In February 2018, KFC found itself in an ironic riddle as more than two thirds of their outlets in the UK had to close due to chicken shortage. Known as the origin of fish and chips, the country has developed a heart for fried chicken as well. According to Euromonitor International, the UK has the largest market for fast-food chicken in Europe. In fact, it is the fifth top market for KFC as it constituted 6% of its roughly US$24.5 billion in global sales in 2017. Hence, a collective disappointment from its loyal customers and a global news coverage were not surprising.
A customer complaining she had to go to Burger King instead, video can be found here.
The supply disruption had even involved the police and a lawmaker as people tried to seek help from them about the limited menu in KFC outlets. Global news agencies had a feast on the issue that choked UK operations covering angry customers complaining they were left with no choice but to have Burger King instead. While others mocked the fried chicken chain, the scarce supply had become a source of funny memes.
This kind of seemingly trivial incident can be funny but not to everyone, especially those who depend on the chicken stores for a living. According to a spokesman for GMB, a trade union, some staff in KFC franchises were missing out on shifts and had no idea when their stores would reopen. Furthermore, staff were reportedly advised to use their holiday entitlement to cover their lost working time. KFC announced that they would pay salaried employees as normal and staff on short-term contracts based on their average work hours in the past 12 weeks. However, this was only for restaurants that are directly owned by KFC. Franchisees, that cover around 80% of its outlets in the UK, were only encouraged to adopt the same policy but were free to seek their own independent advice.
Not a chicken and egg situation but what’s the cause?
The issues started to appear after DHL took over the deliveries from Bidvest Logistics, a food distribution firm, on February 14th, 2018. DHL, alongside Quick Service Logistics (QSL), won the contract for management of supply, distribution of goods, and packaging for more than 850 KFC outlets in the UK in 2017. In fact, this switch was not supported by a trade union as lost contract for Bidvest meant loss of 255 jobs. Albeit sorry for the opportunity lost for Bidvest employees, KFC believed that DHL and QSL would create 300 new jobs and that they have a reputation of “innovation in logistics” across industries.
In a rare happenstance, road accidents occurred at the three junctions in the vicinity of Rugby, Warwickshire, where the sole depot of DHL was located on its first day of contract. A collision took place on junctions two and three of the M6 involving seven vehicles, and another vehicular accident involving two lorries near junction one shortly after. With roads closed off for investigation and clearing up, trucks coming from the warehouse got stuck in the traffic soon after they left. With no other locations to distribute the supplies from, the delays that were first thought to be just “teething problems” became a system-wide crisis.
Two days later, KFC began to shut some of its restaurants and franchises as chicken failed to arrive. By February 18th, only 266 out of 870 outlets in the UK were open. DHL released a statement: “Whilst we are not the only party responsible for the supply chain to KFC, we do apologize for the inconvenience and disappointment caused to KFC and their customers by this incident”.
As the movement of the delivery trucks to and from the depot remained restricted, a consequential problem occurred – the chicken were spoiling. There had been reports of entire trucks of chicken were put to waste because the temperature regulator in the trailer was set incorrectly, or lack of staff and training. On top of that, DHL had to deal with the registration documents of their depot as the Rugby Borough Council found that the warehouse had been used before it had been registered.
Quality communication is one of the core elements of an effective crisis management, especially when getting the message across to hungry and angry customers. The fast-food chain set out two objectives in their public relations materials – a wide-scale public apology and a clear and honest explanation of their solution to the issue.
Photo taken from The Guardian
Signs posted on their closed stores said: “Sorry, we’re closed. We deliver our chickens fresh into our restaurants, but we’ve had a few hiccups with the delivery today. We wouldn’t want to be open without offering our full menu, but we’ll be back at the fryers as soon as we can.” A statement was also released on social media on February 17th that witfully used a riddle that everyone can relate to – Why did the chicken cross the road?, to capture the general situation.
Swinging away from the traditional crisis communication playbook, KFC’s media partner in the UK, Blue 449 was reportedly guided by the “three Hs” during this crisis, which stands for humility, humor, and honesty. Aside from their social media post, they decided to tap print media as they deemed it best to reach large minority of UK consumers. Furthermore, this medium is associated with higher trust metrics than online platforms. They selected The Sun and Metro to get to around six million combined readers.
