This month marks 50 years since John Y. Brown Jr. and Jack Massey bought Kentucky Fried Chicken from Col. Harland Sanders for $2 million ($15 million in 2014). The transaction changed the simplest of food concepts into a company with 18,000 stores in 115 countries generating more than $16 billion in annual revenue.
Under Brown’s guidance, Kentucky Fried Chicken’s metamorphosis altered the restaurant industry in ways that the grease-smeared lens of history makes it difficult to discern.
It’s easy to view KFC’s original “white house” headquarters and massive second building from the Watterson Expressway and imagine the chain was always so impressive. But its humble beginnings are almost laughable by comparison.
Diners and modern restaurateurs alike take for granted things KFC helped pioneer: streamlined duplicable systems; limited menus with easy-to-prepare products; highly recognizable—even lovable—brand icons; and clearly defined market positions. At its roots, KFC was not a concept trying to be everything to everybody.
What Sanders brought to the table was truly excellent fried chicken. (Sorry to say, but if you’re not a Baby Boomer or older, you missed out on the original Original Recipe.) Brown made that, and the Colonel himself, the focus of its product-driven company, and it took off like a rocket.
In the five years from 1966 to 1971, KFC enjoyed a growth spurt never before witnessed in the global restaurant industry. When Sanders sold in 1964, there were zero KFC “stores,” rather only 600 restaurants serving his chicken as a menu item. When Brown left the company in 1971, there were 3,500, including 863 opened in a dizzying 1968 blitz. That brand explosion happened without cellphones, the Internet or fax machines. One franchisee-turned-market developer from that era told me several years ago, “We were going so fast that we mostly got on the phone and said, ‘Send us more money.’”
Brown, just 30 at the time of the sale, and now 80, likens the task of growing KFC to driving untamed horses. His team of entrepreneurial restaurateurs was aggressive, smart, strong-willed and quick to lock horns with a boss who lacked their experience. But they recognized KFC’s potential as unlimited, Brown’s skillful promotion of the brand, and they seized the opportunity.
After taking the company public in 1966, Brown convinced many of the original franchisees to trade their restaurant investments for company stock and join the corporation in its expansion efforts. In a short time, nearly two dozen of them were multimillionaires with fortunes far exceeding the Colonel’s.
Brown, now 80, still loves recalling the story. By phone from his Lexington home, he picked up the tale here…
The Colonel had seen me on TV, called me and asked me to be his real estate attorney because he wanted to start a barbecue franchise. After about six months, I stopped by his office in Shelbyville, and he told me about his business. He said, “C’mon Johnny, I want you to see something,” and he went through this file where he had all these royalty checks from his chicken business. He was just going to these restaurants and saying, “I’ll cook you some chicken, and if you like it, I’ll give you a license.” The franchisees paid him a royalty of a nickel for every whole bird they cooked using his breading recipe (which he manufactured and shipped to them). That was it. Simple. It worked. Some of those checks were for $300 a month, some $50 a month, they all added up. I thought, “He’s got a real business here.”
We talked about the barbecue franchise and … I told him I was a good salesman and a lawyer, and that I could do franchising and sales, and that we could be partners. We even opened one later, but we didn’t do much more with it.
So the next day, I came back to his place (Claudia Sanders Dinner House) and had his chicken. I thought, “My God, this is great!” Plus, I loved the idea of the man in the white suit. I saw the whole thing was an incredible business opportunity.
I had a friend, Jim Cavanaugh, who led me to Jack Massey, who’d been in pharmaceuticals and was retired. … I liked Jack, and we became friends, played golf together. I was at his house in Nashville one weekend and the idea came up about buying the Colonel out. But honestly, at that time, we didn’t think a lot about it.
I set up a meeting later to talk about Jack financing the restaurant equipment for the Colonel’s barbecue concept, but not about buying him out. And as we sat down, the first thing out of the Colonel’s mouth was, “I want you to know that no city slickers are going to buy my company.” We’d never realized he was even interested. But we started thinking about it a lot. …
When we finally went to the Colonel about selling, Jack asked him what he wanted. He said $2 million. … Later, when we all met with the bank in Nashville, the Colonel told them again he wanted $2 million. The president of the bank said we should step out and discuss the price, and he said to ask him for $1.5 million. I said, “If you offer one dollar less than $2 million, he’ll walk out and you’ll never see him again.” He’d have done it, too, because he was a proud man. So they agreed on the price.
Once the Colonel got approval (for the sale) from Pete Harman, his first franchisee … we gave the Colonel a $50,000 good faith payment. Jack asked me what I was going to put up, and I said, $10,000, but I didn’t know where I was going to get it at the time.
Then the grumbling started in his family. They said to him, “Don’t sell it.” It went on for weeks, all that dysfunction. I was a nervous wreck thinking it wouldn’t go through.
So after six weeks of that mess, I met with Barry Bingham Sr. (publisher of The Courier-Journal) and told him we had a contract to buy the Colonel’s business, and he sent a crew to take a picture of the Colonel and me overlooking a picket fence or something. That picture went all over the United States, and I think the Colonel liked the national recognition it gave him. It changed it all and sealed the deal. It told his licensees and everyone else that the deal was real. If I hadn’t done that, I don’t know if we could have closed the deal.
Once we closed the deal, I spent about all my time getting him on national TV, shows like “What’s My Line?” and “The Johnny Carson Show.” He even danced on “The Lawrence Welk Show.” We got him on 31 national TV shows. That really helped build our brand because he was a natural promoter, so charismatic.
As we were going public (in 1966), we did try to give him stock, which would have made him richer. But he said, “That isn’t worth toilet paper.” I thought, “Oh, well, Colonel.”
We started converting a lot of those restaurant franchises into KFC stores. Selling nothing but chicken. We’d find a closed service station or some other building, change it to a restaurant, and put up a bucket, and we grew it.
Victor Hugo said, “Nothing is as powerful as an idea whose time has come,” and it was the right time for this one. We had the right nucleus of franchisees who saw that when we had him on TV, we had a great asset. Sales always went up when he was on TV.
We were on the move. Once we went public, we bought out all 600 franchisees and made them corporate stores. We hardly even knew how to run them. Fortunately I didn’t ever get in the kitchen and try to learn what to do. That was good because I didn’t want to mess it up. But we convinced the franchisees to come run the company and grow it. It was a completely entrepreneurial company.
From there we opened 3,500 take-home stores in about five years. We actually built 863 stores in one year (1968) because competition was coming. Bojangle’s and Church’s started hurting us, and I told our guys, “We better roll this out and build this territory or we’ll lose it.”
It changed the industry because fried chicken was a take-home product. Back then, people went to restaurants and ate. Our chicken changed the eating habits of America.
It was just a great idea. Who’d have thought of frying chicken and putting it in a bucket? Who’d have thought of calling something, “Finger lickin’ good”? Who would drive around in a white suit with pressure cookers in the trunk of his car and teach people how to fry his chicken? It sounds crazy, but it was a great idea!
* Postscript: Brown went on to become Kentucky’s 55th governor (1979-83), own the Kentucky Colonels and the Boston Celtics basketball teams, and led several other restaurant ventures, including Lum’s (a hot dog chain), Ollie’s Trolley and Kenny Rogers Roasters.