News Risk Management 28 Feb 2018

KFC in the UK serves up many risk management lessons, even if no chicken

28 Feb 2018

As many as two-thirds of KFC 900 eateries in the UK were closed last weekend as it was unable to serve up the main thing diners expect to eat at the chain-chicken-due to a major supply-chain hitch.

The company has said the cause is related to its recent change in delivery contractor from the longstanding Bidvest to DHL, which had encountered “teething problems”.

DHL has since issued an apology as cited in local media:

“Due to administrative issues a number of deliveries have been incomplete or delayed.

"We are doing our utmost to rectify the situation as soon as possible and apologise for any inconvenience this may have caused.”

Supply chain complexity

KFC’s “Original Recipe” chicken is known for its use of only fresh chicken. The use of fresh chicken is heavily regulated due to the health consequences and potential of food poisoning if not handled properly, compared to frozen chicken.

The restaurant chain imposes even more stringent handling conditions than those required by UK law. This has added more complexity into the supply chain, said logistics consultant Marcos Clowes, cited in the Financial Times.

According to the FT report, DHL had planned to overhaul KFC’s UK distribution when it won the contract last year, and intended to use technology from another European partner, Quick Service Logistics to deliver fresher produce to KFC branches, which would reduce turnaround times and emissions from logistics to a net of zero over the period of the contract.

The report noted that following the KFC chicken shortage, there have been questions about DHL’s decision to opt for a single, new and untested distribution centre, which also had implemented new staff and technology. In contrast, the previous distributor had about three sites from which it despatched the chickens, fries and sides.

Questions have also been raised over KFC’s decision to make the switch in contractor during the UK school half-term holidays, a particularly busy period for business. The restaurant has explained that its decision to switch contractors was made for reasons such the latter’s focus on innovation, quality and sustainability.

Risk management

One positive outcome of the chicken shortage has been the revelation of the strength of KFC’s brand, with the public dismay and media coverage revealing the extent of demand of its chicken in the UK, the restaurant chain's fifth largest market. Even the police were reported by local media to get public queries about the shortage.

KFC has also garnered acclaim for its public relations efforts, where its use of cheekiness and wordplay worked out well—which is not always an easy thing to do in sensitive or crisis situations.

Last Friday, KFC released an ad with an empty chicken bucket with the image of Colonel Sanders—KFC’s founder and brand image—accompanied by three letters “FCK”, a play on the three letters that make KFC. The acronym suggests a profanity despite the absence of a key vowel--an expression of frustration or outrage that people feel in missing their fried chicken fix.

Other interesting taglines KFC used were “We’re sorry”, “A chicken restaurant without any chicken. It’s not ideal” and “It’s been a hell of a week.” Tweets from its official account included “There’s gossip in the hen house, here’s the facts…we changed our delivery partner last week—Valentine’s Day actually but Cupid’s arrow wasn’t firing for us.”

Some other restaurants also joined in the PR game, with Burger King offering a year’s supply of free food to an irate KFC patron ranting about her having to turn to Burger King instead.

The risk management lessons from this KFC fiasco have shown how good reputation management--including good PR--can help maintain or even improve the image of a company during a crisis.

The other question that has not been answered is--what is the liability and insurance fallout from this? This remains to be seen.

| Print | Share

Enter the code shown above in the box below.

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.


Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.

Other News

Follow Asia Insurance Review