UK Chicken Supplies Struggle for KFC

Feb 2018. KFC restaurants in the United Kingdom are struggling with chicken supplies following a change of vendor. ( MGN/Famartin CC BY SA 4.0 )

(Bloomberg) -- Yum! Brands Inc.’s KFC warned that a supply-chain breakdown that has shut more than half of its 900 U.K. outlets would persist for the rest of the week, continuing to deprive fans of their fried-chicken fix.

KFC said it’s working with new logistical partner Deutsche Post AG to solve a problem that began over the weekend, leaving only 430 British shops with any chicken to cook as of Tuesday. About 80 percent of the brand’s U.K. eateries are franchised.

“We anticipate the number of closures will reduce today and over the coming days,” KFC said in an emailed statement Tuesday. “However, we expect the disruption to some restaurants to continue over the remainder of the week, meaning some will be closed and others operating with a reduced menu or shortened hours.”

KFC overhauled its U.K. chicken supply chain in November by replacing logistics provider Bidvest Group Ltd. with Deutsche Post’s DHL, better known for delivering books and toys to online shoppers’ homes. At the time, the new supplier described the partnership as “groundbreaking” and said it was “committed to setting a new industry benchmark” in service.

Stifel analyst Chris O’Cull estimates that the roughly 750 KFC outlets earlier affected by the chicken shortage, or about 3.5 percent of the brand’s global total, generate daily sales of $2.1 million.

KFC, which previously said it picked DHL for its expertise in other industries, this week blamed the chicken shortage on “teething problems” with the new arrangement, as the fast-food chain’s woes hatched a flurry of poultry-related puns in British newspapers.

DHL managing director John Boulter apologized in a statement for the inconvenience and disappointment caused to KFC and its customers. The company’s appointment was driven by KFC’s desire to cut costs and led to 255 job losses, according to trade union GMB.

“Bidvest are specialists –- a food distribution firm with years of experience,” GMB national officer Mick Rix said in a statement. “DHL are scratching around for any work they can get, and undercut them.”

 

Copyright 2018, Bloomberg News

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