive through this painful procedure.

The Sadistic Abuse- Uncovered by PETA

Six years after KFC promised to take animal welfare seriously, a PETA undercover investigator

witnessed workers at KFC-supplier slaughterhouse in West Virginia slamming live animals into

walls, stamping up and down on them, kicking them across the room and tearing them apart

(Appendx-2).

Critical Analysis of KFC Initiative for Animal welfare

The Animal Welfare Advisory Council

After facing the criticism of being highly unethical, KFC launched it animal welfare advisory council

along with US animal leader program in 2003. This program helped the brand to continuously

research on new methods on animal welfare advancement and adoption for new practices. The

council developed a set of protocols which allowed its suppliers to abide by the standards and

concentrate on compliance. The brand adoption of the American Meat Institute Slaughter protocols

enforced the suppliers to focus on their efforts and process in accordance with these widely

respected protocols. Additionally, the council has been also working with Yum! And it’s other

brands to globally align its core values of animal welfare. The program created polices and audit

documents which addressed the issues of well-being.

External Consultation

While KFC continuously works to keep up with its high standards of animal welfare, the brand also

seeks knowledge from external source for improvisation. KFC along American Association of Avian

Pathologists (AAAP) worked on animal welfare program and made major contribution to the AAAP

welfare subcommittees. The brand is also inspected by experts in academia, addressing legitimate

issues with deliberation to foster improvement.

International Focus

The brand along with its animal welfare advisory council and inputs from US and UK, established

Global Animal Welfare Program. The program adopted a consultancy and collaborative approach to

drive the animal welfare awareness in general in developing countries like china and India and to

encourage their suppliers to invest in R&D to improve animal welfare. This global initiate by KFC

was based on science, technology and had the best practices in the poultry industry, covered the

local needs and regulations. The suppliers were parented with common goals which resulted in

balanced approach benefiting animals, suppliers and consumers. The KPIs are also measured using

this program by analysing performance data and benchmarking the best performances. This

process kept the suppliers well-informed about their rank in the industry with other players. A

quarterly review is provided by the suppliers by the process of self-auditing. Annual audits are

carried out by third party for e.g. Australian Chicken Meat Federation, Inc. (ACMF) carried out

audits to ensure the brand abides by the protocol. In 2011, KFC UK was awarded by Red Tractor

Certification for using fresh chicken on the bone. In 2012, the quality team of KFC calibrated with

third party auditors of Brazil to assure alignment of policies and standards.

KFC CSR Campaign to end hunger: Wall of Hope

Hunger has a higher death toll worldwide than malaria, Aids and TB combined. KFC South Africa

launched a campaign to fight hunger. The campaign highlighted the issues of world hunger, sought

donations and educates consumers on KFC’s contribution towards this program. The wall of hope

was a chain of more than 5000 kids and each kid had an empty stomach which with the shoppers

could place a change, demonstrating that the donations are directly going to feed the hungry

children (Figure1). The program was a great success. (Appendix-1)

Figure-1 Wall of hope

Corporate social responsibility of KFC – Carroll’s model In 1991, Dr. Archie B. Carroll, a professor and business management author, devised a four part

model of Corporate Social responsibility which appeared to be a CSR pyramid (see Figure 5) and

has the following sections:

Legal: The corporations must ensure that their business processes and practices are legal. They

must abide by the rules, regulations and laws. Obeying laws protects all its shareholders and

stakeholders which reply on the business.

KFC abide by the laws, order, regulations and various polices. They have an internal audit on food

safety to meet the industry standards. The company has also fair wages and working hours for its

employees. It also maintains hygienic environment by abiding with the property law of the country.

Economic: Economic responsibility of a company includes being profitable ("Business Ethics’’,

2011) which would help the stakeholders with high returns on investments, increase job

opportunities, contribute to community and develop useful products and services for the society.

KFC believes and creates a win-win situation for the company and the community where they work.

Barnardo’s Partnership and the Work Foundation- The UK-wide partnership with

Barnardo’s provides placements in the restaurants for people struggling to find a job. The

programme provides crucial team-working and employability skills. Work with The Work

foundation to generate opportunities for young people by influencing public policies on

youth employment and training.

They provide training and development programmes for the young people in the community

to create a positive difference. KFC has a kick off 5 year expansion plans in UK and Ireland

creating more than 6500 jobs and thereby increasing its workforce to 23500(Telegraph,

2015).

They designed new restaurants to meet the local concerns and work with local communities

and are very flexible to customize their design depending upon the local needs.

They have developed work ready workshops initiative, where the youngsters are given on

job training from the employees.

They collect the litter and keep the community clean, hygienic and healthy. Figure 2.

Figure-2 KFC community work.

