As the UK and Ireland arm of the fast food business releases its very first CSR update, Tom Idle puts KFC’s head of CSR Ian Hagg through his paces.
If, as a brand you are not offering a salad on your menu, you are out of sync with what is going on around you
KFC. It’s a guilty pleasure, largely among young males making a beeline for tasty fried chicken and fries on their way home from the pub on a drunken Friday night. And it’s one of the UK and Ireland’s biggest and best-known fast food chains, with 860 restaurants and growing at a rate of 30 new premises a year.
Run by the Yum! group, which also owns fellow fast food brands Pizza Hut and Taco Bell, the company has up until now been fairly quiet on sustainability issues, preferring to let its parent divulge information and data on its efforts to run a responsible food business.
But now it’s getting vocal.
Refreshing in its acknowledgement that there is still a long way to go – “we’ve only been managing our CSR in a joined-up way for the last four years” – the UK and Ireland arm of the company has just issued its very first CSR update. Inside the swanky offices of its London PR agency, I caught up with head of CSR, Ian Hagg to find out what the chicken business is actually doing to make a difference – and why it is so far behind the likes of McDonald’s in communicating its efforts to the masses.
This is your first CSR Update. Why publish this now and why has it taken so long to get this together?
Engaging the business in CSR and getting it embedded has taken a while.
We are quite a cautious organization and it wasn’t until we had ticked more boxes than we hadn’t ticked that we felt comfortable putting out an update like this.
And it is just an update; not a full report. It hasn’t got the full assurance levels you’d expect and it’s not yet peppered with stakeholder commentary. There are some data gaps. So, it’s not a completely joined-up, bells and whistles, Unilever-type CSR report.
But it’s a statement of where we are, what we’re thinking and the areas where we can improve.
What did things look like in the early 2000s for KFC? Was CSR even on the radar?
The level of interest among consumers – and the media – about what is in our food, nutrition and well-being has gone mental these past ten years.
Clearly the expectation of food companies – especially big ones like ours – has changed too.
What KFC has always been great at is looking after people. The training and development and apprentice programs have been around a long time, for example.
The debate about nutrition, transparency in the supply chain and what it means to be a sustainable food company wasn’t happening back then. And although we were delivering, we didn’t feel the need to talk about it.
We are very much a marketing-driven company. But back then, these issues just were not a story. Our customers were not asking about sustainability and nobody else was talking about it, so we didn’t feel the need to.
With hindsight, do you wish you had?
Yes. It would have absolutely been the right time to do it because some other brands have been doing it for a long time now.
Yes, company’s like McDonald’s have had their story straight and have been telling it for a long, long time.
That’s right. But McDonald’s had some distinct and unique business challenges. It was make-or-break time for them and they realised that unless they repositioned their entire company, it was potentially ‘bye-bye McDonald’s’ in the UK because they were under pressure from all sides, with media issues, legal issues and nutritional issues.
They had a tough couple of years and, to their credit, they stepped back and put their brand in a very different place and stole an early march.
Does their size often unfairly mean that their heads are further above the parapet than others, ensuring they take most of the brunt of negative public opinion – especially on some of the big responsibility issues?
Yes, it’s similar with Coca-Cola and Pepsi. I used to work at Shell [as an issues adviser] and it was always BP that got kicked, not Shell.
Ten years across, customers weren't asking about sustainability so we didn’t feel the need to. In hindsight, I wish we had
McDonald’s do bear the brunt of issues like employment contracts or supply chain and they get hammered first. It’s something that comes with size and profile.
So, where do you sit within the organization and how far those your remit extend?
I head up CSR, but it’s not all I do. I also pick up public relations and corporate affairs – and that’s deliberate and healthy.
CSR can’t be a bolt-on. There can’t be somebody beavering away on their own on CSR issues; it makes no sense. So I work in a completely matrix-ed way, working closely with the supply chain team, the HR team and the ops team.
Lot of brands learned in the past five to ten years that CSR is about business change.
And what level of influence do you have to bring about this business change?
My level of influence is huge. Genuinely. And that’s not necessarily about my role, but the nature of the business.
It’s a flat structure, with a small head office. There is an open door policy and I speak with board members and the managing director all the time.
So if there’s a challenge that requires investment or business change, people resources, or questions to be asked of suppliers – it’s not a problem and it would be weird if I didn’t pull together a senior team to deal with that problem – a team that would always include a board member or two.
Our CSR steering committee meets quarterly and has four board members, and therefore can make decisions. And if those decisions require a big shift in the business, that can be made. There is no other steering committee in the business that has the same clout.
One of the most impressive elements highlighted in the CSR Update is your Supplier Code of Conduct, which looks fairly sound. How much further is there to go on this to get it to where you want?
The chicken supply chain is a piece of cake compared to something like beef. The suppliers – some of which are huge with a bigger turnover than KFC UK itself – run the farms, barns and hatcheries for the birds. And they will often run the processing plants too. So, it’s a simple chain and couldn’t be more transparent.
