McDonalds Playing Chicken with KFC

McDonald's is going to take on KFC at their own game and the head of Restaurant Brands Ltd [RBD.NZX] replies to the war cry of MD of McDonald's Mark Hawthorne:

Chief operating officer Rod de Vries said sales had increased 9 per cent in the past year - an outstanding result in a highly competitive market. "It is therefore no great surprise that our competitors will try for the same success in our market and challenge our menu offering.

"However, we are confident that KFC will continue to hold the recipe for success in our industry and that consumers will continue to love the secret blend of 11 herbs & spices that Colonel Sanders perfected in 1939.

Full NZ Herald Story

A very logical and understandable reply from the head of Restaurant Brands, in reply to news out today that McDonald's New Zealand is going head to head with KFC to try and knock the Colonel of his lonely perch.

KFC have to respond to the superior marketing and
service levels of McDonald's to keep their chicken market
share.

As Warren Buffett says, he looks for companies with a "moat", that is, a unique product or company that has high barriers to entry and therefore stable and sustainable cash flows. KFC is certainly that. Nobody else has ever managed to get the 11 secret herbs and spices down pat and nor are they likely to and that is the main advantage that KFC has.

The uniqueness of their taste is their secret to their 69 year old history.

Unfortunately for KFC in New Zealand we have heard this all before from Restaurant Brands, "we will take competition seriously" blah, blah. Witness the Pizza Hut meltdown after competition has decimated that brand. I still think RBD management underestimate their rivals and over rely on the strength of the KFC product when going head to head.

McDonald's Vs RBD, I will pick Maccas every time, because management there are smart and know all about service, imagine what they would do at KFC.



KFC's chicken dominance is going to be severely tested by the McDonald's
competition but KFC have a unique product that loyal customers love.


McDonald's are going for an all out assault on KFC's dominance and are going for quality and range in their chicken offerings. Breast meat and real chicken will be the order of the day. They will take market share off KFC, that is clear. How much market share is up to how RBD management react to the competition.

RBD have a great product but where Maccas will beat them is at service and marketing and that is half the battle.

In the USA and Australia this battle has been fought and lost by KFC and the Big Mac has intentions to be no1 here within 3 years, so history could be repeated here.

The McDonald's saturation advertising has already started. It will be interesting to see what the RBD response will be.

Keep up to date with this development at the Share Investor Blog .


Restaurant Brands @ Share Investor

RBD - 2011 Half Year Result
RBD - 2010 Quarter one sales
RBD - 2010 Quarter two sales


Restaurant Brands share price looking overcooked
Most Outstanding Stock of 2010: Restaurant Brands Ltd
Restaurant Brands Ltd: KFC has finally cracked it
Restaurant Brands: KFC Sales Figures Explained - Part 2
Finger Lick'n Good Management
Chart of the Week: Restaurant Brands Ltd
Long Term View: Restaurant Brands Ltd
Stock of Week: Restaurant Brands Ltd
Restaurant Brands: Buy or Sell ?
Pizza Hut sell-off provide opportunities all-round
Danny Diab & Restaurant Brands
2008-2009 KFC sales figures mislead investors
KFC Finally Flying
Starbuck's New Zealand Cup doesn't runneth over
RBD gives KFC a push
McDonald's playing chicken with KFC
Restaurant Brand's Pizza Hut faces increasing competition
RBD sales analysis
RBD saga continues: CEO leaves
The secret recipe is out
2007 FY profit analysis
Delivering increased profit in October 2007
No reason for optimism in latest sales figures

Discuss RBD @ Share Investor Forum
Download RBD company reports




c Share Investor 2008

Unstoppable Global Warming

Something not reported in the mainstream media but it is another form of evidence that refutes man made global warming.


Unstoppable Climate Change

In this issue, NZCPR Weekly reports on implications from a New York conference on Climate Change (printer-friendly version>>>), Guest Commentator Czech President Václav Klaus explains that the global warming scaremongering is really an attack on freedom, the weekly poll asks NZCPR readers whether they agree or disagree with the government's proposed emissions trading scheme, and the NOTICEBOARD has details on how to win a copy of the New York Times bestseller "Unstoppable Global Warming: Every 1,500 years".

I have just returned from an historic meeting of more than 500 people from around the world who gathered in New York to address the question of whether man-made global warming is really threatening the future existence of our planet. In attendance were some 200 scientists, economists and climate authorities, highly respected experts who are standing up to defend science against the tide of political opportunism, media dramatisation, and crowd hysteria that is propelling the global warming debate. In doing so these scientists and economists are putting their livelihoods at risk - their research grants, tenure, and ability to get published have all been threatened. Some have even faced death threats for speaking out against the global warming alarmism that is sweeping the world.

As a New Zealander concerned that our country is on the brink of passing new laws to counter global warming that will have a devastating effect on our standard of living, I wanted some answers. In particular, I wanted to know whether there is any scientific evidence that human-induced catastrophic global warming is occurring, since that is the sole justification for the economically damaging policies that Labour intends to push onto the country. I would like to share with you what I found.

