Second-Generation KFC Franchisee Operates 36 Restaurants with Third-Generation Franchisee Family and an Eye on Growth

Wednesday, December 16, 2021

2022 will mark 70 years since Colonel Harland Sanders first began franchising his now world-famous secret recipe of eleven herbs and spices that would become known as “Kentucky Fried Chicken” in 1952. There are now over 24,000 KFC outlets in more than 145 countries and territories around the world, but KFC’s franchise roots go back to humble beginnings when the Colonel realized that the real secret to his secret recipe was franchising. But it wasn’t easy. With little or no success selling his recipe at The National Restaurant Convention in Chicago, he decided to hit the road – literally. 

Sanders traveled throughout the country searching for restaurant owners interested in acquiring the franchise rights to his chicken recipe and adding it to their own restaurant menus. This time, he made some headway. Per their contract, franchisees paid Sanders a royalty of “5¢ per head of chicken” in exchange for the secret recipe and a coveted pressure fryer large enough to fry 2 chickens. KFC’s early success could soon be found in established cafés and restaurants where customers were amazed by the taste of this new creation and lined the streets outside waiting for the opportunity to buy it.

 

Chuck Schoenhofer, owner of Kau Kau Korner in Wichita, Kansas, soon after became one of the first Kansas franchisees. Quickly seeing the success of the Colonel’s creation, Schoenhofer changed the name of his restaurant to Kau Kau Kentucky Fried Chicken in 1960 and expanded to two new locations. Then, in the mid-60’s, he changed the restaurants over to full Kentucky Fried Chicken franchises and sold 9-piece buckets of chicken for $2.25. 

Chuck’s son, Denis Schoenhofer, grew up in the business that his father began and became a second-generation KFC franchisee in 1993 and now owns 36 restaurants in Kansas, Oklahoma, Texas, Colorado, and New Mexico, working side-by-side with his daughter and son, Samantha and Cameron, who represent the third KFC generation. While Chuck passed at the age of eighty-five in 2006, Denis and his family carry on Chuck’s 46-year franchisee legacy and their commitment to Colonel Sander’s vision dating back 70 years. 

Growing up in Wichita, Denis Schoenhofer thought of the Colonel as a member of his extended family as it was nothing unusual for this American icon to regularly visit their home and attend their dinner parties. One memorable day, the Colonel accompanied his dad to pick up Denis and his siblings from school and the pandemonium that erupted among the teachers, students, and parents was nothing short of the frenzy of an Elvis concert. Later, the Colonel emphatically told Chuck, “Never do that to me again!” 

Denis and his brother, Mark, made their bones at the ripe ages of 12 and 13, when two cooks one day walked out of their dad’s Kau Kau Korner. Having already learned how to cook chicken in the Colonel’s patented pressure fryer, they took over the kitchen and never looked back. At $5 a day, they could add a day’s wages to their feelings of accomplishment and satisfaction for stepping in and helping their dad out. 

After college, Schoenhofer began his first role as the manager of his dad’s KFC in Augusta, Kansas, which lead to supervising 5 additional stores in Kansas, and then 3 more. At that point, he decided to chart his own path alone, acquiring his first 4 stores in the panhandle of Texas. 

It’s at this moment that Schoenhofer came into his own. Through the guidance of KFC business coach, Mike Koeninger, Schoenhofer was strongly encouraged to acquire distressed or bankrupt stores and markets – and so he did. He was an avid learner and quickly embraced the challenges of restaffing, reorganizing, and remodeling each of the stores within the first 12 months in Wichita, Amarillo, Abilene, Tulsa, and outlying Dallas markets. Still today, Schoenhofer continues to work with KFC in its quest to reinvigorate distressed markets, holding to the same discipline that marked his early years. In the last year and a half, Schoenhofer has acquired flagging stores in El Dorado and Great Bend, Kansas, and has built 2 new stores in Pueblo and Canon City, Colorado. In all, he has built 12 stores from the ground-up, and remodeled countless others in a 5-state region. 

