KFC’s Veggie Voyage Would it be a right move? A thorough market research and analysis on KFC and interesting enough it’s not about their sales or market share stuffs. It’s a bit off the track to look out on the exploring Veggie menu in KFC. This research has been done at times when Aussies are quite aware of Obesity and research shows their declination towards fat items. Instead people hops in for new and healthy items; winners bragging it on dicing the piece of Healthy menu necessarily be less junky and herbier or organically made of. We tried to do the research and thus feel the pulse of consumers and assess how probabilistically are there any chance of a real purchase call owing to veggie menu items.

Md Nazmus Shakib Ching Orraput Michelle GE

Executive Summary

It’s been a fantastic tour- I must say; yes in terms of knowledge and execution in the field of Marketing research. Started with ideas and then finalizing the idea of looking at the consumers’ preference- are all broad things that we had over the last 3 months.

KFC-Kentucky Fried chicken by its name has the flavor of chicken thing. We know that but again we see a growing concern of fast food eatery habit and in affect to this how obesity grabs the happiness of consumers – all these made us believe that like all developed countries maybe Australia is also embracing the health conscious food items. Based on that, we tried to reach out the management problem whether there has been any chance of Veg menu from KFC or are they at all concerned about the growing Fat campaign.

We produced our research into two different segments. Initially we did the home work of the market and industry trend regarding the food. We drew the line where we see a significant portion of consumers are growing in veg segment. Numbers are quite attractive for the upcoming years.

We designed our research and started the fact from secondary sources. We have got the numbers and now we had to do feel the pulse of the consumers. Here comes the execution part and the most important part. We have generated a survey research questionnaire keeping in mind that there should remain least errors or bias so to say. Professor Pat, I must mention his name since he has helped us making this survey a fruitful one.

Sampling again is one of the concerns for us. Due to time limit and resource constraint, we have chosen non probalistic sample. We have tried to reach tough to two segments through initial screening. We got an 83% response which I would say alright with a mix of different nationalities and of different profession. This has to be mentioned here that we have leniency towards convenience sampling.

Once we were doing it we did a comprehensive 7min interview with one of the KFC officials. This has been an eye opener for us since we have got to know some appealing and appalling facts for our research.

Then we got the response and to our mind this s what we liked most. We then did the analysis of 59 responses with 40 different variables. We did a big bunch of analysis to address of our management problem. We saw that the health consciousness have inversely correlated to price; deducing more from the data- we ran few regression to assess whether there is any likelihood to buy KFC menus incorporating and compared several variables.

Based on the regression we have made a matrix which has given us an indication whether from our data analysis does this research credibly reasoning to recommend KFC to go for veg menu. We did this as well. And we suggest KFC not to go for veg menu right now but should always keep an eye on this.

While doing this research we are aware of unavoidable errors like random sampling errors and some human errors on database. Apart from that we have always been careful enough so that in any manner we would not bias the respondents. We 3 Marketers team have put our effort so that we learn qualitatively and want to thank Professor Patrice Auger for all his kind support for being the ultimate resort of solution.

Research Prelude

The number of people who become vegetarians has been increasing in recent years in many countries around the world including Australia. This vegetarianism trend is mainly due to the greater concern in obesity and greater awareness in healthy diets and the treatment of animals. Many celebrities, politicians and athletes including Former President Bill Clinton, comedian Russell Brand, model and actress Gwyneth Paltrow, talkshow host Ellen Degeneres, boxer Mike Tyson have publicly described themselves as vegetarians. This brought the trend into the public eye. Even though retaining vegetarian lifestyle is not easy due to the difficulty of finding the restaurants that provide vegetarian menu, the growing demand in vegetarian foods has lead to the recent adjustment of the menu in many restaurants, airlines catering and hotels. Current Market standing in Australia In Australia, many fast food chains started to offer more options to vegetarians. These fast foods chains including Burger King, Hungry Jack, Subway, Nandos, Dominos and Pizza Hut put the vegetarian menu in their main dish whereas KFC only has it in their side dishes. With this growing trend of vegetarians and the great competition in fast food industry, adding vegetarian menu in KFC Australia can possibly help KFC to continue its growth and deliver the ‘convenience’ value of fast food concept to its vegetarian customers. However, with the popularity of its chicken, “Kentucky Fried Chicken”, providing menu without meat may incur negative impacts on the core value of the brand. Hence, this research paper will investigate the impacts of this vegetarian menu on its revenue growth and brand image in order to provide KFC managers to further develop business strategies and make best decisions in the future. Research Proposal

Management Question: “What would be the impact on the revenues and on the brand image if KFC adds vegetarian menu in Australian market”?