The content? An apology that began with a controversial three-letter word “FCK”, an anagram of KFC’s brand name, marked on an empty bucket. The profanity was an acknowledgment and understanding of how their customers must have felt during the disruption. This was followed by regrets and gratitude for their team members and franchise partners, written in everyday language. “A chicken restaurant without any chicken. It’s not ideal,” teased by the ad. “Huge apologies to our customers, especially those who travelled out their way to find we were closed… It’s been a hell of a week, but we’re making progress, and every day more and more fresh chicken is being delivered to our restaurants.”
Photo of the “FCK” print ad from the BBC
Besides from being bold, catchy, and humorous, the PR team had also shown consideration for their customers as they ended the ad, published on February 23rd, 2018, with a link to a dedicated microsite: kfc.co.uk/crossed-the-road, where they can easily find the nearest KFC branch that was open.
The “FCK” print led to more than 700 press articles and TV discourses, reaching around 797 million audience and additional 219 million on social media users all over the world. A single press ad that delivered to more than 1 billion audience within three months.
Chicken done right
KFC’s crisis communication response made an effect on the public. Based on the data from YouGov BrandIndex, the positive attention the brand received from people had increased to 29% from the pre-crisis level of 7%. In addition, its brand impression score among consumers returned to -1 from -12, with pre-crisis score of -2. Clearly, the ad had successfully saved KFC from the brand damage and even improved its reputation.
More importantly, the “FCK” ad that won multiple awards, also lessened the tension in KFC stores among the employees and between the customers and staff. KFC’s Chief Marketing Officer, Meghan Farren, shared: “After we ran the ad, I think our team members felt supported and valued, and that their customers understood that it wasn’t their fault, and that the abuse shouldn’t be directed at them, but rather at the brand. That is what we wanted, to support our teams” (Ibid ).
KFC continuously restored its operations to normal, following the campaign launch. Committed to get back to business as soon as possible, they rehired Bidvest Logistics to deliver to 350 branches in Northern England and Scotland. This would ease the pressure on DHL’s Rugby warehouse.
It is inevitable, however, that the chicken brand’s sales suffered after the distribution crisis. KFC’s overall sales declined with the same store sales growth of -6.8%. Due to the crisis and refranchising initiatives of the company, its turnover sales fell from £445.7 million to £207.3 million, between 2017 and 2018. For the full year, the profit after tax fell by 27.8% from £171.9 million to £128.8 million.
A bucketful of learnings
Logistics is a pillar of successful food business. Oftentimes, logistics and deliveries are regarded as expense in a business, notwithstanding how tightly tied they are to service. Savings from changing third party contractor will mean nothing when your product did not reach the customer on time. In KFC’s chicken shortage, we saw how customers and franchisees depend on logistics to a great extent.
Conduct due diligence. A business connected to a third-party provider is open to potentially disruptive consequences associated with compliance, operation, and reputation. That is why it is important to review the supplier’s financial capability, commercial relationships, operational infrastructure and facilities, and business continuity among others before entering into a contract. KFC was, in fact, warned that it may face the same supply chain issue that hit Burger King when it cancelled Bidvest and chose DHL to cut cost. Had they become more thorough in assessing DHL’s reputation and capabilities, they would have anticipated this kind of disruption. Bidvest Logistics had six warehouses in its supply system, while DHL only had one distribution in Rugby.
Create a plan. DHL had a limited experience in handling perishable goods then. However, failures could have been avoided if there was a detailed plan on managing preparations and operations set up. They would not have to deal with the warehouse registration while the crisis was happening if things had been sorted out beforehand. Had they have business continuity plans, they would have been able to identify early on the risk of having just one depot for the delivery of fresh chicken all over the country.
Humor and humility may be the elixir of crisis communication. Humor in marketing campaigns is a sure way of attracting attention from the audience, although this does not work all the time as there is a risk of offending people as well. KFC was in a good position to incorporate humor in their response as customers had already begun to make fun of the brand through memes and comments on social media when the crisis was starting. Needless to say, it was the ad’s sincere apology that won the audience. KFC acknowledged their shortcomings, recognized the hard work of their staff and franchisees, and validated the frustrations of their customers.
Author: Lucil Aguada
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