Chapter 421: KFC's Development Plan
The structure of the kitchen was simple, not much different from what Yang Wendong had seen in his previous life. In fact, there was even a Chinese worker inside. Yang Wendong chatted with him briefly and learned that he was from Taiwan.
Sanders took a document off the wall and handed it to Yang Wendong, saying, "Mr. Yang, this contains all the sanitation processes and regulations of our KFC kitchen. It's the result of more than a decade of our team's work—some of these items were only added after specific problems occurred."
Yang Wendong took the document and gave it a serious glance. The contents indeed laid out detailed rules regarding food handling, oil usage, cleanliness, the cleaning or replacement of tools, and other sanitation-related operations.
"Very impressive," Yang Wendong praised.
Even though he wasn't sure whether this was merely for show, having such procedures in place was far better than having nothing at all. It was just like in the manufacturing industry—when a factory had detailed procedural cards, even if some workers broke the rules, the overall outcome would still be better than a system with no structure whatsoever.
Sanders smiled and said, "In the long run, the only way we can gain the most benefit is by making food that tastes good and causes no problems. Only small-time businessmen focus solely on short-term gains."
"Absolutely right," Yang Wendong agreed. "I may not have worked in the service industry before, but I've run factories. I definitely understand this principle."
"Glad to hear that," Sanders continued. "Mr. Lin and I have already discussed many of the business aspects. I wonder if there's anything else you'd like to know, Mr. Yang?"
Yang Wendong thought for a moment and asked, "Mr. Sanders, I know that KFC currently has about 100 directly operated stores, and around 500 franchised ones. But I've noticed something odd—your directly operated stores seem to be in less-than-ideal locations, while the franchises are in prime urban centers. Why is that?"
Back when he was still in Hong Kong, Yang Wendong had gone through all the available data on KFC. Although he didn't have access to confidential financial reports, most public records were easy enough to find.
Sanders responded, "That's because our aim isn't to maximize profits, but to maximize stability in product quality."
"So, you mean those directly operated stores exist mainly to ensure quality?" Yang Wendong asked in surprise.
Typically, when a business handles both direct operations and franchises, the good locations in city centers are reserved for direct management, while the rest are franchised out to locals—this is how profit is maximized.
From a quality perspective, apart from a few exceptions, franchised stores usually couldn't match the quality of directly operated ones. Many small business owners had short-term mindsets. As long as they weren't in obvious violation of the contract, they'd cut corners—even if it ultimately hurt the brand more than anyone else.
Sanders nodded and said, "Exactly. Originally, due to funding constraints, I started by inviting franchisees and had them send their staff to headquarters for standardized training. But problems soon arose. Many of these stores were located in areas where the majority of customers were just passing through, not locals. That led to a serious decline in quality, which damaged the KFC brand. That's why I later revoked or bought back KFC locations at roadside rest stops—just to protect quality."
"I see," Yang Wendong nodded in understanding.
No wonder KFC was able to grow successfully. It seemed that even though it was sold off in the mid-1960s, the company's early culture had already taken shape. As long as development continued along those lines, the business could thrive.
Yang Wendong also knew from history that KFC had once been sold to a U.S. company, but that company didn't take the business seriously, wasting more than a decade. It wasn't until KFC was acquired by PepsiCo's restaurant division that it gained proper support.
Even if one didn't consider the future market in mainland China, KFC had once been capable of competing with McDonald's in the U.S. domestic market. But due to funding and other issues, it ultimately lost that race.
Sanders added, "To me, brand quality is more important. Ensuring that more people can access safe and fast food is the top priority. But over the years, KFC's rapid expansion has put enormous financial pressure on me. Now that I'm getting older, I really have no choice but to let go."
"I understand. In that case, after I acquire KFC, you can still serve as a consultant for the company. If you have any opinions, feel free to share them," Yang Wendong replied.
Many people start businesses with pure intentions, but as the company grows, things change. Like that guy surnamed Ma from his past life—he once said he wanted to make business easier for everyone, but in the end, he made business even harder. He even started entertaining some very... questionable ideas.
"Great. I'd be happy to do that," Sanders said enthusiastically. "Shall we discuss the price then?"
"Sure," Yang Wendong nodded in agreement.
Over the following few days, Yang Wendong visited several more KFC outlets, all accompanied by the old man Sanders himself.