Research objectives: To assess the impact both on revenues, to ideally identify an untapped market (if any) and thus to determine its aftermath in the course of consumer perception journey for KFC; once KFC opts for adding vegetarian menu.

Decision alternatives: If KFC will not add vegetarian menu in Australian market, it will keep developing other chicken menu to its meat-lovers customers.

In finding an answer for this management question, Australian customers’ preferences on fast foods industry and their perception of KFC brand will need to be well understood. Conducting primary research will provide insightful information of their current customers as well as the views of their potential customers.

Besides, as the customer preferences and perception of the brand evolve over time, the information regarding this issue is impractical to get from secondary research. The available current information from secondary research will not be directly relevant to the topic and hence, may provide the incorrect evaluation to this topic.

Research design:

Since our research mostly deals with the insights of KFC menus and its impact on consumers, we would go for an exploratory method initially through Primary research on consumers. Once

resourceful qualitative representations correlated to our objectives are at our hand, we then would move towards more descriptive mood. Combination of these two or quite a bit mix up of these methods would destine us to a conclusive decision point, we believe. We however rule out the position of experiments due to valid reasons. Design Flow will be as follows:

We assume that through an exploratory survey we would have a grip on some research assumptions which later on would justify our objectives. Once we are on the move with few assumptions, we then go for qualitative questionnaire to spot on the issues that we look for. By definition, we will do survey twice and we might opt for a reduced and selective respondents (consumers). And “pre vs. post” will determine the next course of our journey.

While doing the research several mandatory questions will be answered and these are no doubt- the connecting spades for our conclusive comments. Like the objectives itself, answers of these vital issues might be proven very inclusive and influential for projection in future.

Management issues: A. What are the trends of the consumers who prefer to buy KFC meal? B. Is there any significant demographic leniency observed? C. What is the Current market share- on the basis of surveyed consumers? D. Any choice from the menu that drives KFC sales in OTC (over the counter)? E. Is there any issues regarding the service executions? F. Consumers’ perception of the brand and its brand muscles? Consumers “like and dislike”

tips? G. Will an addition to the menu tap the potentials of so far untapped arena? Would it give KFC a

competitive edge?( potential market size of the menu) H. Do KFC need to consider pricing on menu for current and proposed brand?

Consumers point of view A. What are the reasons for choosing KFC? Especially concerning the convenience or VFM or

both. B. What is the insight of consumers regarding quality of the products and service? C. Why choose KFC over other brands? Which identity of KFC do consumers value most?

Current market stand

Consumer observations Revenue Drivers

Demographic leniency Choice drivers Quality issues Service at OTC

Revenue Impact Assessment

Consumers perception on potential new menu. Potential market size

Whether an addition/rendition on KFC menu impacts

its revenue? And to what extent consumers would likely to welcome this initiative?

Descriptive Exploratory Conclusive decision point

Qualitative research Assessing assumptions T1 T2

TF

Secondary Research gives light into the tunnel Beginning with the situation analysis, we found out that many fast foods restaurant which are the major competitors to KFC currently provide vegetarian menu. Moreover, with the increasing growth of vegetarian populations and the healthy diet trend, KFC is facing challenge in coping up with the competition. To reach to the conclusion whether KFC should offer vegetarian menu in Australia market or not, our research will gather information for analysis in three major steps respectively as followings:

Excavating things from Secondary research1

Our research crucially deals with the responsiveness of consumers to healthy menu items in fast food and more precisely in KFC. Like every market research our journey has even eyed first on secondary look outs from different and available recognized sources. We looked out for secondary research mainly due to the fact that this information will lead us to the final outcome of our research. Secondary research primarily has served us in the following facts and thereby to form some hypothesis as well for our further works. Things are like the followings:

1 The secondary research was collected from various online databases including euromonitor.com. & IBIS world.

Seco

ndar

y Res

earc

h Objectives:- To understand the fast food industry in Australia, study about the market growth, trend as well as competition in this industry.- To understand the vegetarian trend in Australian market.

