The fast food chain KFC was warned it would face delivery problems months ago, it has emerged, as the company tries to grapple with a worsening chicken supply crisis that has forced most of its outlets to remain closed.
More than 640 KFC stores are currently shut after the company switched deliveries to a cheaper service. An updated list showed that the number of outlets remaining open dropped from 338 on Monday night to only 254 at noon on Tuesday. And for a second day KFC gave no indication of when operations would be back to normal.
The GMB union said it had expressed major doubts about KFC’s decision last October to switch its deliveries from the food delivery specialists Bidvest Logistics to DHL.
Mick Rix, the GMB’s national officer, told KFC that it could face a repeat of supply problems that hit Burger King when it ditched Bidvest Logistics in favour of DHL six years ago.
He said: “We warned them a few months ago. I wrote to KFC. I alluded to Burger King trying to cut costs and ending up with poorer quality service and poorer distribution. They had shortages too, but not on the scale we’re seeing now at KFC. Within six months they [Burger King] were pleading with Bidvest Logistics to take it back.”
Rix claimed KFC’s current crisis stemmed from dropping a supply system based on six warehouses run by BL to a system of one distribution centre in Rugby, run by DHL. He said conditions at the Rugby warehouse were “an utter shambles.”
Rix added: “They took a lower tender with a load of promises that have not materialised. The system can’t cope. My sources say KFC execs knew three weeks ago that there was a major problem with DHL. They were concerned about the set-up and the systems after testing. And some of the answers from DHL were completely strange and worrying. It was clear it was going to fall flat on its face.”
He urged KFC to go back to BL to help resolve the problem, despite its decision to make 255 staff redundant since losing the KFC contract.
Speaking en route to a meeting with BL at its offices in Banbury, Rix said: “We’ve never had redundancies at Bidvest before on this scale. Some of those staff would come back. It is the only way of resolving the problem.”
He added: “DHL will not be able to provide the service they quoted for. Even if industry experts piled into that depot now to sort out the mess at Rugby, it would take weeks and even months to sort the problems out.”
“We think that with the dedicated professionals that are already there at Bidvest and with new people and new vehicles, you could have a good operation up and running within a couple of weeks.”
Malory Davies, the editor of the trade journal Logistics Manager, said KFC would have to resolve the crisis within days. “Frankly, KFC can’t afford for it to go on for more than a few days. They have a whole load of franchisees who will be getting very angry,” he said.
Davies added: “This one is going to be a case study for business schools for years to come, it is really major. It is entirely possible to service the UK market from one warehouse, lots of people do it, but a contract of this size would be more of a challenge.”
KFC has yet to respond to the GMB’s claims.