KFC sees profits drop following distribution crisis

By James McAllister

- Last updated on GMT

KFC sees profits drop following distribution crisis

Related tags: KFC, Restaurant, Fast food, Fried chicken

KFC saw its turnover and profits plunge in 2018 following a logistics fiasco that at its peak saw more than 600 outlets forced to close temporarily due to a chicken shortage.

The fast food chain, which is owned by Yum! Brands, saw turnover fall 73% between 2017 and 2018, from £445.7m to £207.3m.

In the full year to 23 December 2018, profit after tax fell by 27.8% to £129.9m, down from £171.9m in 2017.

KFC said in the report that the chain started 2018 with a strong same store sales growth, but posted an overall same store sales decline of 6.8% for the year following the distribution crisis.

In February last year, KFC was forced to close more than two thirds of its restaurants for almost a week after “operational issues” involving the chain’s new distribution partner DHL led to a chicken shortage.

Problems with the delivery transition also led to many sites having to temporarily operate with a limited menu after reopening.

The report said the company returned to positive sales growth by the end of the year.

Looking beyond its sales report, the last year has seen KFC begin to implement a number of notable forward-thinking business ideas.

In June the chain trialled a new vegan burger​ in select restaurants in London, Bristol and Birmingham, which comprised a bespoke Quorn fillet with KFC’s famous ‘original recipe’ coating.

While in July it became the first fast food chain in the UK to sign up to the European Chicken Commitment​; an initiative that calls on brands to ensure greater welfare animal standards are implemented across the supply chain.

Meanwhile, in May last year, KFC also pledged to reduce the number of calories per serving in its meals by 20% by 2025​.

Related topics: Business & Legislation

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