Inte

rvie

w Objectives:

- To get deeper qualitative data from the KFC store managers who are the ones who observe customers' preferences everyday.- To understand KFC factors of sales and its current menu.- To collect the opinions about this new menu concept from KFC management team

Surv

ey Objectives:

- To understand current and potential KFC customers' preferences- To understand customers' perceptions of KFC brand.- To compute the possibility of acquring new vegetarian customers for KFC- To understand the impact of offering vegertarian menu on KFC brand value

Let’s therefore start our journey with knowing ins and outs of the fast food industry as a whole in the Australian market perspectives. A roughly about 3.5%2 growth (CAGR ) projections are in the fast food category in Australia for the period of 2013-18. The current estimate of revenue from the fast food market is about AUD$ 15.8 bln.3 Over the past years there has been a tendency to grow on fast food eatery items across the Australian markets. Most prominently the market is moving towards a point where consumers are asking for more healthy diets in their choice. Things are having more consumer centric in these days as most companies who fight this zone are pouring up with lots of fast food options, which are somewhat limited to burgers and chips op. Consumers ask are catered by adaptable options more or less by all participants in the market.

Fishing in the surface has just given an idea of how big the market is. Now we would try to look at the market trends and key market players share. One thing is sure that market is quite competitive and it’s in the matured stage of product life cycle. There is a hint of appreciation for innovative or new product line in the fast food markets. Big players like McDonald and KFCs are actually trying out new menus for the consumers, thanks to the awareness of consumers for healthy consumptions at the end of the day. We, from our research point of view, feel a cognitive & simultaneous improvement in the fast food eatery in Australian Market.

Currently, MacDonald leads from the front with 19.6% and Yam! On the other hand is actually closing the gap with having fair share of about 16.4% in the market. Its KFC within the Yam group consist of 53% meaning that nearly 10% of the market. As we can see from the data that locals and some mini multinationals are capturing the most of the market, predominantly serving consumers with different menus in a meaningful ways. Again one thing for sure and we should not be dubious about the fact that demand for fast food is growing (ever better compared to 2008 base) but with some anecdotes of healthy items. We assume vegetarian items would just fit there as the

In terms of considering the menus, we see a major portion goes to non fatty and even towards the vegan’s choice –the salad & veggi sandwich items, i.e. of about AUD$3bln market. It’s a bright number and appealing for players who want to grab a fair share from it. And not to forget that Australian market is fairly competitive and therefore anyone satisfies the growing demand of consumers will get the hands on the sweet pie of market leadership.

Regarding the consumer perception, things are a bit tricky here. The secondary data that we excavated has not profoundly talked about the concept of vegetarian menu as trendy and driving force for consumption in future. However, as we said earlier consumers are likely to consume of more healthy and non fatty items in future, precisely number of transaction would be 1.3% higher than the current one. And we are observing fresh wave on it even from the main players describing the consumers that

2 IBIS world industry report G5125a Fast food in Australia, July 2012. 3 Fast food in Australia, Euromonitor International August 2012

fast food they ate in Mac or KFC are no longer cooked or processed in a way that can increase the chances of fat or unhealthy, let alone obesity.

Along the way in our research we have found evidence that there is and will be a market for healthy menus in the fast food restaurants, in our case for KFC especially and the number is just quite mind numbing. Here comes the million dollar question, whether should KFC try to grab that potential market with a veg menu alongside in their current offering. We would look out on that part through direct consumer survey4 and management interviews5 since we believe consumers are the king in the free market and will remain the driving force for innovative tests like veg menu in KFC.

4 Appendix A: Consumer survey form. 5 Appendix B: Management Interview.

Qualitative Research

Interviewing- a method to get the insights The interview objective is to get insights on the view of KFC management towards any inclusion of menu like vegetarian, competitive spirits and consumers’ treatment in their own marketing jargon. However with the limited of time and low willingness to participate from the store managers, we could only manage to conduct one interview. We did a comprehensive interview of a store manager of one KFC branch in Melbourne. The face-to-face interviewed was conducted at a KFC store in CBD Melbourne area. Our team members were the interviewers. From this interview, we can tell that management in KFCs is quite confident about their current sorts of menus. Vegetarian menu seems a distant matter for the interviewee though she mentioned “Subway” as the biggest competitor.

