KFC closing 80% outlets in UK and Ireland – what's meaning that from business perspective?


www.businessinsider.com/kfc-shuts-750-uk-stores-in-chicken-logistics-crisis-2018-2
On short:
Delivery problems force KFC shutdown across UK, Ireland due to DHL delivery logistic chain blockage, where there is mainly one big warehouse in the city of Rugby, a town in central England from where all the chicken is distributed country wide.
More than 750 out of 900 KFC outlets that is 80%, were closed due to lack of chicken and other primary ingredients. They’ve been closed for few days by now, and there is not in sight, when it will reopen.
Few months ago, KFC switched the logistic transport from a company named Bidvest (who had to fire 255 logistic experts employees). Bidvest company has many warehouses distributed in the country, as opposite with DHL. When the DHL center in Rugby didn’t worked properly, it affected the entire business of KFC in the UK and Ireland.
The entire affair is interesting from business point of view.
Imagine, you are one entrepreneur out of those 900 in UK or Ireland who bought the KFC franchise. According with the franchise contract, you are obligated to buy KFC prepared chicken, primary ingredients, etc.
Now, you put yourself in the line, take out a bank loan, maybe put all of your life savings, then rent the location, then hire the staff, etc, then you got this.
Each year you need to pay the franchise fee, the royalties to KFC, etc. Now your business has large chances to be ruined by the franchisee itself, because they, KFC, decided to make a buck, by renouncing to the services of the logistic transport company, named Bidvest, for the probable cheaper services pit by DHL.
Now, I read many information, that the KFC management were warned that they are making a mistake. Even those managers, received some hair raising reports about DHL capacity and stuff, but it seemed too late to revert to Bidvest.
Now, this incompetent management team at KFC, which weren’t able to assess the logistical risk and find a counter for it, now are trying the ease the chaos they created, with some shoddy palliatives: creating a website where the customers, could find the closest NOT CLOSED KFC around them and giving assurance that the “colonel is working to address the situation”.
Would be interesting to see if KFC will recover after the myriad of lawsuits this affair will trigger, will they charge the closed KFC outlets with the known royalties and fees, etc?
But even stranger and most interesting is, how come a company like DHL, can take a huge contract like that w/ KFC, w/o being 90% they can deliver.
Where is the redundancy ?
Apropos redundancy, Bidvest has many warehouses distributed in the country, while DHL has ONLY ONE big warehouse in Rugby, at which the logistic chained malfunctioned and caused all this collapse.
What might happened at DHL? I might have an idea but want to hear other people insights?
 
 
AC

574 views