Although Yang Wendong had no prior experience in the food service industry, his knowledge from the internet era in his past life allowed him to offer a few insights that Sanders found quite valuable. In just a few days, the two went from business partners to becoming rather well-acquainted.
A week later, once all of KFC's data had been thoroughly vetted by the legal team led by Lin Youtian, Yang Wendong and Sanders reached a final agreement: $2.1 million for the acquisition of the KFC brand and all its stores.
This deal came together partly because a rival bidder had offered $2 million. Yang Wendong simply raised the price by an additional $100,000 and, importantly, allowed Sanders to remain involved in KFC's future operations. That clinched the deal.
Once the contract was signed, Yang Wendong immediately instructed Zheng Zhijie to transfer funds from Hong Kong under the name of this transaction. This allowed him to move a large amount of Hong Kong dollars held by Changxing Real Estate.
On December 16th, Yang Wendong hosted a banquet for Sanders at the InterContinental Hotel in Los Angeles.
"Mr. Sanders, let me offer you a toast," Yang Wendong said with a smile, raising his glass. "In the short term, you'll continue managing KFC. We'll begin the search for a professional manager later on, but we'll still need your involvement in operations moving forward."
His side wasn't a professional consumer services company. So after acquiring KFC, he didn't have any qualified personnel ready to immediately take over management. On the other hand, Sanders had chosen to sell the company primarily due to age-related concerns, not a lack of passion—he still enjoyed the work.
That's why the two sides hit it off so quickly. In fact, it was precisely because of this offer that Sanders was willing to sell to him.
Although Sanders had many experienced team members under him, the previous operating model didn't prepare them for managing a large enterprise, especially during a period of rapid expansion. Even if Sanders were younger, he might not have had the capability either.
Founders or early teams often lacked the experience required to manage a business after it reached a certain scale. Yang Wendong was no exception. He mostly stayed out of direct operations, focusing instead on defining strategic direction.
"No problem," Sanders also raised his glass, took a sip, and asked, "So what's our next step?"
"Shouldn't I be the one asking you that question?" Yang Wendong countered playfully.
Sanders paused for a moment before speaking. "Actually, I've had a plan for KFC's future for a long time. I just never had the money, so I had no choice but to grow it step by step. Now that you've acquired it, I'd like to know—how many resources are you planning to invest into KFC?"
Yang Wendong replied with a question of his own, "How much are you asking for?"
Sanders smiled and said, "I'd like an additional one million dollars in cash. Is that doable?"
Yang Wendong didn't answer immediately. Instead, he countered, "And what exactly would you do with a million dollars?"
A million dollars in the 1960s was a massive amount of money. Based on GDP ratios, it was roughly equivalent to 40 million USD in 2024; depending on the asset, it could even translate to over 100 million in today's terms.
Sanders explained, "I have two main goals. First, I want to build frozen chicken processing plants in at least four different locations across the U.S. This way, we can handle all chicken processing ourselves.
That would reduce costs, and more importantly, we'd be able to control quality right at the factory level and prevent problems from arising. Just last year, a quality issue at KFC cost us $200,000 to resolve—that kind of money could have built a small chicken processing plant."
"Building factories is one thing—but what about distribution?" Yang Wendong asked, puzzled. "The U.S. is huge. Can four factories really handle nationwide delivery? Wouldn't transportation costs be way too high?"
Business in the U.S. was very different from that in Hong Kong. The population density and geography alone made for vastly different cost structures.
Sanders shook his head. "It's not a problem. While KFC outlets are scattered, they're actually divided into just thirteen regions. Stores within each region are relatively close to each other.
As long as the deliveries are sent in the general direction of those regions, we can handle distribution centrally to the stores. Plus, gas prices are low right now—I've already calculated the costs in detail."
"Alright, seems like I was overthinking it," Yang Wendong nodded.
Someone like Sanders obviously wasn't clueless—he must've considered the transportation aspect early on. His only real disadvantage was starting too late. Otherwise, in an alternate timeline, it would've been hard to say who'd be bigger: KFC or McDonald's.
Also, it helped that gas prices were currently low, which kept inland logistics affordable. But come 1973, that would no longer be true—a matter for future consideration.
Sanders continued, "If the funds allow, we also need to keep expanding our number of outlets. The more branches we open, the more we can distribute costs, which lowers the average. Mr. Yang, you're a businessman too—you understand this."
