Kentucky Fried Chicken (KFC) plans to double its domestic presence by 2010 with 25 new fast food outlets at a cost of between 0.5 and 1.2 million dollars per restaurant.
“In Romania, KFC has 9 restaurants in Bucharest and another 12 in Constanta, Brasov, Ploiesti, Iasi, Oradea, Ramnicu Valcea, Pitesti and Cluj. By 2010 we plan to open another 25 restaurants in other Romanian cities,” stated KFC representatives.
KFC forecasts the level of investments could range between 0.5 and 1.2m dollars per outlet, depending on the area, number of employees and the size of the kitchens. Investments would cover outlet fitting, necessary technical equipment, as well as training personnel and providing uniforms.
The KFC brand is present in Romania through a franchise system, controlled by US Food Network company, which is part of Altrom group run by businessman Gabriel Popoviciu.
The company estimated it would reach turnover worth around 28m euros by yearend, up 40% from the end of 2006, however, according to company officials, these estimates will be exceeded after the new outlets open. “At present, turnover has topped 28m euros, which has happened because of the rising turnover in existing outlets, as well as of the contribution brought by the outlets we’ve opened recently,” KFC representatives also specified.
After Bucharest, the restaurants that generate the highest revenues are those located in Timisoara, Constanta and Ploiesti.
If KFC sales maintain the current growth rate, the company could post turnover worth around 34m euros by yearend.
As far as the entire market is concerned, most so-called informal restaurant chains have decided to strengthen their domestic presence, particularly amid favourable market conditions.
According to market players, the value of the market ranges between 1.5 and 2bn euros.
“The market will probably witness an actual annual growth rate of 30-40%, especially starting this year. The reasons have to do with the country’s overall economic development,” explained KFC representatives.
The favourable economic climate could bring other restaurants onto the domestic market, which lead to another trend on the segment. Another factor that has aided market development is Romania’s EU integration.
However, integration has also generated a series of challenges, such as salary hikes, as well as recruitment problems due to a labour shortage.
One of the factors hindering fast-food networks’ expansion is the serious shortage of commercial space.
This is causing tight competition in the acquisition of available space, which, according to market players, covers only 20% of the space needed, and is also very expensive.
This is why most networks are reluctant to reveal their future locations.
KFC in Romania
Present on the market through a franchise system, via US Food Network company, which is part of Altrom group controlled by businessman Gabriel Popoviciu
Plans to double its domestic presence by 2010 with 25 new fast food outlets and investments worth between 0.5 and 1.2 million dollars per restaurant.
Estimated to reach turnover worth around 28m euros by yearend, up 40% from the end of 2006, however these estimates will be exceeded after the new outlets open