by Josh Ozersky
What we have just heard shows why we have one of the great companies of the world, and why it is going to be even greater. For this man here, who founded it, is an artist, and like all great artists, he’s a perfectionist. He founded this company on the desire not just for profit but for excellence . . . The Colonel wants us to keep up to his standards. What we represent is the Colonel’s dream. It really is a dream, and it’s up to us to make that dream come true. It may be that in our rapid growth, in our drive to organize this fast-growing company along the lines of order and efficiency that are fair to everyone, we have somehow slipped from following your standards, Colonel. But, Colonel, let me say this: when you sold this company to us, you asked us to be fair and honorable, and we have been. We haven’t had a single lawsuit. There is not one single person who can say that we haven’t honored every promise, every contract we have made. If there is anyone here who has any complaint, who feels he has been treated unfairly, we haven’t heard of it, and we want to hear of it.16
The Colonel, still thinking the crowd was with him, grabbed the microphone and asked for a show of hands. None went up. His coup had failed. Brown, sensing his victory in hand, proceeded to the strongest part of his counterargument, which, born salesman that he was, he had held in reserve: the unquestionable litany of Kentucky Fried Chicken’s financial successes—the immense sales figures, the growth, the profits being seen by franchisees from both operations and stock. He ended by turning to his vanquished attacker and saying, “Colonel, you’re still our leader. You’ll always be our leader. And I give you my word that we’re going to make this company all you want it to be and more.” The room erupted in applause. Most of the crowd knew the Colonel well and saw his intemperate attack as just hotheadedness. None were prepared to take arms against the company that was making them rich, however. Even the Colonel knew he had been in the wrong. “Well, John, you did a good job last night,” he told Brown.17 The two men never spoke of it again and even remained friendly, although the Colonel always believed that he had been swindled, or pretended to believe it, anyway.18 Irascible but essentially good-natured, he simply found it hard to hold a grudge, particularly against the charming and deferential Brown, who continued to treat the Colonel as a father and to act as his advocate internally at the corporation. There was no doubt, though, who was boss. Within Kentucky Fried Chicken, the showdown had a galvanizing effect, removing any doubt of who was in charge and placing the Colonel, then and forever, in his powerless role as goodwill ambassador for a company he founded but no longer controlled. His dream, the American Dream, of fame and fortune regardless of rank had come true; but the price of it had been the erasure of his identity. And he knew it.
4
BARBARIANS AT THE GATE
By 1969, five years after the sale, the average Kentucky Fried Chicken restaurant had annual gross sales of nearly a quarter of a million dollars. Many were double that. The stock price at its highest was more than fifty-five dollars—an astronomical sum by the standards of the time. More than three thousand stores were in the system, with more opening every week. The company passed Howard Johnson as the leading food dispenser in America, excluding only the Army, the Navy, and the U.S. Department of Agriculture’s school lunch program. These were inspiring numbers and, one would have thought, more than enough to keep Brown and his troops busy. The company was still a small one, with most of the major decisions being made by Brown and his immediate subordinates (usually including a courtesy consultation with the Living Legend) in their Nashville headquarters. The stock price was based on the rate of expansion that Kentucky Fried Chicken had seen in the 1960s, when the country was virgin territory and such rivals as Kentucky Fried Chicken found were small, poorly organized, and late to the game.