Moreover, she seems too biased to “meat” due to her own experience.

She also added that the menu was regulated by the head quarter and hence, this is not under store manager responsibility. What she told us was a great insight indeed. Nevertheless, projecting her comment(s) as representation of KFC management would be an early judgmental call at this stage. The bull’s eye here is the competition awareness. Positioning against Subway and leaving the arms of vegetarian menu is quite an interesting finding for us.

“Less than 10 customers out of 7,000 weekly customers will ask for vegetarian." If customers want vegetarian, they are not

going to come to KFC."

“KFC, Kentucky Fried Chicken, that's what we sell. Chicken is the backbone

of the business. If you look at my menu, where is the salad? It's there but it's not what you're going for. There's no

one big menu dedicated to it. The menu is dedicated to chicken.

“I was vegetarian for 10 years and I got sick because I didn't eat meat. I don't think it's a healthy way of life. It's not my choice. But if we were to get something vegetarian, I wouldn't

be very happy

Survey- a snapshots of consumer perception

We have formulated a survey question though which we believe we would be able to estimate the pulse of consumers regarding vegetarian menu offered by KFC. Questions have been kept simple and precise.

Survey Research

From the secondary research and interview information, we got better understanding about fast food trend, vegetarian trend in Australia and KFC menu and current KFC customers. We use the information from both secondary research and the interview to formulate the survey questions. The survey will focus mainly on testing vegetarian menu concept and understanding customers’ perception of KFC brand if it offers this menu. Survey questions were designed and conducted with these following objectives;

Survey questionnaire design

In formalizing the survey questions, the survey was divided into three different categories which are ‘fast food category’, ‘KFC category’ and ‘demographic category’. The questions in all these three parts consist of both non-structured questions and structured questions. Since this is the new product menu concept survey, the open-ended question is to explore insightful opinions and new ideas from customer.

In the fast food category, we want to measure the current perception of consumers on fast food restaurants, their awareness and attitude towards vegetarian food as well as their willingness to buy this vegetarian menu in fast food restaurant. The structured questions include multiple choice, interval scale, rank order and Likert scale. Since this is the new product concept for fast food restaurant, the description of the product was provided for clear understanding.

In the KFC category, we want to measure the perception of consumers on KFC brand values, their preference on current KFC menu and their willingness to buy KFC vegetarian menu. The questions consist of multiple choice, dichotomous and rank order. In order to ensure the right understanding, the definition of each consumer characteristics (meat lover, innovative user, health-conscious person and menu lover) was provided.

In the demographic category, the short and simple questions were formalized in order to segmentation and target purpose. This demographic information also assists in analysing the data to find differences between groups.

Description of population of interest and explanation of target population appropriateness

A. To understand consumers preferences about fast foods and awareness of vegetarian trend

B. To understand customers' perceptions of KFC brand. C. To compute the possibility of acquiring new vegetarian customers for KFC D. To understand the impact of offering vegetarian menu on KFC brand value

Since we would like to know whether the KFC vegetarian menu will have any impacts on the current KFC customers and whether this menu will bring in new customers to KFC. Hence, our interest target groups are:-

1st group: Vegetarian or Health-concerned, new customers: The results will indicate the possibility whether the vegetarian menu can help KFC acquire new customers and hence, generate more revenues for the company.

2nd group: Non-vegetarian, current customers: The results will show the reactions of current KFC customers if it offers vegetarian menu and hence, indicate the impact on the brand value of KFC.

Sampling

Since our survey aims to find an answer whether KFC should launch vegetarian menu in Australia, our sample population is all people living in Australia including both Australians and Non-Australians. However, with limited time and budget, we could only conduct the survey in some areas of Melbourne. In terms of sampling procedures, nonprobability sampling technique (convenience sampling) was used. With only 1 week time period in gathering the results, we got in total 59 samples in which 30 samples are from offline channel and another 29 samples are from online channel.