Early on, as he began taking over distressed stores, Schoenhofer saw the need for innovation. To drive traffic and transactions in these markets, he created a chicken fried steak special and a 2-piece meal special that would be thought of as commonplace today. And yet, they were groundbreaking in the 1980’s. Some Texas locations would easily average over 1500 chicken fried steaks per day and Tulsa locations would regularly average 600 2-piece meals in the once-bankrupt market. Schoenhofer’s innovative specials continue on in the minds of customers today, as they seek out the balance of price, convenience, and value on a daily basis. 

The key to a franchisee’s sustainability is taking new steps towards attracting a new on-the-go customer looking for convenience. Today, while KFCs are undergoing considerable change with the technology-driven online delivery platforms and digital innovation through the new KFC app and KFC.com, Schoenhofer works in restaurants every day and can often be seen in the back-of-the-house breading and frying chicken, as he was taught by his dad some 40-years ago. The business has changed in many profound ways since Chuck’s early days, days when there were no drive-thru windows or cell phones. But the Schoenhofer family is still guided by their founding principles that will direct the growth and expansion of future generations. 

PERSONAL 

First job: Like a lot of kids, I had a lawnmowing business, but my first two real jobs were working in menswear clothing stores. I was a real clothes horse back then. 

Formative influences/events: You could say I grew up in a “franchisee household.” My father, Chuck, was one of the first KFC franchisees in Kansas, back in 1959. In fact, Colonel Sanders was a regular visitor in our home – it was just no big thing back then. Of course, it was a big thing to our neighbors and friends because he definitely had celebrity status. 

Key accomplishments: In my late 20’s, after working for my dad for several few years, I took the leap and went out on my own. I was fortunate enough to purchase several underperforming KFCs in the panhandle of Texas. Looking back, that was an important stage of my life. 

Biggest current challenge: As with so many others today, it’s definitely the employee shortage. A close second is the inflation we’re seeing in both the price of goods and wages. 

Next big goal: Expansion of new restaurants. As KFC approaches 5,000 units in the US, there is a new emphasis on non-traditional formats in both urban and non-urban environments. We are actively looking at it from all angles and see expansion as a great opportunity. 

First turning point in your career: Early in my career, my family was going through some tough times, so I made the difficult decision to go it alone. Necessity is the mother of invention and I quickly learned on my own how to surround myself with talented people. 

Best business decision: As I learned how to bring in new people, I discovered that hiring a team with different skills than mine meant that I could build a pretty formidable team – even if we were in our 20’s. 

Hardest lesson learned: Not to grow too fast, especially when your eyes are bigger than your stomach. 

Work week: My work week has never followed a set pattern. Last week, I was sitting in on a board meeting one day and was tiling a kitchen the next. After all these years, I realize it’s how I’m wired. 

Exercise/workout: My daily regimen can include biking, running, weights and playing pickle. Rarely do I miss a day or I feel out of sorts if I do. 

Best advice you ever got: I had a music professor in college named George Gibson who told me, “It’s all in how badly you want it.” His advice then forced me to ask myself “Why do I want it?” 

How do you balance life and work: Creating the right balance became easier as I grew older and more mature, and as my kids grew older, too. But it’s important to find that right balance while you’re still young and healthy. 

Guilty pleasure: Horse racing – owning and racing horses. 

Favorite movie: Actually, I have three: Night Shift, Elephant Man, and Goodfellows. 

What do most people not know about you: My first major in college was Music Theatre. 

What did you want to be when you grew up: I either wanted to be the guy at the gas station who cleaned windows and pumped gas, or the Wonder Bread/Hostess man who delivered twinkies, pies, and bread. 

Last vacation: My wife, daughter, and I spent a month in Florida a couple of years ago while my daughter trained and played competitive tennis. We went to Del Ray, Coconut Grove, the Keys, Miami, everywhere. 

Person I’d most like to have lunch with: Kris Kristofferson. He has a great story and is so talented – actor, singer, and an incredible songwriter. I have so many questions I’d like to ask him. 

Pet peeve: I can’t stand dishonesty. 

MANAGEMENT 

Business philosophy: It comes back to my same music professor, George Gibson, who taught me to have a vision and to never give up on that vision. Have a dream and the persistence to stick to it. 

Management method or style: The harder you try, the luckier you get. You have to be willing to take a risk; it’s what makes a franchisee. 

Greatest challenge: Getting this company off the ground. It wasn’t easy. 

