Are you a big fan of the tender and crispy chicken burgers of KFC? Do you want to have your own KFC restaurant? Well, Kudos to you, but owning a KFC franchise is not that easy.
In this guide, we have answer burning questions like how much does a KFC franchise owner make? What is the initial investment needed? What is the payback period for the KFC franchise and more?
So let’s look at the details closely.
About KFC
With more than 24,000 restaurants worldwide, KFC is one of the most renowned quick-service restaurant chains in the world.
KFC was founded by Harland Sanders in 1952 in Salt Lake City, Utah, under the name “Kentucky Fried Chicken.” Later in the year 1991, it adopted its iconic abbreviated name, “KFC,” to create a healthy brand image.
Today KFC is a part of Yum Brands, Inc., which is the world’s largest restaurant company, and 99% of its locations are franchised.
Now if you are willing to own this world-famous franchise, then you must have guessed that doing so is not that simple.
Moving ahead, we will share what it takes to qualify to own this franchise and how much money you can make a KFC franchise owner.
Investment Required to Own a KFC Franchise
Several factors determine the amount of investment you are required to put in. However, to give you an idea, here’s how much initial investment you will need to open a KFC franchise:
- For new ground-up construction – $1,442,600 to $2,771,550.
- To re-open or remodel – $1,00,8600 to $2,221,500.
- For non-traditional outlets – $253,600 TO $1,003,500.
((https://www.kfc.com/franchising/investment))
KFC Franchise Key Stats
| Franchise fee | $45,000 |
| Royalty fee | 5.0% |
| Marketing fee | 4.5% |
| Investment (mid-point) | $2,107,075 |
| Payback period | 5.5 years |
| Minimum net worth | $1,500,000 |
| Minimum liquid capital | $750,000 |
How Much Does A KFC Franchise Owner Make?
The sales figure of each KFC franchise differs based on their location, operating cost, advertisement expenses, service, etc.
However, according to the FDD, on average, a KFC franchise owner makes $1,567,474 in sales per year.
How Much Does A KFC Employee Earn?
According to ZipRecruiter, KFC pays its employees a minimum of $10.65 an hour and a maximum of $27.88 an hour on average.
The salary of a KFC employee may vary based on their skill set, department, location, position, etc.
For example, a KFC employee at an entry-level position with the job title of Shift Manager earns $22,142 a year, while an employee at a higher-level position with the job title of restaurant Assistant Manager makes $58,000 a year on average.
Pros & Cons Of KFC Franchise
Pros Of KFC Franchise
- Provide training and on-going support.
- Global presence.
- Highly profitable.
- Larger customer following.
- Proven expertise.
Cons Of KFC Franchise
- High-cost investment.
- External competition.
- Does not offer financing to new franchises.
KFC Franchise Average Revenue & Profit
Unlike many other restaurants, KFC is quite transparent about the performance of their franchised outlets and offers a lot of information in the FDD.
So KFC franchise owner makes a profit of $384,031 annually on average, which corresponds to a 25% profit margin.
This is one of the highest profit amounts that we have seen in the quick-service restaurant industry.
| Profit-and-loss | Amount ($) | As % of sales |
|---|---|---|
| Sales | $1,567,474 | 100% |
| COGS | $(470,242) | 30.0% |
| Rent | $(109,723) | 8% |
| Labor | $(454,567) | 31.1% |
| Royalty + marketing fees | $(148,910) | 9.5% |
| Adjusted EBITDA | $384,031 | ~25% |
KFC Overall Company Revenue & Profit
KFC has been witnessing steady growth in the recent years. And in 2022, KFC generated $2.83 billion in revenue, an impressive jump from the previous year’s revenue of $2.79 billion.
This strong financial performance is a testament to the brand’s enduring popularity and its ability to operate successfully in multiple countries around the world.
KFC Franchise Failure Rate
To find out the failure rate of KFC have a look at this table:
| Location type | Year | Locations at the Start of the Year | Locations at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised Outlets | 2019 | 3,980 | 3,969 | -11 |
| 2020 | 3,969 | 3,860 | -109 | |
| 2021 | 3,860 | 3,872 | +12 | |
| Company-Owned Outlets | 2019 | 55 | 56 | +1 |
| 2020 | 56 | 47 | -9 | |
| 2021 | 47 | 47 | 0 | |
| Total Locations | 2019 | 4,035 | 4,025 | -10 |
| 2020 | 4,025 | 3,907 | -118 | |
| 2021 | 3,907 | 3,919 | +12 |
The table above clearly shows that there has been a decline in KFC franchises over the last few years. Does this mean you should be worried?
Well, compared to the massive number of KFC outlets, the closing rate seems less besides, KFC is a giant in the fast-food sector, and we do not see it going anywhere in the future.
If you still have your doubts, then you can always discuss them with the franchisor and find out the reasons for the closedown of some of the outlets.
KFC Franchise Payback Period
To determine the KFC franchise payback period, let us do some calculations.
| AVERAGE INVESTMENT | $2,107,075 |
| AVERAGE REVENUE PER OWNER | $1,567,474 |
| AVERAGE PROFIT PERCENTAGE | 25% |
| AVERAGE PROFIT PER YEAR | $384,031 |
| AVERAGE PAYBACK PERIOD | 5. 5 Years |
PAYBACK PERIOD = TOTAL INVESTMENT / PROFIT PER YEAR
= 2107075/384031 = 5.48 = 5.5 Years based on median
The average investment for a KFC Franchise is $2,107,075 and the average revenue per owner is $1,567,474.