Method of survey distribution

The survey questionnaires were distributed in two channels; offline and online. For the offline channel, the paper survey was distributed in Melbourne University and CBD area. Both channels were conducted within 1 week period and there were no incentives provided for the participants for both channels.

Customer Segmentation Age under 15 Age 16-25 Age 26-35

Age 36 or older

Vegetarian/ Health-concerned

Current customer

New customers

Non-Vegetarian Current customers

New customers

Target groups of participants for survey analysis

Data Analysis

From the survey results, by utilizing SPSS, we focused on four major functions for the analysis. These four functions include descriptive, correlation, independent sample t-test and regression.

Descriptive Potion

The descriptive function is to get the overview of the means of each variable to find out the current ranking of fast food factors, top fast food restaurants, consumer characteristics as well as the KFC brand values in consumer perception

Then, the correlation is used to understand the strength and direction of relationship between variables. This analysis can tell us what consumers are willing to trade-off. For example, it can predict their behavior whether they will be willing to trade off some factors for better quality of food or healthiness of food if fast food provide vegetarian menu.

Moreover, independent sample t-test will be used in order to analyze the differences between groups. Since we want to know whether demographic and survey distribution channel will have any impacts on the survey results. Hence group differences including male vs female, age group, single vs married, Australian vs non-Australian and online survey vs offline survey will be analyzed.

Findings

From the descriptive analysis, top three factors when consumers consider fast food restaurants are ‘taste of food, location and quality of food’. According to exhibit 1, KFC ranked as 2nd top among the well-known fast food restaurants in Australia with the brand values as ‘chicken’, ‘convenience’ and ‘appetizing’ respectively.

In terms of vegetarian perception, according to exhibit 2, there is high awareness that vegetarian food is not only for vegans but also for anyone who is health conscious. However, people tend to be quite neutral on the vegetarian trend and on the willingness to try vegetarian menu in fast food restaurants. Moreover, people perceived the value of vegetarian menu as less than meat menu (49.2%), equal to meat menu (49.2%) while only 1.7% perceived it as more expensive than meat menu.

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1.00

2.00

3.00

4.00

5.00

6.00

Tasteoffood Location Qualityoffood Price Healthfactors Varietyofmenus Qualityof service

leas

t im

port

ant-

---->

mos

t im

port

ant

Fast food factors

In terms of willingness to try KFC vegetarian menu, approximately 50% of current KFC customers who like and dislike KFC current menu said that they want to try KFC vegetarian menu. While 100% of vegetarian respondents said that they want to try KFC vegetarian menu. According to exhibit 3, there is significant correlation between the factors of choosing fast food restaurants.

In considering fast food restaurants, if customers are concerned more about healthiness of foods, they will be less concerned about location, variety of menu and taste of food. If consumers are concerned more about quality of service, they will be less concerned about price. Furthermore, if they put great importance on quality of foods, they will put low importance on price and location.

Hence, this implies that if consumers become more concerned about healthiness of food in the future, they may not choose to go to fast food restaurants. However,

if the restaurants and provide better quality of foods, they are likely to be able to raise the price.

In terms of group differences, there are not much difference between male and female group, age group, single and married group and online survey and offline survey group. However, exhibit 4 demonstrates differences between Australians and non-Australian groups. In terms of consumer characteristics, Australians are more likely to be “health-conscious” person while non-Australians spread out among ‘meat lover’, ‘innovative user’ and ‘health-conscious’ person. Both groups are less likely to be ‘menu lover’. Moreover, non-Australians put more importance on variety of menu than Australians when considering fast food restaurants and they are more aware of “vegetarian food is a new trend” than are Australians.

Regression Analysis

One of the crucial parts of our research is to get a grip on data analysis so that we can make some objective recommendations to KFC regarding veg. menu in their regular items. From the secondary research we have found a formidable 3.2% CAGR in Australian Fast food categories; of which we assume veg menus and salad will contribute to nearly AUS $ 3 Billion revenue.

