He never gave up, put crazy miles on his car, promoted and sold Kentucky Fried Chicken (KFC), and worked well into his seventies.
Dave Young:
Welcome to The Empire Builders Podcast, teaching business owners, the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is well it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
[Jim’s Razorback Pizza Ad]
Dave Young:
Welcome to The Empire Builders Podcast. I’m Dave Young, alongside Stephen Semple. And we’re talking about a brand today that’s been around forever and I’m trying to think of my memories of them. I mean, I grew up in a town that didn’t have one for a while. I think about their marketing today and it’s gotten weirder and weirder and that’s the Colonel, KFC. We’re going to find out about Colonel Sanders, right, and KFC.
Yeah. So pop quiz.
Dave Young:
Okay.
Stephen Semple:
Is the Colonel a Colonel?
Dave Young:
I know the answer to this because it’s a related thing to an honorary that I have, which is an Admiral in the great Navy of the state of Nebraska. So the Colonel I’m guessing that there’s an honorific.
Stephen Semple:
There is because both Fred Astaire and Whoopi Goldberg are also colonels.
Dave Young:
Colonels. All right. I outrank them I think, as an Admiral.
Stephen Semple:
Well, it’s a pretty important title because it’s the highest award you can get in the Commonwealth of Kentucky. KFC was founded by Harland David Sanders and at the time of his death in 1980 KFC had 6,000 outlets and was doing $2 billion in sales. So it had become a pretty big deal in the fast food space. Harland was born on September 9th, 1890. And when he was six his dad died and his mom was forced to go to work. And this left young Harland to take care of the household. This is where he learned to cook. And he left home at the age of 13 and he did a lot of different jobs early in his life. He was an insurance salesman. He was a filling station operator. And when he turned 40, he was offered the chance to take over a Shell gas station located on US Route 25, just outside of North Corbin, right on the edge of the Appalachian Mountains.
Stephen Semple:
And it was on this busy highway. Now, when he took over the gas station, he decided to convert the gas station store room into a small eatery. So he put up a couple of tables, few simple chairs, and this kept him busy. He was the cook, he was the server, he was the gas attendant, but it worked out well. Well enough that four years later he bought the larger station that was across the road and he expanded the six tables. And this is when he started to sell fried chicken. He had been working on a recipe for fried chicken.
Dave Young:
And he’s in his 40s at this point.
Stephen Semple:
Oh yeah. Yeah, he’s in his mid-40s at this point.
Dave Young:
Yeah.
Stephen Semple:
So for the next few years, he experiments with the recipe for fried chicken and he lands on what is now the original recipe with 11 herbs and spices. Right.
Dave Young:
It’s a secret.
Stephen Semple:
And it is a secret. It’s actually a secret they’ve guarded pretty tightly.
Dave Young:
Yeah.
Stephen Semple:
But he also decided he needed to become better at managing restaurant. And it’s interesting how we’ve done a few podcasts now where people have reached this stage where they realize, you know what, I need to get some more information. I need to get some more knowledge. So he took a course at Cornell University of hotel administration learning a little bit more about managing a restaurant. So now it’s a couple years later, it’s 1936. His business is so successful he gets that first honorary title. He’s now the Colonel.
Dave Young:
He’s a Colonel. All right.
Stephen Semple:
But he doesn’t start dressing like the Colonel until the 50s. It’s quite a few years later that he actually takes on that persona. But that’s another story. In 1939, a fire destroys his restaurant and he has to rebuild it. So he rebuilds this 140 seat restaurant and hotel and he calls it the Sanders Court and Cafe. He also buys a hotel in Asheville, North Carolina. It’s now 1952, he’s 62 years old. And he does his first franchise deal. It’s 1952, he’s 62 years old. He franchises recipe to Pete Harmon in Salt Lake City. And Harman plays a really important role in this because Harman coined the term, Kentucky Fried Chicken (KFC) to differentiate from Southern fried chicken.
Dave Young:
Okay. Okay. So Southern fried chicken. I mean, that’s a thing, but it’s not a brand thing.
Stephen Semple:
Correct.
Dave Young:
It’s a style.
Stephen Semple:
Correct. When he franchises it to Pete Harman, Pete Harman is the one who says we should call this Kentucky Fried Chicken.
Dave Young:
Because it’s not just Southern fried chicken.
Stephen Semple:
Because it’s not just Southern fried chicken.
Dave Young:
I think it’s so important that that’s such a differentiator, right? I mean, even if it isn’t, even if it tastes exactly like some other Southern fried chicken you’ve had, it sets it apart, it sets your brand apart and it becomes that other thing.