With an average profit percentage of 25%, the average profit per year is $384,031.
This means that the average payback period for a KFC Franchise is 5.5 years, as the total average investment of $2,107,075 would be recouped within this period.
KFC Might Be The Hardest Franchise To Get
Getting your hands on one of the world’s most popular franchises is obviously not going to be easy. KFC franchise is quite expensive, and you can be eligible to own this franchise only if you meet the following criteria:
- Have an initial investment of $1,442,600 TO $2,771,550.
- $750,000 Total Liquid Assets.
- $1,500,000 Total Net Worth.
- Strong credit report and history.
- Business experience.
- Sound personal reputation.
For owning Multi-Unit Operations, you need to have the additional:
- Successful business ownership experience.
- Proven track record in the operating hospitality business or multi-unit restaurant.
((https://www.kfc.com/franchising/faq))
Facts About KFC
- KFC’s 11 herbs and spices recipe is a super secret, and now the recipe is kept locked at the headquarter of KFC, with only a few members having access to it.
- To keep the recipe of KFC a secret, there is a company that prepares the first half of the 11 spices and moves it to McCormick, who prepares the rest of the half before sending it back.
- Eating KFC chicken on Christmas day is a tradition in Japan that became popular after a marketing camping KFC run in 1974.
- There is a KFC for deaf people in Egypt, Pakistan, and India that is handed by and made for deaf people.
- KFC is called “Poulet Frit Kentucky” in Quebec, Canada, which is the French name for Kentucky Fried Chicken.
- You can get yourself a KFC Crocs.
- In 2019 Pizza Hut and KFC came together to create a Popcorn Chicken Pizza together.
- A couple got engaged in a KFC outlet in South Africa, and the chain paid for their wedding.
- In the year 2007, a girl of age seven got paralyzed after eating KFC chicken.
- The founder of KFC has his own game called Colonel Quest, where the player has to collect as much chicken as possible.
- The Colonel also has a comic book about him which depicts his life till he founded KFC.
- There are more KFC outlets in China than in the United States.
- KFC’s tagline “Finger lickin good” was not translated correctly in China, and for a while, it was “eat your fingers off” there.
- The largest KFC outlet is in Baku, Azerbaijan.
- For KFC, the busiest day of the year is on Mother’s Day.
- In 2016, KFC launched edible nail polishes that came in Hot & Spicy and Original flavors in Hongkong.
- In the year 1964, Colonel Sanders sold KFC to investors for $2 million.
- KFC’s first franchise location came up with the slogan “Finger lickin good” and even invented the famous “Bucket.”
((https://www.kickassfacts.com/kfc-facts/))
What Is KFC Known For?
KFC is a quick-service restaurant chain that is well-known for its fried chicken and chicken bucket.
The secret to their juicy, flavorful, and crispy chicken lies in the secret recipe of 11 herbs & spices that the founder came up with when he opened KFC.
In spite of so much external competition, the reason why KFC has been able to maintain a firm hold on the market is due to not one but several reasons.
KFC sources fresh chicken from trusted suppliers that undergo 34 quality checks which is prepared and cooked at a similar temperature each time, among other things.
Here are some of the most popular items on the KFC menu worldwide:
- Chicken Pot Pie.
- Original Recipe Chicken Breast.
- Chicken Sandwich.
- Popcorn Chicken Nuggets.
- Mashed Potatoes with Gravy.
- Mac & Cheese Bowl.
- Original Recipe Chicken Drumstick.
- Secret Recipe Fries
- Popcorn Chicken Large
- Cole Slaw
Is KFC Franchise Profitable?
KFC is the second-largest restaurant chain in the world after McDonald’s, earning revenue is $6.8B annually.
Since 99% of its locations are franchise-owned, investing in a KFC franchise is definitely profitable.
By putting in an initial investment of $1,442,600 to $2,771,550, you can make a profit of $384,031 a year on average.
KFC Franchise Earning Potential
According to the company’s website, a new KFC store opens in every six hours daily, and if we look at the growth figure of KFC then in the year 2022, there was a 36.86% revenue growth.
The increase in sales and revenue increases profit. So a KFC franchise owner has the potential to make a solid amount of profit, and if the positive revenue growth continues in the coming years, then a KFC franchise owner will be able to make much more than the average profit of $384,031 a year.
Wrap Up
After reviewing the KFC franchise in detail, this is what we think:
Since KFC is the second-largest restaurant chain in the world, getting your hands on a KFC franchise is not easy. There are strict criteria to meet, a hefty investment to make, and a 12-week-long opening process waiting time.
However, if you do qualify to own this franchise, you will be able to make an amazing amount of profit with continuous foreseeable demand.
Overall, KFC is a great franchise to invest in.
Frequently Asked Questions
What is the franchise fee for KFC franchise?
KFC charge a franchise fee of $45,000.
How much royalty and marketing fee does KFC charge?
KFC charges a royalty fee of 5.0% and a marketing fee of 4.5%.
Does KFC offer financial assistance to franchises?
Yes, it does but it offers financing oppurtunity to minority groups only which can be a deterrent for potential franchises as the initial investment is quite high.
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.