Categorically we, through our survey, tried to reach a conclusion on whether consumers would likely to buy veg menu or not. To see the impact we made the following regression model as-

Keeping the above regression equation in mind, we have tried to assess “likelihood to buy” (dependent variable) has any impact from different variable(s). Confidence interval is taken as 90%. We have tried to assess the impact on the following manners-

Likelihood to buy(Y) = Const+ Coefficient(Price)+ Coefficient(Location)+ Coefficient(Variety of Menus)+ Coefficient(Taste of Food)+ Coefficient(Quality of service)+ Coefficient(Quality of Food)+Error.

We ran this regression model and we have got the following:

Necessary inference: Both varieties of Menus and Health factors meaningfully important and has an impact on likelihood to buy veg menu from KFC.

Then we tried to look at the following-

Likelihood to buy(Y) = Const+ Coefficient (Vegetarian Trend) + Coefficient (Health conscious) + Coefficient (Vegetarian Trial) + Error.

We ran this regression model and we have got the following:

Necessary Inference: As per trend, vegetarian concern has an impact on buying behavior of veg menus. But veg. trend which is one of the determiners- has very little significance from the consumer point of view.

Then we tried to look at the consumer characteristics and thus whether their characteristics have any impact on likelihood to buy-

Likelihood to buy(Y) = Const+ Coefficient (Meat Lover) + Coefficient (Innovative user) + Coefficient (Health Conscious) + Coefficient (Menu lover) +Error.

We ran this regression model and we have got the following-

Necessary Inference: Again we find an interesting fact that even meat lovers seemingly would likely to buy veg menu from KFC; an insight confirming the fact of veg menu-as innovative Limitations of this research methodology Things can appear gloomy from the early morning and it did eventually! We have had limitations like:

Firstly, in arranging the appointment with the KFC store manager for the interview, we expected to conduct 3 interviews within this time frame. We approached to different KFC stores as well. And we just got one till now. Hence, the interview results so far may not truly represent the whole population (all the KFC store managers in Australia). (But the facts of KFCs core business model will remain same, we suppose)

With this limited time and budget, the survey will be conducted only in some areas of Melbourne. Therefore the obvious result is: low sample size along with the low degree of diversification. Making this sampling representative (all current and potential KFC customers in Australia) is the hard task above all. (Needless to say here that we from the backend are aware of it and its impact as a result cautiousness & meeting the guidelines in selecting samples is prioritized)

Consumers with “zero” incentives to participate, may rush through the survey particularly in some open-ended questions. Hence, the results may reflect abnormalities in true perceptions of customers.

Conclusion Even though the secondary research suggested that the vegetarian food markets is growing in Australia market and this market seems to be promising in this near future, the primary research from both interview and survey affirm us for the conclusion that KFC should not launch the vegetarian menu at this period. The interview gave us the management insight that the core competency of KFC is chicken and they are still growing in this fast food restaurant industry. From the management point of view, KFC can still maintain its competitiveness in this industry without vegetarian menu.

According to the survey results, there are some positive results that support this new product menu concept. For example, there is high awareness that vegetarian foods is for those who are health conscious. Also, the low percentage of menu-lover type in consumer characteristics implies that people are willing to try new things. However, once we look deeper into the regression analysis to predict the likelihood to buy KFC vegetarian menu with different variables, based on the estimates of our test statistic we may regress that:

1. Both variety of menus and health factors have significant impact of Veg menu buying from KFC.

2. Innovative Users and even meat lovers are likely to buy it. 3. Thus we can come to a conclusion that if veg menu offered and with variety of menus from

KFC, Innovative Users will likely to buy it and even meat lovers would like to try it. And not to forget- it has to carry the weight of Healthiness in it for new positioning.

From this regression analysis results, we compute a Trinity model (trinity.xls) to indicate the percentage of likelihood to buy from 3 major dimensions which are fast food restaurants factors, vegetarian trend awareness and concern and consumer characteristics. We took out the variable and for signified regressed variables- we have weighted them in equal base. Basing on that, we assume that- we got the following-

Lastly, we believe that KFC should not launch vegetarian menu at this time period!