Stephen Semple:
Forces your brain to say, this is something different. This is Kentucky Fried Chicken, not Southern fried chicken. So it’s the early 50s. Things are going great for Harland. Then in 1955, a new interstate is built that bypasses Corbin.
Dave Young:
That’ll kill it.
Stephen Semple:
Well, it’s interesting because how many times have we seen this in business? My restaurant is so popular and people love me so much that it will be successful even though the highway goes by it. right. People will travel here to come. How often have we heard businesses say the world has changed,
Dave Young:
Yeah.
Stephen Semple:
But I’m still going to be successful. Well, guess what it failed.
Dave Young:
Yeah. Those are famous last words of anybody that gets bypassed by a highway that’s been relying on highway traffic.
Stephen Semple:
Yeah. At ages 65, it failed. Went out of business. And he was reduced to savings and his social security check. And he’s a senior citizen at the age of 65. So he decides to open up another restaurant and really ramp up franchising. He hits the road, he goes to restaurant to restaurant and he cooks up the chicken. If they really like it, he shakes hands and he gets a nickel a bird, nickel a bird is what the original deal was.
Dave Young:
So he’ll give him the recipe and teach him how to cook it and it’s a nickel, a bird.
Stephen Semple:
And it’s estimated that he traveled 200,000 miles a year on the road, that he was just going everywhere. Now, eventually franchisees started to come to him and no he never shared the recipe. He mixed the spices and sent them the spice. So eventually franchisees start to come to him. It’s the mid 60s and he’s starting to open up also franchises in other countries. And here’s where there’s a fun Canadian tie in. So by 1964, there’s now 600 restaurants and he’s 73 years old and he sells the franchise for $2 million, which would be equivalent to $17 million today.
Dave Young:
He sells the whole thing.
Stephen Semple:
Sells the whole thing.
Dave Young:
Okay.
Stephen Semple:
But it does not include Canada.
Dave Young:
Okay.
Stephen Semple:
So he and his wife moved to Canada. He’s 73, to run Canada. He buys this little house in Mississauga, couple hours for me. I got a picture of the house on the show notes and he moves to Canada and that’s where he ends his career.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Empire Builders Ad]
Dave Young:
Let’s pick up our story where we left off and trust me, you haven’t missed a thing.
Stephen Semple:
Where the real lesson here is when the world changes in this case, when traffic changes, you got to be realistic and really look at your business and say, how is this changing my business? With the world going online, we can’t ignore that. With the pandemic going on, we can’t ignore that. With the fact that people may or may not be returning back to their offices, we can’t ignore that. As successful as the Colonel was, successful enough that he got that honorary title. When things changed, it wiped him out. But the other thing that’s really interesting was this whole idea of creating a new category. If you’re in a crowded category, one of the things you can do is create a new category. And he created a new category called Kentucky Fried Chicken. Now it wasn’t him, but he was smart enough to look at it and go, yeah, that’s a really smart idea.
Dave Young:
A differentiator. And to not just sell it into restaurants, but actually sell restaurants.
Stephen Semple:
He would show up and he would cook up the chicken for you.
Dave Young:
They eventually switched to franchising,
Stephen Semple:
Yes, they did.
Dave Young:
Restaurants.
Stephen Semple:
They did.
Dave Young:
KFC would be a restaurant, not a product in your restaurant.
Stephen Semple:
Correct. There was a point where they pivoted to it becoming a restaurant rather than a product in your restaurant, but they started first of all, with it being a product in your restaurant, which in many ways, is also an easier sale.
Dave Young:
It’s an easier sale and it’s still a differentiator, right?
Stephen Semple:
He was a really interesting character and boy talk about just not giving up and just soldiering forward and keeping at it and it’s really quite remarkable. And the only thing that’s interesting is when you look at the house he bought in Mississauga, it is a really modest little home in a pretty ordinary suburban location, especially for the 60s. He could have bought something a lot nicer is what I’m telling you with $17 million in his pocket.
Dave Young:
Here’s what I like to think. He was born in 1890. Right. So he’s 132 years old now.
Stephen Semple:
Yeah.
Dave Young:
And I’m not sure where he’s disappeared to. Right. I’m going to pretend that he’s still out there like growing this franchise in South America or Asia or somewhere.
Stephen Semple:
He could very well. He could very well.
Dave Young:
Because he didn’t seem like he was stoppable in being able to change and grow and change again. Amazing.
Stephen Semple:
Yes. Yeah, absolutely amazing. Hats off to the colonel.
Dave Young:
Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review. And if you have any questions about this or any other podcast episode, email to [email protected].