Scientists have shown that in the earth’s geological past, concentrations of carbon dioxide have been up to 20 times higher than they are at present and temperatures have been considerably warmer. The two most recent warming periods occurred during Roman Times from 200BC to 600 AD and Medieval Times from 900AD to 1300AD, when Greenland was green and grapes grew in England. The Little Ice Age followed.

Current temperature trends show a warm period between 1920 and 1940, followed by a cooling phase. There was a sudden warming surge from 1976 to 1978 and another in 1998. Since then the weather has been cooler. The year 1934 has emerged as the warmest of the 20th century. This, along with the evidence of those historical warm periods, confirms that man-made greenhouse gas emissions cannot possibly be the cause of the earth’s warming.

The very latest scientific research shows that the climate operates on a 1,500-year cycle and is driven by a complex interaction of solar activity including sunspots and cosmic rays, winds, deep ocean currents, as well as cloud and precipitation cycles. It is a “chaotic” system which is very hard to predict. That is why it is almost impossible to forecast weather more than ten days in advance. For the United Nations Intergovernmental Panel on Climate Change to pretend that their predictions of the earth’s climate in a hundred years time are accurate is fanciful, and for politicians to regulate their economies on the basis of such fantasy is grossly irresponsible.

The UN’s climate change panel – the IPCC – was set up in 1988 to assess the impact of human-induced climate change. This is a governmental body that was established to show firstly, that humans are causing global warming and secondly, to present the case for regulation.

In their latest report, released in 2007, the IPCC concludes that “most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations”. However, in the two years since the cut-off date for that report (May 2006), scientists have discredited that conclusion by showing that the IPCC used corrupted data, that proper forecasting principles were not followed, and that their statistical analysis was flawed.

A key problem that scientists have discovered is that the computer model outputs produced by the IPCC are at odds with observable results: in particular a central feature of the IPCC’s case for catastrophic global warming is a forecasted build-up of warmer air above the tropics, yet temperature records show that this is not occurring. Some of the excessive temperatures used in the IPCC’s models, which are presented as evidence of catastrophic warming have been traced to urban encroachment - temperature stations that were once located in the countryside are now surrounded by car parks, roads and other heat absorbing structures.

Scientists at the conference refuted emotive claims that polar bears are dying out due to a loss of habitat (claims which featured in Al Gore’s drama, “An Inconvenient Truth” that is now screening in schools). They showed that Alaska’s polar bear population is stable, and Canada’s has increased by 25 percent over the last decade.

Claims that the melting snow of Mt Kilimanjaro is caused by global warming were shown to be wrong. In fact, the snow has been known to be melting since 1880 - deforestation at its base has reduced cloud cover increasing exposure to the sun.

Predictions of dramatic sea level rises were categorically discredited. The sea has been rising by a constant 18cm a century (1.8mm a year) and is thought to be driven by the melting of the West Antarctic Ice Sheet. The fact that this started an estimated 18,000 years ago and is expected to continue for another 7,000 years, shows that humans are not to blame!

The President of the Czech Republic, Hon Václav Klaus, gave a keynote address at the conference and received a standing ovation. He is very happy that his speech is being featured as this week’s NZCPR’s guest commentary.

President Klaus, who spent most of his life under a communist regime, believes that global warming alarmism is essentially an attack on freedom. In his speech he explained: “Future dangers will not come from the same source. The ideology will be different. Its essence will, nevertheless, be identical – the attractive, pathetic, at first sight noble idea that transcends the individual in the name of the common good, and the enormous self-confidence on the side of its proponents about their right to sacrifice the man and his freedom in order to make this idea reality. What I had in mind was of course, environmentalism and its currently strongest version, climate alarmism”.

President Klaus went on to state that there are only three ways to reduce emissions of carbon dioxide: “we either have to stop economic growth and thus block further rise in the standard of living, or stop population growth, or make miracles with the emissions intensity”. He explained that the only realistic option is to stop economic growth and cut living standards, which is why he is so vocal in his opposition to the objectives of the IPCC.

Those New Zealand politicians who have jumped on the global warming bandwagon have been less than honest with us over the implications to this country. They have failed to spell out clearly enough that the main cost of joining up to the Kyoto Protocol (which, in spite of a 22 percent increase in our population, requires greenhouse gas emissions over the next four years to be reduced to 1990 levels) will be a dramatic cut in living standards.

Once the Emissions Trading Bill and the Electricity Amendment Bill are passed into law, a price for carbon dioxide emissions will be imposed on the New Zealand economy which will in effect tax growth and spread the costs across the economy. The lion’s share of that burden will fall on households.