Reference

Andy Battaglia, “KFC: best healthful menu innovation New nonfried option keeps health-conscious consumer in mind”, Nation’s restaurant news (2010)

Aysha Karamat Baig, “Review of Trends in Fast Food Consumption”, European Journal of Economics, Finance and Administrative Sciences - Issue 48 (2012)

“Fast food in Australia”, Datamonitor (2010), 0125-2230

“Fast food in Australia”, Euromonitor International (2012)

“Fast Food in Australia”, IBISWorld Industry Report G5125a (2012)

“KFC Case Study: Addressing recessionary challenges by focusing on health and value”, Datamonitor, CSCM0271 (2009)

Steven Connell, “Health kick: An influx of healthier food options drives industry growth

www.datamonitor.com

www.euromonitor.com

Appendix

Exhibit 1

(note: higher mean implies higher level of importance)

Exhibit 2

Vegetarian awareness and perception N Minimum Maximum Mean Std. Deviation 5)Vegconcern 59 1 5 4.05 .899 6)Vegtryfastfood 59 1 5 3.32 1.252 1)Vegtrend 59 1 5 3.19 1.121 Valid N (listwise)

59

Note: from question number 4-6 (please see exhibit ….for the details of questions)

Exhibit 3

Correlation Analysis

Correlations

Price Location Varietyofmenus Tasteoffood Healthfactors Qualityof service Qualityoffood

Healthfactors

Pearson Correlation

-0.256 -.400** -.321* -.260* 1 0.191 0.064

Sig. (2-tailed) 0.05 0.002 0.013 0.047 0.148 0.632

N 59 59 59 59 59 59 59

Qualityof service

Pearson Correlation

-.426** -0.245 -0.17 0.037 0.191 1 0.132

Sig. (2-tailed) 0.001 0.061 0.197 0.778 0.148 0.318

N 59 59 59 59 59 59 59

Qualityoffood

Pearson Correlation

-.343** -.477** -0.103 0.041 0.064 0.132 1

Sig. (2-tailed) 0.008 0 0.436 0.758 0.632 0.318

Ranking for fast food restaurants in Australia N Minimum Maximum Mean Std. Deviation McDonald 59 1 5 3.20 1.270 KFC 59 1 5 3.07 1.271 Hungry Jack 59 1 5 2.95 1.490 Subway 59 1 5 2.93 1.660 Pizza Hut 59 1 5 2.85 1.375 Valid N (listwise) 59

N 59 59 59 59 59 59 59 **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Exhibit 4:

Group difference (Australian -1, Non-Australian-2)

Independent sample t-test

010203040506070

Meat lover Innovative user Health-conscious person

Menu lover

Perc

enta

ge

Consumer Characteristics

Australian

Non-Australian

0 0.5 1 1.5 2 2.5 3 3.5 4

Australian

Non-Australian

least important-----------------------------------------> most important

Variety of menu - importance level

0 0.5 1 1.5 2 2.5 3 3.5 4

Australian

Non-Australian

Strongly disagree ------------------------------> strongly agree

"Vegetarian food" is a new trend - perception

Appendix A:

Just put your thoughts! We are a team of Melbourne Business School (MBS) students who are currently carrying market research regarding a potential new product menu development in the fast food restaurant. Answers will be kept confidential. 1) When considering fast food restaurants, which attributes (do you think) are most important?

Please rank from 1 (most important) to7 (least important). Each number can only be used once.

a) Price _______ b) Location _______ c) Variety of menu _______ d) Taste of food _______ e) Healthiness of food _______ f) Quality of Service _______ g) Quality of food _______

2) How often do you visit fast food restaurants? a) Never b) Once a week c) Once a month d) Twice a month e) 3+ times a month f) Others___________________

3) Rank the following fast foods restaurants according to your preferences from 1 (least preferable) to 5 (most preferable). Each number can only be used once. a) McDonalds _______ b) KFC _______ c) Hungry Jack _______ d) Subway _______ e) Pizza Hut _______

From question 4 to 6, please rate as your opinion:

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di

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Dis

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Neu

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Agr

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Stro

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4) “Vegetarian food” is a new trend.

5) Vegetarian food is not only for vegans but also for anyone who is health conscious.

6) If there are vegetarian menus offered in fast food restaurants, I want to try them.

7) If you agree or strongly agree with question 6, can you specify reasons why you want to try?