So, what are you asking for with your Code of Conduct?
All of our UK chicken is Red Tractor-certified.
Anything that comes from outside the UK – from Brazil, Thailand or Poland – has to hit the same Red Tractor standard. It’s a common standard to all the big retailers, is recognized globally and tightly-audited.
But we actually go one step further than the Red Tractor standard for our UK chicken and have our own auditing system. So, we work with our suppliers to do things like introduce natural light into the barns.
What do you mean you ‘work with suppliers’? What does that actually mean?
It is advice and guidance. We haven’t written it into the contract that they can’t supply us unless they go beyond Red Tractor. But we work with them and share best practice.
Would you go that extra step and force them to go beyond Red Tractor?
We’d like to. But the reality is the chicken supply chain in the UK, although simple, isn’t big enough. There isn’t enough poultry out there. That’s why we have to source overseas.
Although KFC is big, our slice of the chicken supply chain is tiny and we have very little influence, compared with the big retailers. We are not in a place to walk away from suppliers because there is limited supply.
It’s a real shame that you are having to fly chickens in from across the world to feed the UK and Ireland. Would you like the ‘All our chicken is British’ story?
It’s an easy story to tell. But all our chicken on the bone is 100% UK. It’s a sheer access-to-supply issue; there just isn’t enough chicken in the UK.
Is it a harder job doing what you do for a fast-food business, rather than a higher-end food business?
If you’re in Waitrose or M&S, the standards and expectations set are very high. So it’s hard to keep meeting them and keep raising the bar – no doubt about that.
But it’s easy because they have a very warm spot in the consumers’ heart and they are trusted. So if you stick an M&S or Waitrose logo on a product, the consumer does the editing and in their mind has everything ticked off – whether that’s ethical sourcing, human rights, or whatever it is. Those companies don’t need to smother those products with FSC, MSC or Soya Association logos.
For a brand like ours, we have to work a bit harder than M&S and Waitrose which have a very warm spot in the consumers’ heart
For a brand like ours, we have to work a bit harder. There isn’t that natural warm spot because we haven’t been associated with those issues. We have to do more with the consumer to get them over the line.
The nature of product is a problem too – KFC is a treat.
Yes, it is a treat. The biggest criticism thrown at the likes of KFC is that you are playing a big role in fuelling obesity, with kids nipping into their local KFC during school lunch breaks. How do you square that? How can you be a responsible business when your product is making people unhealthy?
We don’t hold the consumers hands all the time; they are equipped to make a choice.
We go quite a long way; the calories are there for consumers to see, on the website, in store, on the app – we go further than most in displaying information.
And there are some credible choices there – salads, no fried food and sides.
We don’t market to kids either.
We just never have in the UK. There is a kids’ choice, but we don’t push it.
Is that a responsible business decision? You don’t think your product should be marketed to kids?
I wouldn’t say that. We have a kids menu and we encourage families to come in.
But responsible marketing and positioning ourselves within the nutritional and obesity debate is a tricky one.
I remember reading an interview a few years back with one of the bosses of Burger King at around the time their introduced salads on their menu. They didn’t sell very well at all. He said they did lots of research and heard from their customers that they wanted a wider menu with more ‘credible’ choices – “but they lied to us”, he said. Do your customers really come into KFC for a salad? Having salads on your menu seems like a bit of box-ticking exercise.
I’m sure the numbers of people buying salads is not high.
Do you feel like you have been cornered into the decision about including salads on your menu?
I don’t think it’s that simple.
You have to be relevant to customers and they need to know you are an innovative brand. If, as a brand you are not offering a credible choice or salad, you are out of sync with what they see going on around them.
So, it’s not tick box. And we are constantly refreshing our offering and we will revamp our credible options. That is keeping up with the marketplace and being a relevant brand.
Is it important that you communicate your CSR story to people coming in on a Friday night to eat chicken?
It’s increasingly important.
Do they care?
We don’t know the answer to that.
But if they were to find out from a third party that you weren’t sustainable and had a dodgy supply chain that didn’t have the quality, you would definitely be hit.
For the consumer, it’s wallpaper – you just have to cover it off.
But there is something about reassurance and quality and innovation in knowing that the brand is doing right by the community, by the environment or by their own people; that does say something about quality. And it does say something about being a modern and relevant brand.
It’s something they are being hit with by other brands all the time – so to not do that doesn’t make sense.
But will your CSR story ever win you market share? Would somebody walking home on a Friday night choose KFC over a high-street chicken joint because of how your treat your staff or source your chickens?
It’s really hard to say; maybe not.
What can we expect in the coming months when it comes to sustainability messaging?
I’d be surprised if CSR messaging doesn’t creep more overtly into our brand advertising.
I’d love to see our business leaders on the front foot a bit more, speaking at public forums talking about some of these issues – which is something they haven’t done before.
What remains the biggest challenge for KFC as a business going into 2015?
Figuring out how we can take our story down to a store and local level is probably going to be the biggest challenge. If we can crack that one – that will be a good one.