No entity as singularly and spectacularly successful as Kentucky Fried Chicken could fail to inspire imitators. Much as the novel success of White Castle earlier in the century inspired a nationwide wave of clones with variant DNA—White Tower, Blue Castle, Royal Castle, White Manna, White Diamond—Kentucky Fried Chicken inspired a flurry of get-rich-quick schemes looking to cash in on the fried-chicken craze. There was All-Pro Chicken, Chicken Hut, Maryland Fried Chicken, Ozark Fried Chicken with “Miss Alma’s Recipe,” Cock-A-Doodle of America, Pail-O-Chicken, and Wife-Saver Chicken. Various celebrities, too, were encouraged by their accountants to lend their names to chicken chains in the hope that a ready-made icon might rival the Colonel’s all-powerful brand recognition. Country music proved to be a profitable breeding ground for these chains: Grand Ole Opry superstar Minnie Pearl and crooner Eddy Arnold sold their share of birds, and later, when John Y. Brown wanted back into the chicken business, he cast his eye about for another white-bearded deity and found him in the leonine Kenny Rogers. Soul-music stars were also a natural match for chicken chains, given the dish’s special African American provenance so painstakingly unacknowledged by the Colonel. Mahalia Jackson had a chain of no small extent, including units in Jacksonville, Nashville, Chicago, Shreveport, and Charlotte. Similar chicken chains were aimed specifically at inner-city blacks. Chicken George Chicken and Biscuits, named after the character from Alex Haley’s novel Roots, was a black-owned chain in Baltimore that spread to thirty-two units in the mid-Atlantic states. Chicago’s Chicken Unlimited and Ron’s Krispy Fried Chicken, spreading across a smattering of southern states, also did well for a time. Nearly all of these have vanished from the landscape. Some were undercapitalized. Others offered inferior or inconsistent products; some, like the Mahalia Jackson chain, suffered from their ghetto locations being frequently robbed.
A few, like the New Orleans–based Popeye’s and the Charlotte-based Bojangles, survive and have carved out a niche for themselves—Popeye’s offering a spicy Cajun flavor and Bojangles emphasizing breakfast service. Lee’s Famous Recipe Chicken had a royal pedigree, having been founded by the Colonel’s nephew, and continues to do business in the Midwest and South. And, of course, all the major hamburger chains, as their menus became ever larger, colonized their sister chains, adding fried chicken to the menu in the form of sandwiches, “tenders,” McNuggets, and even, as in the case of Roy Rogers, a full-fledged fried-chicken program.
No chicken-centric rival seriously affected Kentucky Fried Chicken, with one important exception. George Church Sr. opened his first chicken restaurant in San Antonio in 1952, just around the time the Colonel was landing Pete Harman, his first franchisee. Church built a small chain on the idea of higher-quality fried chicken, much as Wendy’s would later do in the hamburger business. The chickens were delivered fresh, rather than frozen, to the stores, and were said to be bigger than the standard fryer one might find at Kentucky Fried Chicken. George Church Jr., the hereditary chief of the firm, expanded it aggressively throughout the 1960s and ’70s, retaining partial ownership of the stores rather than just franchising them. As a rule in franchise-based businesses, the less active a chain’s corporate management and oversight, the greater the potential for franchisees to get lazy and take shortcuts. Fast food, as its name implies, is not a highly prestigious field, and generally most people who work in it, as in every other form of human commerce, are engaged in an involuntary and reflexive lifelong calculus to maximize profit and minimize effort. By being a joint operator, Church’s was able to impose a level of control Kentucky Fried Chicken could not. Combined with what were believed to be bigger and fresher chickens, it cut into the Colonel’s hitherto omnipotent market share. By 1977 the chain had 740 stores in twenty-two states and was coming on like gangbusters, a leader in profit growth not just among chicken joints but among U.S. businesses as a whole.
Against such a formidable challenge, the chances of Kentucky Fried Chicken hewing to the founder’s vision was approximately nil, at least under its distant, impersonal overlords. In 1974 the chain would debut Extra Crispy chicken, a direct knockoff of Church’s aggressively breaded, deep-fried product. The Colonel, predictably, was aghast. “Now why did you have to ask me that?” he respo
nded to New York Times critic Mimi Sheraton when asked in 1976 about Extra Crispy and Kentucky Fried Chicken’s other new products. “They really gag me, that’s what I think of them.” (On another, equally alarming occasion for Kentucky Fried Chicken management, the chain’s founder declared that the Extra Crispy chicken was “a damn fried doughball put on top of some chicken.”)1
Kentucky Fried Chicken, with so few worthy rivals in its own special corner of the animal kingdom and the idea of overseas expansion still some years off, undertook a series of expensive and futile undertakings. Wall Street had to be encouraged in its belief that the company’s early boom years were a template for future growth. So Brown, having no special attachment to chicken, assumed that since people liked Kentucky Fried Chicken, they would also like Kentucky Roast Beef. The Colonel’s Beef was launched in 1969. People didn’t dislike it, but it had none of the lightning-in-a-bottle electricity of Kentucky Fried Chicken, and after some initial success, the venture collapsed, leaving a hundred stores shuttered. This was likely a blow to the Colonel, who in the early days of his restaurant had been even more proud of his country ham than of his chicken; the ham was a featured dish in the roast-beef concept. Brown also reached back into the Colonel’s playbook in starting Colonel Sanders Inns, a would-be motel chain, in 1969. This, too, went nowhere.