(You can choose more than one)

a) Because it’s new. b) Because I’m health conscious. c) Because it’s better to environment. d) Others (please specify)

____________________________________________________________________________________________________________________________________________________________________________

For questions 8 to 10, suppose that the following product menu were introduced at a fast food restaurant;

“A new vegetarian menu in the fast food restaurant that can deliver ‘convenience’ to the vegans and can provide more options to non-vegans and to those who are concerned about their health.”

8) How much would you be willing to pay for this menu? a) Less than meat menu. b) Same price as meat menu. c) More than meat menu. d) Indifferent.

9) What is the likelihood that you will buy this vegetarian menu?

Definitely Not Buy Probably Not Buy Not Sure Probably Buy Definitely Buy

10) If you would definitely not (be) interested in buying the vegetarian menu as above, can you give reasons for your decision?

___________________________________________________________________________________

___________________________________________________________________________________

11) Which one of the following statements describes you best? (Please choose only one) a) Meat lover (You prefer meat dishes to veggie dishes.) b) Innovative user (You love to try new dishes.) c) Health-conscious person (You concern about the healthiness of foods.) d) Menu lover (You have your favorite menu and you order that same menu every time.)

12) Are you vegetarian?

Yes No

13) If you think of KFC, what comes up in your mind? Please pick 3 choices and rank them from 1 (most important) to3 (least important). Each number can only be used once.

a) Chicken _______ b) Less costly _______ c) Trendy _______ d) Appetizing _______ e) Different _______ f) Family meals _______ g) Convenience _______ h) Others_______________ _______

14) Have you tried KFC before?

Yes No

(if the answer is No, please go to question no. 17)

15) Do you like or dislike KFC products?

Like Dislike

16) Could you please specify why you like or dislike KFC?

___________________________________________________________________________________

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17) If KFC offers vegetarian menu as a main dish, would you like to try?

Yes No

18) Could you please specify why you want to try or don’t want to try KFC vegetarian menu?

__________________________________________________________

_____________________________________________________________________

About Yourself 19) Gender

Male Female

20) Age: a) Under 15 b) 15 to 25 c) 26 to 35 d) 36 and older

21) Marital status

Single Married or partnered with_________Children

22) Occupation_______________________________

23) Nationality_______________________________

Your feedback is very important to us and this will help us in providing you with a better product and service.

Thank you for your time!

Appendix B

” “

I was vegetarian for 10 years and I got sick because I didn't eat meat. I don't think it's a healthy way of life.

It's not my choice. But if we were to get something vegetarian, I wouldn't be very happy.

” “ Less than 10 customers out of 7,000 weekly

customers will ask for vegetarian."

If customers want vegetarian, they are not going to come to KFC."

” “ KFC, Kentucky Fried Chicken, that's what we sell.

Chicken is the backbone of the business. If you look at my menu, where is the salad? It's there but it's not what you're going for. There's no one big menu dedicated to it. The menu is dedicated to chicken.

Interview question:

KFC and the market:

How is the business going on in this store?

What type of consumers is frequent to this KFC shop?

Who are major targets for KFC? Menus and consumer perception

Which is the top sale in this KFC store?

How frequently KFC changes its menu? Once changes the menu how are the KFC promote it?

Are these changes driven by consumers’ perception? How do you recognize specific ideas on menu which may fit the potential consumers?

Challenges (Competition/Innovation)

Which brand do you feel your best match competitor?

Are you aware of the competition’s market share and their innovative acts?

Vegetarian Menu

What do you think about the concept of KFC offering vegetarian menu?

Have you ever thought about vegetarian menu in KFC?

Do the customers ask for vegetarian menu in KFC?

Do you have separate process between the mean and non-mean menu?

Location: Bourke Street KFC

Personnel Name: Ms Phylis.

Position: Shop Manager, Bourke Street, KFC.

Review:

Considering the above stated excerpts, we can tell that management in KFCs is quite confident about their current sorts of menus. Vegetarian menu seems a distant matter for the interviewee though she mentioned “Subway” as the biggest competitor. She seems too biased to “meat” due to her own experience.

What she told us was a great insight indeed. Nevertheless, projecting her comment(s) as representation of KFC management would be an early judgmental call at this stage.

The bull’s eye here is the competition awareness. Positioning against Subway and leaving the arms of vegetarian menu is quite an interesting finding for us.