The Strategist

KFC decides to save money and finds itself on the verge of collapse

02/23/2018 - 05:28

Fast food restaurants chain KFC faced a real crisis, which forced the management to close a huge number of restaurants in the UK. The problems started with a new logistics company: after the computer malfunction the chickens were left to rot in the warehouse, and the restaurants were empty. The unexpected closure caused a violent reaction from visitors - customers reached the police, demanding to find out why KFC is not open.

Marufish via flickr
Marufish via flickr
The crisis erupted on Friday, February 16, after the computer system of DHL (the system developed by Quick Service Logistics), responsible for managing orders and deliveries, failed. It was an unpleasant surprise for Kentucky Fried Chicken (KFC) and a bad first impression as the German DHL become a new partner of the fast food restaurants chain just a few days before. Earlier, the delivery of products was handled by the South African company Bidvest, which also serves KFC’s competitors - Friday's and Pizza Express.

As a result of a malfunction in DHL, the chicken meat that was destined for fast food restaurants was stuck in the logistics company's warehouse. Restaurants in the kingdom’s territory (there were about 900 of them in the UK and Ireland) were closed due to a lack of meat. Some restaurants kept working, but only with a limited menu. About half of the restaurants closed. KFC itself, however, decided that the glass was half full.

By Thursday the company managed to open almost 70 percent of its restaurants, and the media reported that the crisis is on decrease.

The temporary closure of restaurants led to the fact that KFC employees (a total of about 25 thousand people) were forcibly sent for a day off. In the period of downtime, according to the company, workers receive a salary. However, about 80 percent of KFC restaurants in the UK and Ireland work under a franchise, which means that they conclude their own employment contract with their employees. Therefore, it is unknown what will happen to the salaries of 19 thousand people.

The reason for such a pitiful situation was the desire to save on logistics. DHL offered the fast food chain a solution to serve all restaurants from one warehouse (the previous logistics company used several distribution centers to reduce risks).

A trade union reported that a few months before the "chicken crisis" they expressed concern about KFC’s decision to abandon the services of the former logistics company in favor of a cheaper counterparty. Specialists warned that the desire to save may end badly and lead to the fact that the quality of the company's services will drop.

The union reminded of a situation in which Burger King found itself several years ago: the company also decided to save and changed Bidvest to DHL. As a result, six months later it refused the German company’s services and fled to the South African operator.

Sources say that KFC management knew that there would be problems with the delivery of the product three weeks before the events: after testing the system, some DHL applications seemed "very strange and disturbing." The organization believes that KFC, like Burger King, will return to Bidvest.

The "chicken crisis" in the UK caused a storm of emotions in KFC fans. Some Britons fell into despair and attacked the police with questions. Law enforcement agencies had to recall that the fried chicken is not within their competence. To reduce the degree of stress, KFC launched a service that helps to find the nearest working restaurant. The police indicated this to the distressed consumers.


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