How do others describe you: I’ve often had people tell me that after getting to know me, “you aren’t the person I thought you were.” I’m assuming they meant for the better! 

One thing I’m looking to do better: To create larger opportunities for more employees. 

How I give my team room to innovate and experiment: It’s important that I give my team the autonomy to make their own decisions without micro-managing them. 

How close are you to operations: I’m in restaurants every single day and still bread and fry chicken on a regular basis. 

What are the two most important things you rely on from your franchisor: 1. Marketing 2. Innovating new products. 

What do you need from vendors: One of the most important relationships you can have is with your vendors. There are certainly more vendors than ever before, so it’s difficult but it’s so worth it. 

Have you changed your marketing strategy in response to the economy: Yes, and that strategy revolves around the importance of attracting new, younger customers. The KFC app, Quick Pick-up, and our delivery partners enable us to introduce new customers to our brand. 

How do you train and retain: It’s critical to make everyone feel like they are a part of a team and are needed and that we can’t live without them, and we honestly can’t. 

How do you deal with problem employees: It’s important to identify the problem, but it’s even more important to identify the root cause of the problem and to address it. 

Fastest way into my doghouse: Showing a lack of honesty or integrity. 

How is social media affecting your business: We heavily rely on social media as it often provides us with insight and feedback on areas that need improving. We have also found that it’s a place where customers share their appreciation and positive comments and gives our team members encouragement. 

How do you hire and fire: Despite the shortage of workers out there, every day we are driven to “hire better” and look for individuals that want to grow, improve and are willing to work. We are a company of second and third chances, but the truth is that we’ve given individuals even fourth and fifth chances that have truly paid off. 

COVID-19 

What are the biggest impacts of Covid-19 on your business: The supply chain issues have been devastating in so many instances. The shortage of workers within our company, certainly, but the shortage of workers for our vendors has caused so many headaches and continues to do so. 

How have you responded: I serve on the KFC Restaurant Supply Chain Solutions board and have had a front row seat to many internal and external challenges. Our role is to anticipate and find solutions as quickly as possible. 

What changes do you think will be permanent: Covid will never go away permanently. We will be dealing with challenges for the foreseeable future and are not interested in temporary solutions and instead are looking at long-lasting solutions. 

BOTTOM LINE 

Annual revenue: Exceeds $40M 

2022 goals: Our goal in 2022 is to continue to identify market opportunities and build new free-standing restaurants. 

Are you experiencing economic growth in your markets: Yes, definitely. We have seen an increase in sales in a number of the markets that we operate. 

Growth meter: How do you measure your growth: Growth is built on exceeding same stores sales and continuing acquisitions and new builds. 

How is the economy in your regions affecting you, your employees, your customers: In our region, we are experiencing the very same challenges and demands that many restaurateurs are experiencing. In many regions, it’s feast or famine. 

How do you forecast your business: We forecast based on commodities, inflation, LY sales, market conditions and the national advertising calendar. 

What are your best sources for capital expansion: Our bank is our best source. We expand through our company’s capital in conjunction with our bank, Intrust Bank, with whom we have had a thirty-year relationship. 

Experience with private equity, local banks, national banks, other institutions – Why/why not: We have experience with national banks but we primarily receive lending from our friends at Intrust Bank. 

How do you reward/recognize top-performing employees: We are big believers in incentives, recognition, and awards. Competition plays an important role as it is the catalyst for top performers rising to the top. 

What are you doing to take care of your employees: Many of our employees have been with us for fifteen, twenty, some even thirty years. Wherever our employees find themselves at any given time, we mentor, encourage, coach, support, and stand behind them in many different ways. Honestly, it’s difficult to think of ways in which we haven’t taken care of our employees over the years. 

How are you handling rising employee costs (payroll, minimum wage, healthcare): On an ongoing basis, we make daily decisions that ensure our own competitiveness in the workplace. 

What laws and regulations are affecting our business and how are you dealing with this: As the Covid situation seemingly changes on a daily basis, we are more clearly connected with our franchisor than ever before for daily direction. 

What kind of exit strategy do you have in place: My father continued to work in this business well into his 80’s. I can’t see not following in his footsteps, particularly with Samantha and Cameron in their owner-operator roles in many of our new acquisitions. I’m not going anywhere. 

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