The urge to expand should not be dismissed as youthful folly on John Y. Brown’s part; even the sagacious Pete Harman, who had more operating knowledge about Kentucky Fried Chicken than anyone, fell into it, purchasing the American franchising rights to a British fish-and-chips chain called H. Salt, Esq., Authentic Fish and Chips. This, too, went nowhere, although the chain survived Harman’s investment in it. All these moves presaged what was to be a melancholy motif in Kentucky Fried Chicken’s history: the chain’s inclination, demonstrated over and over again, to avoid defining itself by its core product. Roast chicken, grilled chicken, chicken sandwiches, barbecued chicken, chicken tenders, winglets, Rotisserie Gold, and the like come and go on Kentucky Fried Chicken’s menu like transient visitors to a youth hostel. They all have met with some temporary success, like the Colonel’s Beef, before returning back to the void. The primary product that made the company was renamed “Original Recipe” to make room for the Church’s knockoff chicken and never returned to its original place as the titular product served at Kentucky Fried Chicken. Like the Colonel himself, it became more symbol than substance, one part of a larger complex of commodities, indispensable indeed but by no means the essence of the business.
Another aspect of the business that had not been apparent during those bullish early years was the company’s less-than-exacting accounting. Wall Street was learning that fast food was not a genie that produced whirlwind profits indefinitely and that the relationships of the company, its franchisees, and the listed profits were not as simple as they seemed at first. The magic of franchise fees was found to give an initial but illusory boost to stock values. All too often the franchisee was a cashbox for the franchising company, a mark who paid through the nose for the right to operate and who was little concerned thereafter. McDonald’s was an exception to this practice with its low franchising fees and iron control of operations; but most other chains showed less foresight and paid heavily after the initial fees stopped rushing in.
The one-time payment of a franchisee fee by a would-be operator was a much larger and more short-lived source of revenue than anyone realized at first; basically, it was a big initial payoff for the company that might or might not ever lead to a store even opening. Minnie Pearl Chicken, for example, sold more than 1,800 franchises in summer 1969, but only 161 stores were opened.2 This disenchantment led to Kentucky Fried Chicken stock losing over 80 percent of its value within a year of going public, and the trend would become typical of the company’s performance.
This was another part of the American Dream that, when followed to its terminus, was less happy than the dreamers imagined. Once they made it, they had to keep making it and in fact could lose everything if they didn’t make even more. The pressure never abated, and it was this that twisted the company so far from the Colonel’s original vision. It was enormously successful, based on its market share, its profits, its continued growth, and other fundamental economic vital signs—but never profitable enough. Someone always wanted Kentucky Fried Chicken to make more money than it did. Maybe if they sold more Pokemon toys? Maybe if the menu was bigger? Maybe if the food wasn’t fried? Various corporate caretakers would be in charge of the company over the next three decades, wave after wave of careerist managers whose primary background and loyalty was to a large corporation rather than to Kentucky Fried Chicken and its founder. Even today, with the most stable and healthy ownership the company has had since the time of its founding, Kentucky Fried Chicken is considered the weak sister of Yum! Brands, its current parent company. And why shouldn’t it be? Taco Bell’s food costs are negligible and its bean and cheese concoctions little harder to make or more expensive to stock than one might find in a prison commissary. Pizza Hut, likewise, can sell a piece of frozen bread with tomato sauce and industrial cheese for five dollars anywhere it can place an oven and a cash register.
Contrast this with Kentucky Fried Chicken’s product, its troublesome carcasses and bubbling oil and unhealthy, déclassé product. David Novak, the CEO of Yum! Brands, was still apologizing for the primacy of a company called Kentucky Fried Chicken being known for fried chicken forty years later.
