In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a KFC franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a KFC franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned KFC outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the KFC franchise opportunity

Section V – Presentation and analysis of KFC’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 average and median net sales, cost of product, and labor cost for the 39 single-brand company-owned KFC outlets open for at least one year as of KFCLLC’s fiscal year ended December 26, 2022

• 2022 average and median net sales for the 2,913 single-brand franchised KFC outlets open for at least one year as of KFCLLC’s fiscal year ended December 26, 2022

• 2022 average and median net sales for the 2,952 single-brand KFC outlets (company-owned and franchised) open for at least one year as of KFCLLC’s fiscal year ended December 26, 2022

• average, median, high, and low weekly net sales for the 92 new KFC outlets, which have been open for periods ranging from 13 to 104 weeks as of KFCLLC’s fiscal year ended December 26, 2022

Section VI – Key ratios, comparables, computations, and analyses for the KFC franchise opportunity (exclusive content for Platinum subscribers)

Section I – KFC Franchise Costs

• KFC franchise costs, based on Item 7 of the company’s 2023 FDD:

• Background Check Fee:  $575 to $2,500 per person
• Deposit Fee:  $20,000
• Option Fee:  $25,000
• Training Expenses:  $5,000 to $8,000
• Permits, Licenses, and Security Deposits:  $50,000 to $100,000
• Real Property:  $300,000 to $1,000,000
• Building and Site Costs:  $1,000,000 to $1,900,000
• Equipment, Signage, Decor, POS, and MERIT:  $375,000 to $606,000
• Start-Up Inventory:  $10,000
• Grand Opening Expense:  $5,000
• Insurance:  $7,250 to $10,050
• Miscellaneous Costs:  $5,000 to $10,000
• Additional Funds:  $50,000 to $75,000
• Total Estimated KFC Franchise Costs:  $1,852,825 to $3,771,550

Section II – KFC’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• KFC’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $45,000. You must pay the initial franchise fee in two parts: (i) the Deposit Fee; and (ii) the Option Fee.
• Royalty:  4% to 5% of Gross Revenue or a minimum of $1,350, whichever is greater, per month (minimum fee subject to adjustment based upon the Consumer Price Index)
• National Co-Op:  4.5% of Gross Revenue

Section III – Number of Franchised and Company-Owned KFC Outlets

Franchised

2020

• Outlets at the Start of the Year:  3,969
• Outlets at the End of the Year:  3,860
• Net Change:  -109

2021

• Outlets at the Start of the Year:  3,860
• Outlets at the End of the Year:  3,872
• Net Change:  +12

2022

• Outlets at the Start of the Year:  3,872
• Outlets at the End of the Year:  3,842
• Net Change:  -30

Company-Owned

2020

• Outlets at the Start of the Year:  56
• Outlets at the End of the Year:  47
• Net Change:  -9

2021

• Outlets at the Start of the Year:  47
• Outlets at the End of the Year:  47
• Net Change:  0

2022

• Outlets at the Start of the Year:  47
• Outlets at the End of the Year:  46
• Net Change:  -1

Section IV – News Updates on the KFC Franchise

• Celebrating Progress, Spurring Passion: 2022 Yum! Brands Global Citizenship & Sustainability Report

• Yum Brands to Fully Exit Russia with Deal to Sell KFC Stores

• KFC Franchisee Launches Texting Engagement Program

• KFC Ranked No. 13 on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the KFC Franchise (Item 19, 2023 FDD)

• Of the 2,952 domestic, single-brand Outlets open for the entirety of KFCLLC’s fiscal year ended December 26, 2022 (“FYE 2022”), 39 were owned and operated by KFCC and 2,913 were owned or operated by KFCLLC franchisees.

• This financial performance representation reflects the averages for a sub-set of all single-brand Outlets in the United States as of FYE 2022. The sub-set consists of Company-Owned Outlets and all single-brand Outlets which were owned or operated by KFCLLC’s franchisees.