Ethical: Being ethical has become a critical responsibility of any company. Ethical responsibility is

to do what is right and fair, even if not legally required to do this. Ethical responsibilities could be

managing waste, recycling, employee welfare which included fair wages and working hours, animal

welfare etc.

KFC was claimed to be unethical in 2001 by PETA which resulted in the foundation of animal

welfare advisory council. The programme not only helped KFC to adopt best industry practises but

also its suppliers to abide by the ethical animal welfare policies. KFC is quick in reacting when held

with issues. For example,

All the KFC suppliers across the globe comply with the Red Tractor standards which enables

more transparency in its supply chain process for local and national stakeholders (CSR

Report 2013).

The company believed in animal welfare which is necessary for high quality food. KFC has

the Supplier Code of Practice which sets out the expectations on ethics, sustainability and

animal welfare, encourage the suppliers to practice ethical farming practices.

KFC was charged with serving expired meat to customers in China (Wall Street Journal,

2013). The brand quickly reacted to this issue and apologised to its consumers in public

forum.

KFC Thailand has issued an apology after Thai denizens criticized the company for a

Facebook message that urged people to rush home during Wednesday's tsunami scare and

order a bucket of KFC chicken (NDTV, 2012)(Figure-3)

Figure-3 KFC Apology letter

Philanthropic: The philanthropic responsibility helps in promoting human welfare and spread

health and harmony. For example, donations support for local community and running charitable

funds.

KFC has been very sensitive in designing its business process which accommodated its contribution

to humanity and harmony and raise donations . To list a few of them are:

The wall of hope which has been already discussed in the previous section was a very

sensitive and heart-warming initiative which touched millions of hearts and generated

millions of funds. The campaign ran for four weeks, raising over $250,000 in donations and

generating $150,000 worth of PR coverage (WSJ, 2012)(Appendix-6)

Figure -4 KFC Wall of hope in South Arica

The company has contributed to the global community by working together with UN World

Food Programme(WFP).This programme has helped to generate more than 1million pound

in UK and Ireland in the year 2014 there by providing 6 million meals for children in the

poor parts of the world.

KFC launched the Educational Grant Program in 2013 to help the KFC employees reach their

educational dreams (Appendix-7). Even though Colonel Harland Sanders was a 6th grade

dropout, he did understand the importance of education and created opportunities for its

employees by awarding REACH Educational Grants to more than 500 hourly team members.

Since 2006, an additional $10 million in college scholarships have been awarded by the

Foundation.

In last 2 years, more than 700 employees have received grants worth 1.5 million dollars In

the past two years, more than 800 employees have received grants worth nearly $1.5

million(Appendix-2)

From the above discussion, KFC is striving best to be a good corporate citizen. It has high

philanthropic and also economic responsibilities. The company do abide by the laws and regulation

to keep a check on its quality of food, suppliers and storage capacity. It also maintains health and

safety of its employees. However, KFC has witnessed some worst protest for being an unethical

company which did have an impact on its sales and reputation in china and India (BBC, 2012). The

company did accept the flaws and continued to work for improvisation. Figure 4

Figure-5 Carroll’s model

McDonald’s - A potential competitor of KFC McDonalds, an international fast-food chain, who's CSR is quoted as:

'At McDonald's®, giving back to the community has always been a key mission and part of our

heritage. And in Hong Kong, we are proud to be part of the communities we serve and community

involvement has always been a part of our culture.'

In early 1980s. McDonalds was on spotlight for the McLibel case which had lot of allegations against

the company and one of the major allegation was the animal cruelty (theguardian,2005).Though

the trail was ruled out due to lack on evidence, McDonalds had adopted ethical practices in animal

welfare and has launched initiatives to deal with the charges.

The company has launched McDonald’s Agricultural Assurance Programme (MAAP) which

ensures food quality and safety is integrated with the production right from the beginning

(McDonald’s, 2010). The programme is designed to support sustainability and improve

ethical conditions and to measure the annual progression. The programme focusses on the

areas like Animal medication, nutrition and welfare and also emphasised on environment,

good agriculture practices and transparency in supply chain(Appendix-5)

The Food Animal Initiative (FAI)- FAI farm is grown along the banks of the river Thames at

Wytham, Oxfordshire. Which was started by a group of farms in 1988 and now this farm has

become a critical research centre in the UK. McDonald’s has been a core supporter and has

been helping to develop new farming methods which will improve animal welfare and

produce high quality food(Appendix-5(a))

In 2009, McDonald’s Flagship Farms programme was launched in collaboration with the

Food Animal Initiative. The programme aimed at sharing sustainable and ethical agricultural

practices and shows its long-term commitment to agriculture across Europe.