At KFC, there’s no question we have our work cut out for us as some store sales declined 4% during 2009. Unlike the rest of the world where we have a much more extensive menu and a very strong sandwich business, KFC US is primarily a chicken on the bone bucket business. Therefore job number one is to stabilize and grow this segment. . . first we launched Kentucky Grilled Chicken. This product receives rave reviews and now represents around one quarter of our chicken on the bone business. And the fact is, we hate to think where we would be without it given the fact the vast majority of our customers are cutting back on fried foods. . . . we no longer have the “fried” veto vote.3
One way to cover up this evil secret, of course, was to rename the company KFC, a ludicrous ruse but one desperately required by a company with a giant market share that needed it to become even bigger. In the United States, where KFC was a mere “chicken on the bone bucket business,” average sales were $960,000 in 2009—less than in the previous three years but still almost $1 million per store. It’s an astronomical sum, beyond the dreams of cupidity to everyone except the only person who matters: the collective stock-buying public, which likes growth more than either revenues or profits and which punishes past success with a dreaded downward arrow of doom. The stock price drove the product for most of Kentucky Fried Chicken’s history rather than the other way around. There has been almost nothing that the business would not sacrifice for short-term profitability, particularly in the decades since Brown sold the company to Heublein in 1970.
To take the most egregious example, if anything was or is sacred to the corporate culture of Kentucky Fried Chicken, if the brand has any value at all other than its ownership of the Colonel’s posthumous image, it lies in his most storied relic—the yellowing sheet of paper where the eleven herbs and spices are listed that supposedly constitute his original recipe. An enormous amount of lore surrounds this recipe, from its creation to its various hiding places over the years to the current measures taken by the company to safeguard its priceless identity. In 2010 the company made a very public announcement of the new security system of the kind that world-famous jewel thieves watch with raised brows in caper movies. According to a press release,
The Secret Recipe’s new high-tech home is like something out of a Hollywood movie. The custom-built, digital Fire-King safe protecting the Secret Recipe weighs more than 770 lbs and has a 1⁄2" thick steel door. The computerized safe also boasts a dual-opening system that requires both a smart key and a personal identification number (PIN). A built-in s
ilent alarm and time lock feature provide additional layers of safekeeping, which will alert the security team of any attempted intrusion and allow access to the safe only during pre-set periods of time. But the new safeguards don’t end with the safe. The vault housing the new safe is reinforced with two feet of concrete in the ceiling, walls and floor to ensure that no one can tunnel or drill into the vault. Additionally, the vault and safe are now under 24-hour video and motion-detection surveillance.
Nor are these the only safeguards. “The recipe is such a tightly held secret that not even [the CEO] knows its full contents. Only two company executives at any time have access to the recipe. KFC won’t release their names or titles, and it uses multiple suppliers who produce and blend the ingredients but know only a part of the entire contents.”
The only problem is that nobody is really sure that Kentucky Fried Chicken is using it. The Colonel insisted over and over again during his lifetime that it had been changed, that it didn’t taste the same, that the new owners were cutting corners. William Poundstone, in his 1983 book Big Secrets, claimed that the current version consisted entirely of salt, pepper, and MSG.4 Many customers maintain that the taste of the Original Recipe today is not the same one they recall from the 1960s and ’70s. It’s impossible to say, of course, and subjective taste, particularly when time and nostalgia are involved, are notoriously unreliable. The question of whether KFC still uses the eleven herbs and spices, though, is a profound one. Without it the brand essentially ceases to exist, which is one reason the company has been zealously protective of the recipe over the years.
On the other hand, what guarantee is there that the Kentucky Fried Chicken franchises of the John Y. Brown era were faithful to the Colonel’s recipe? The original nickel-a-chicken franchisees got their seasoned flour directly from the Sanders kitchen, where it was mixed up and bagged by Claudia and a few helpers. After that, the matter was in the hands of an institution fighting for its survival in one of the most demanding competitive markets in America. Brown, although ingenious, well-meaning, and genuinely loyal to the Colonel, made it explicitly clear that his duty was to the company and its franchisees and stockholders and that the Colonel’s culinary standards were not ones he could follow. “Let’s face it, the Colonel’s gravy was fantastic, but you had to be a Rhodes Scholar to cook it,” an unnamed executive told The New Yorker magazine in a 1970 profile of the Colonel. “It involved too much time, it left too much room for human error, and it was too expensive.” The writer noted, “This attitude is incomprehensible to the Colonel.”5 If that was the attitude of Brown and company, the subsequent owners of the company had even less compunction about price controls.