• The financial performance representation does not include Non-Traditional, multi-brand, seasonal, or any type of KFC location other than single-brand KFC locations.

• All KFC Outlets included for FYE 2022 were open a minimum of one year as of FYE 2022.

• Characteristics of the included locations may differ materially from the characteristics of the Outlet(s) that you may develop or acquire depending on your experience; competition in your trade area; the physical condition of the included locations as compared to the Outlet(s); employment and labor conditions in your trade area; and the length of time that the included locations have operated as compared to the Outlet(s).

• “Average Net Sales” is the mathematical average of the total annual cash or other payments received after discounts and promotions for the sale or use of any products, goods, or services that were sold from the Outlets included within the group.

• “Average Cost of Product” is the mathematical average of the total annual delivered cost of food, beverages, paper, and promotional items to the Outlets included within the group (“Cost of Product”), which is then expressed as a percentage of Average Net Sales. This does not include any financial results from Outlets that were owned and operated by franchisees of KFCLLC.

• The median Cost of Product during FYE 2022 was $486,044.

• Of the 39 Company-Owned Outlets included in this Item 19 for FYE 2022, 22 or 56.4% attained a Cost of Product lower than the stated average result.

• “Average Cost of Labor” is the mathematical average of the total annual hourly labor costs; the salaries and related costs of management; payroll taxes; health insurance; vacation; sick pay; bonuses; and workers’ compensation insurance for all employees at the Company-Owned Outlets included within the group (“Cost of Labor”), which is then expressed as a percentage of Average Net Sales. This does not include any financial results from Outlets that were owned and operated by franchisees of KFCLLC.

• The median Cost of Labor during FYE 2022 was $453,746.

• Of the 39 Company-Owned Outlets included in this Item 19 for FYE 2022, 22 or 56.4% attained a Cost of Labor lower than the stated average result.

• The operations of Company-Owned Outlets are similar to those of the franchised Outlets offered by the Disclosure Document, except that Company-Owned Outlets do not have certain expenses that franchised Outlets have, such as payment of royalties. Company-Owned Outlets also benefit from economies of scale that are not available to outlets that are owned singly or in small groups by a franchisee.

Part 1 – 2022 Average Performance of Single-Brand KFC Locations Open During the Entirety of FYE 2022

Company-Owned KFC Outlets

• Count:  39
• Average Net Sales:  $1,392,891
• Median Net Sales:  $1,371,344
• Average Cost of Product:  $494,951
• Average Cost of Product as % of Net Sales:  35.5%
• Average Labor Cost:  $469,834
• Average Cost of Labor as % of Net Sales:  33.7%

Franchised KFC Outlets

• Count:  2,913
• Average Net Sales:  $1,340,696
• Median Net Sales:  $1,274,940

All Single-Brand KFC Outlets

• Count:  2,952
• Average Net Sales:  $1,341,385
• Median Net Sales:  $1,276,699

Part 2 – Average Weekly Net Sales for New Outlets

• As of FYE 2022, there were 110 Outlets that were built as a new Outlet (whether as a new restaurant, or as a torn down and reconstructed Outlet) (the “New Outlets”) during the fiscal years ended December 27, 2021 and December 26, 2022.

• KFC discloses information below relating to Average Weekly Net Sales for 92 New Outlets, which have been open for periods ranging from 13 to 104 weeks as of FYE 2022. KFC excluded 18 Outlets, 17 of which opened in 2022 and have operated for less than 13 weeks due to an insufficient period of operations, and 1 Re-Opened Outlet (defined below) for which KFC did not have prior sales information for the 52 weeks preceding its closure.