"Yes, I do," Yang Wendong nodded, then asked, "Are we going to continue using the franchise model?"
"Exactly. All franchise. That's the only way we can expand at the fastest speed. If we try to operate all stores ourselves, the management burden would be overwhelming," Sanders said. "Our funding should be used for central operations—developing food products, training staff, cultivating store managers—those things take a lot of money and time, even if they sound simple.
As for stores that absolutely require direct operation to maintain quality, we can skip them for now and revisit them later. The ones I held directly were all ones I had to take back after problematic franchises—I couldn't just shut them down."
"Alright, I agree. All stores should be franchised," Yang Wendong said. Then he asked, "Have you considered overseas markets?"
"Overseas? I haven't thought about that. The U.S. market alone is already more than enough to deal with," Sanders replied—but then caught on. "Mr. Yang, are you thinking about opening KFC in Hong Kong?"
Yang Wendong nodded. "That's right. Don't worry—I'll send people over to learn the operations, and KFC in Hong Kong will be managed by the local team."
Hong Kong was a small market, sure, but managing it well could establish a foothold for expansion into the rest of Asia. Now that he had acquired KFC, Yang Wendong naturally planned to accelerate its growth.
He couldn't interfere much with U.S. operations—Sanders or a future professional team would have to handle that. All he could do there was put in more money. But Asia was his home turf, and he was determined to do it right. Especially in the coming ten to twenty years, with Asia's economic boom, KFC would become easily affordable to the rising middle class. He could even elevate its brand positioning like it had been in mainland China in his past life—aiming for the mid-to-high end of the market.
"In that case, I have no objections," Sanders smiled. "About the funding I requested…"
"No problem. I can give you the million dollars," Yang Wendong said, "but I need a detailed plan."
If they were going to expand fast, money had to be spent—factories, advertising, opening new stores, even franchising involved costs. Only with strong brand operations and high visibility could KFC reach the point where people lined up to buy in—and that's when the real profits would roll in effortlessly.
"Of course. I'll prepare a comprehensive proposal for you," Sanders agreed.
Yang Wendong asked again, "One more thing. Since you're building chicken processing plants—where will you get the chickens?"
Sanders answered, "Wherever I choose to build a plant, there are nearby poultry farms. We'll buy directly from them."
"Have you considered raising your own chickens?" Yang Wendong asked. "In Hong Kong, I own chicken farms myself."
Sanders shook his head. "Not for now. We should focus our resources where they're needed most. Once a region has enough stores and funding, then we can consider poultry farming."
"Alright. I'll follow your lead on that," Yang Wendong said. "I'll be leaving the U.S. before Christmas. You should prepare a preliminary version of your plan for me to review.
If it looks feasible, I'll release some initial funding to support your early expansion. After further review, if everything checks out, I'll give you all the capital you need."
Communicating across continents was too troublesome in this era. From the U.S. to Hong Kong, the only real option was by phone, and even then, many things couldn't be explained clearly. If a problem came up, it could take ten or even fifteen days to resolve it.
There was no substitute for face-to-face conversation. Even in the 21st century, a WeChat video call couldn't match the efficiency of talking in person.
"Understood. I'll draft a plan as soon as possible," Sanders immediately agreed.
Yang Wendong added, "Right now, KFC has 600 outlets. I hope that one day, that number can increase tenfold—or even more."
In his past life, McDonald's had over 10,000 stores in the U.S. alone, and that was in a competitive market with many brands fighting for space.
Now that he had taken control of KFC, Yang Wendong naturally wanted it to become the number one fast food brand in the world. The best thing about this industry was its stability—and the fact that it rarely attracted government scrutiny. For Chinese investors, it was one of the best sectors to get into.
"Tenfold? 6,000 stores?" Sanders was visibly startled. He quickly added, "That's a massive goal. Expanding store count ten times over doesn't just mean ten times the management cost—it could be even more. Meanwhile, profit wouldn't increase tenfold because location quality would decline."
In the early stages, restaurants always opened in city centers where traffic and profits were high. As the chain expanded, they'd have to settle for less optimal locations, which meant the average revenue per store would decrease.
"I know. It's just a goal—but I believe it's achievable," Yang Wendong said with a nod.
In his past life, McDonald's had 13,000 stores in the U.S. alone. Setting a goal of 6,000 for KFC? Perfectly reasonable.
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