Based on the government’s own predictions of $50 a tonne for carbon dioxide, petrol prices will rise by 12.2 cents a litre, and electricity by 20 percent. Once agriculture is brought into the scheme, farmers will be effectively taxed on the methane produced by their livestock with devastating costs – a 12 percent reduction in the payout for dairy, a 21 percent reduction for beef, a 39 percent reduction for sheep, and a 43 percent reduction for venison. The overall effect of this madness will be a stalling of growth and a decline in living standards.

So will our emissions trading scheme work? The experience of the European Union says not. The scheme has forced carbon-intensive industries to relocate to non-Kyoto countries, it has caused businesses to fail, and others to reduce their hours of operation. It has done nothing to reduce carbon emissions, but a lot to reduce economic growth. And all for nothing – there is no logical scientific reason to reduce greenhouse gas emissions. The only reason is a political one.

As acclaimed journalist George Will wrote in Newsweek last year, if nations go ahead and impose anti-global warming policies, “the damage to global economic growth could cause in this century more preventable death and suffering than was caused in the last century by Hitler, Stalin, Mao and Pol Pot combined.”

In a nutshell, the overwhelming conclusion from the Climate Change Conference in New York is that climate change is caused by natural forces not human activity. It is an unstoppable process and any attempts that are made to try to control it are futile, political and expensive.


Related Political Animal reading

Global Warning: Tax Iceberg Ahead
Kyoto critic comes to town - Sunday Star Times
Carbon Credit trading puts Global markets at exteme risk
Of Tulip Bulbs and Tooth Fairies
Ponder the Maunder - 15 Yr old Kristin Byrne explodes the GW myth

Links c Political Animal 2008

Latest Auckland International Airport developments

There have been further developments today over the Auckland International Airport(AIA) sale to the Canadian Pension Plan Investment Board(CPPIB).

CPPIB have decided to lower their voting rights on a merged board.

I have added my acceptance votes for a merger.

Full NZX release here

Related media on today's developments

Stuff.co.nz
NZ Herald

Herald's Auckland Airport merger coverage to date

The Battle for the Airport

Share Investor merger coverage to date

Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Links c Share Investor 2008

Alan Bollard's indecision over OCR a worry to NZ INC

The case for Alan Bollard, New Zealand's Reserve Bank governor, to lower interest rates is strong and the time to do it is clearly now.

His rationale and excuses for raising them over the last few years has been to keep inflation in check but he really is swimming up the creek without even a boat when he has had to contend with out of control government spending and more to come, record oil prices, an exchange rate that is at post float highs and a crises of credit flow and lack of faith in business and the global economy.

He had raised the rate, with one explicit goal in mind and after every rate rise he told us that kiwis really needed to "end their love affair" with real estate. Almost double figure mortgage rates have finally put paid to our love affair and some sellers are finding their divorce from excess rental investments becoming more hateful by the day.

Yes, the housing market is dropping like a cheap hookers knickers but it took more than two years lag for Bollard's aim to take effect.

That is my point. The effect of his rate manipulations, up or down, take time to infiltrate their way through the market. A rate cut one Thursday morning could take more than a year to have a consequence.

The time to cut our interest rates from the current official cash rate of 8.25% is now. A couple of .75 cuts in succession are needed immediately, and then 2 more .50 cuts after that, then smaller ones if needed.

The fact that Alan Bollard is sitting on his hands over this, just shows those who know a little about economics that he really doesn't know what to do. Like a possum in the headlights he is going to move when he has to, that is, when the shite hits the fan.

His upwards movement of the official cash rate has not only affected the housing market negatively it has also put business lending out of reach of many struggling and promising new growth businesses. With high CAPEX costs our economy is simply going to fold up and go somewhere else if the status quo continues.

While Bollard's high cash rate has clearly pushed up our currency against our big trading partners, as Mr and Mrs Uridashi take advantage and invest their Yen here, it has also squeezed margins for our exporters.

While this is a risk that New Zealand exporters need to manage and only a smaller consequence in my opinion, it really shouldn't be happening if the cash rate was managed properly.

In fact, a wise move would be to abandon the official cash rate and keep the machinations of hopeless bureaucrats like Bollard out of things he doesn't understand. Let the market decide its own cash rate, it would be more efficient, more predictable for those it has a direct affect on and allow flexibility and competition for our banking institutions.

Finally, moving the cash rate too low isn't enough to rescue our economy from the current downturn. Japan tried that in the 1990s and it failed miserably. We must also have large personal and business tax cuts. These would have the dual effect of stimulating our economy while also putting the brakes on wasteful government spending, when we most need it.

The headlights are getting closer Mr Bollard, lets hope you move before our economy is run over.


Related Share Investor reading

Time for OCR intervention by Dr Cullen

Alan Bollard's indecision over OCR a worry to NZ INC
Bollard sits on his hands

Related Amazon reading



The Movement of Interest Rates, Bond Yields And Stock Prices in the United States Since 1856 by Frederick R. Macaulay
Buy new: $80.00
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c Share Investor 2008