Supply chain farce dragged KFC’s UK sales down 9% in Q1

The chicken supply crisis that rocked KFC’s UK operations earlier this year has predictably come back to haunt parent company Yum! Brands by dragging down its first quarter sales.

Q1 sales from the fast food giant, which also owns Pizza Hut and Taco Bell, grew just 1% for the three months to March 31, compared with the 2% that analysts were anticipating. It also ranked as the company’s slowest growth rate in four quarters.

KFC’s UK sales plunged 9% during the quarter, one of only two KFC territories that registered a year-on-year decline, with reports suggesting the UK would have grown 3% without the shortage. Overall KFC sales plunged to $658m (£486m) in the period, from $732m (£541m) last year.

The UK is currently KFC’s sixth most important region from a revenue perspective, contributing 6% of its quarterly turnover.

Reuters reported that shares in Yum! fell 5% after executives said lingering concerns at KFC UK would mean the current quarter ends up being “the worst” of the year.

And it said KFC would have recorded a 3% growth in same-restaurant sales had it not been for the supply farce in the UK, where it has 871 restaurants.

Reports speculated that the slowing growth means Yum would likely have ceded market share to McDonald’s and Domino’s Pizza, which both recently reported higher quarterly sales rises.

Hundreds of KFC stores were temporarily closed in February when KFC switched logistics providers from Bidvest to DHL. Some restaurants were forced to serve limited menus until the problem had been resolved.

Crisis-hit KFC admitted plans to transform supply chain were “ambitious” three months ago

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