In London 2012, McDonald’s Open Farms programme was launched to showcase the British

and Irish farmers that supply the menu to encourage best practice and raise awareness of

what British farming has to offer.

McDonald’s has bagged the Eggcellent awards from Compassion in World Farming for Europe-wide action on cage-free eggs. McDonald’s supply chain and farms are very transparent to its stakeholders, local and also national, which not only increase trust in business but also position them as a social corporate citizen in the industry.( Appendix-5(b))

Recommendations

After all the protest and criticism, KFC should work on strengthening its brand position. The

company must have a clean and transparent supply chain and should be more interactive

with the media to communicate with its stakeholders.

KFC must learn from its competitors. It must start its own local poultry farms instead relying

on suppliers. They must launch animal welfare programmes with local farmers.

As the company was charged with animal cruelty, it must launch programme to enhance the

health of animals with open farms thereby developing healthy environment for the animals

to grow.

People these days are very health conscious and KFC should keep this in mind when

preparing its menu. It should make healthy food and include vegetarian menu also.

KFC has been accused of serving chicken’s brain and kidney (adweek, 2013)(Appendix-4). It

must create a process to track its food preparation techniques and train its staff to abide by

the process.

It could also start Master Franchise where all the responsibilities are given to a single

franchise. The master Franchise would be solely responsible for all the operations. This

helps the brand to focus on other issues rather than concentrating on the supply chain

network.

Conclusion KFC has a high CSR value which could be derived from the above discussion. However, after having

many policies and programmes to deal with the suppliers, there are definitely loop holes in the

supply chain network which spoils the reputation of the company thereby lowering its sales and

growth. KFC must focus on sustainability for which it should launch programmes that could audit

the suppliers at a close range. Furthermore, the internal employees must be trained to validate the

food items before serving them to the consumers. They should be taught to differentiate between

fresh and expired items. The company is no doubt doing a great job in being philanthropic but it

should also focus on helping people which are affected by natural disaster. Though, KFC secret

recipe has continued to win millions of hearts and smile across the world, it must strengthen its

position to attain sustainability.

References

KFC. (2013). Are Your Chickens Well Looked After? . Available: http://www.kfc.co.uk/our-food. Last

accessed 22nd may 2015.

YUM!. (2014). Corporate Social Responsibility Report. Available:

http://www.yumcsr.com/food/animal-welfare.asp. Last accessed 22nd may 2015.

KFC. (2014). There’s more to us than great food. Available:

http://www.kfc.com/about/responsibility.asp. Last accessed 23rd may 2015.

Alex Blyth. (Jul 26, 2003). KFC and PETA. Available: http://www.ethicalcorp.com/content/kfc-and-

peta. Last accessed 22nd May 2015.

PETA.org. (2012). Exposed: Tyson Workers Torturing Birds, Urinating on Slaughter Line. Available:

http://www.peta.org/action/action-alerts/tyson-workers-torturing-birds-urinating-slaughter-

line/?_ga=1.150439350.1600199513.1433706973. Last accessed 24th may 2015.

PETA.org. (2010). KFC Supplier Exposed in New Undercover Video.Available:

https://secure.peta.org/site/Advocacy?cmd=display&page=UserAction&id=1552. Last accessed 24th

may 2015.

CHRISTOPHER HOOTON. (2015). KFC is dreadful, the company has ruined the product' says man

who brought it to the UK, 'I would not go in there'. Available:

http://www.belfasttelegraph.co.uk/life/food-drink/kfc-is-dreadful-the-company-has-ruined-the-

product-says-man-who-brought-it-to-the-uk-i-would-not-go-in-there-31146008.html. Last accessed

25th may 2015.

LAURIE BURKITT. (2013). Yum Brands Apologizes Amid Chicken Probe. Available:

http://www.wsj.com/articles/SB10001424127887324081704578232791336513864. Last accessed

24th may 2015.

McDonald's. (2014). Corporate Social Responsibility (CSR).. Available:

http://mcdonaldsethics.weebly.com/mcdonalds-ethical-issues.html. Last accessed 23rd may 2015.

McD. (2013). the McLibel Trial Story. Available: http://www.mcspotlight.org/case/trial/story.html.

Last accessed 22nd may 2015.

Mark Oliver. (2005). McLibel. Available:

http://www.theguardian.com/news/2005/feb/15/food.foodanddrink. Last accessed 23rd may 2015.

1. Appendix-1-KFC Awards and Recognitions

2. Appendix-2- KFC Funds raised from charity

3. Appendix-3-KFC in news

4. Appendix-4- KFC CSR Goals

5. Appendix-5-McDonald’s Open farms

6. Appendix-6- KFC Charities and donations

7. Appendix-7- KFC Educational Grant Program