KFC “distribution crisis” saw store sales fall 6.8pc

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KFC has described supply and distribution issues last year resulting from its contract with DHL and QSL as a “distribution crisis” after it led to a 6.8 per cent decline in same store sales growth.

In its annual report for the year-ending 23 December 2018, filed to Companies House, Kentucky Fried Chicken (Great Britain) said: “2018 started with a strong same store sales growth performance in the weeks leading up to the distribution crisis.

“Closure of stores and operating on a limited menu during the height of the distribution crisis resulted in an overall sales decline for the year with the same store sales growth -6.8 per cent (2017: 3.8 per cent). The company steadily recovered transactions through the remainder of the year returning to positive sales growth by year end,” it added.

In October 2017, KFC awarded DHL and QSL the contract for supply and distribution of food products, packaging and consumables to its UK restaurants. However, during its first weeks of operation in February 2018, KFC was forced to close some restaurants and operate others under a limited menu as a result of “supply availability issues”.

A month later KFC signed a long-term agreement with incumbent Bidvest Logistics to supply to up to 350 of restaurants in the North of the UK.

In the UK contract, DHL Supply Chain managed the physical warehouse and distribution service, while QSL handles operational purchasing, demand planning and stock management.

During the first week of operation DHL was forced to apologise, citing “operational issues” as the reason for incomplete or delayed deliveries while QSL said it regretted the “inconvenience caused”. In July of this year DHL Supply Chain admitted that the start-up of the new service had had a “significant impact on profit” in financial year 2018.

By Christopher Walton

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