• Of the 92 New Outlets (i) 48 were freestanding restaurants built from the ground-up (“Ground Ups”); (ii) 14 were freestanding restaurants converted from a different restaurant brand (“Conversions”); (iii) 3 were permanently closed freestanding restaurants that were later remodeled and re-opened (“Re-Opened Outlets”); (iv) 8 were freestanding restaurants relocated to a different freestanding location (“Relocated Outlets”); (v) 2 were freestanding restaurants torn down or scraped and rebuilt at the Outlet’s existing location (“Rebuilds”); and (vi) 17 were non-freestanding restaurants that were newly built in-line or on an end cap of a strip mall, which may or may not have drive thru (“Inline/Endcap Outlets”).

• KFC calculated the Average Weekly Net Sales by dividing the sum of Outlet Average Weekly Net Sales for the New Outlets by the number of New Outlets in each category identified below. The “Outlet Average Weekly Net Sales” for each New Outlet is the total sales for such New Outlet since opening, divided by the number of weeks such New Outlet has been open as of FYE 2022.

All New Outlets

• Average Weekly Net Sales:  $32,303
• Median Weekly Net Sales:  $31,623
• Lowest Weekly Net Sales:  $13,958
• Highest Weekly Net Sales:  $89,094
• Percentage That Met or Exceeded the Average Weekly Net Sales:  45%
• Annualized Sales:  $1,679,753
• Percentage Increase Over Single Brand Outlets:  25%
• Average Increase in Net Sales:  N/A

Ground Ups

• Average Weekly Net Sales:  $35,055
• Median Weekly Net Sales:  $33,544
• Lowest Weekly Net Sales:  $17,196
• Highest Weekly Net Sales:  $89,094
• Percentage That Met or Exceeded the Average Weekly Net Sales:  44%
• Annualized Sales:  $1,822,886
• Percentage Increase Over Single Brand Outlets:  36%
• Average Increase in Net Sales:  N/A

Conversions

• Average Weekly Net Sales:  $32,134
• Median Weekly Net Sales:  $28,806
• Lowest Weekly Net Sales:  $19,068
• Highest Weekly Net Sales:  $53,730
• Percentage That Met or Exceeded the Average Weekly Net Sales:  43%
• Annualized Sales:  $1,670,991
• Percentage Increase Over Single Brand Outlets:  25%
• Average Increase in Net Sales:  N/A

Re-Opened Outlets

• Average Weekly Net Sales:  $27,522
• Median Weekly Net Sales:  $31,948
• Lowest Weekly Net Sales:  $17,534
• Highest Weekly Net Sales:  $33,084
• Percentage That Met or Exceeded the Average Weekly Net Sales:  67%
• Annualized Sales:  $1,431,151
• Percentage Increase Over Single Brand Outlets:  7%
• Average Increase in Net Sales:  52%

Relocated Outlets

• Average Weekly Net Sales:  $36,011
• Median Weekly Net Sales:  $36,997
• Lowest Weekly Net Sales:  $28,567
• Highest Weekly Net Sales:  $42,645
• Percentage That Met or Exceeded the Average Weekly Net Sales:  50%
• Annualized Sales:  $1,872,552
• Percentage Increase Over Single Brand Outlets:  40%
• Average Increase in Net Sales:  36%

Rebuilds

• Average Weekly Net Sales:  $33,898
• Median Weekly Net Sales:  $33,898
• Lowest Weekly Net Sales:  $29,894
• Highest Weekly Net Sales:  $37,902
• Percentage That Met or Exceeded the Average Weekly Net Sales:  50%
• Annualized Sales:  $1,762,691
• Percentage Increase Over Single Brand Outlets:  31%
• Average Increase in Net Sales:  55%

Inline/Endcap Outlets

• Average Weekly Net Sales:  $23,581
• Median Weekly Net Sales:  $23,436
• Lowest Weekly Net Sales:  $13,958
• Highest Weekly Net Sales:  $40,100
• Percentage That Met or Exceeded the Average Weekly Net Sales:  47%
• Annualized Sales:  $1,226,214
• Percentage Increase Over Single Brand Outlets:  -9%
• Average Increase in Net Sales:  N/A

Section VI – KFC Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️