Yahoo Finance How KFC got into a flap: 'Eyebrows raised' after disastrous switch in chicken supplier
John Boulter, managing director of retail at DHL Supply Chain UK & Ireland, said at the time of winning the contract it intended to “re-write the rulebook” on food service logistics for KFC, but appears now to have come unstuck.
DHL was arguably hampered at the start of the crisis by an incident beyond its control - the closure of the M6 motorway after a crash last week - but questions will now be raised about contingency planning for such an incident and whether KFC should have phased the contract over to DHL rather than switching it wholesale.
The fact its lorries were stuck in gridlock - causing some stock to become out of date - was unfortunate, but traffic on the UK's motorways is not an unusual occurrence.
The GMB union has claimed that it warned KFC the decision to hand the contract to DHL “to save money” would have consequences.
The union said the contract meant 255 redundancies were made at Bidvest because of the loss of the KFC contract. Bidvest could not be reached for comment.
"We intend to re-write the rulebook..."
Another industry expert highlighted the fact that supply costs had been rising and would likely do so again after the collapse of meat supplier Russell Hume yesterday.
“Restaurant supply is too high - hence a significant increase in discounting - but labour and food distribution supply appears to be going in the opposite direction,” the source said.
“I would expect prices of distribution to rise post-Russell Hume.”
KFC has managed to open more of its stores today - up to 430 by early afternoon - as chicken starts to arrive at its sites.
But even once every restaurants is up and running again, major issues will remain. How will franchisees be compensated? Will staff be remunerated given they could not go to work? And what plans will be put in place to make sure when the chicken crosses the road, it actually does reach KFC’s restaurants?
At the moment KFC and DHL have said little beyond the fact they are working to fix the problem but scrutiny is likely to remain on the Colonel for some time.
