Crisis Management: Key Issues Faced by KFC and How It Handled the Crisis

This article discusses the key issues faced by KFC during a crisis and how the company managed to handle the situation. It explores poor planning, contemporary management, and vulnerability in the supply chain as the main issues. The article also highlights the steps taken by KFC to address the crisis, including communication strategies and re-engaging with suppliers. Overall, it provides insights into crisis management and the importance of effective planning and communication.

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Crisis management
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Introduction
A crisis is a major, unpredictable event that threatens operations of a company,
customers, staff, legal, financial status and reputation of an organization. Furthermore, a crisis
can strike any company at any time regardless of size or notoriety and can affect an organization
unexpectedly. Research conducted by Al-Jenaibi (2019 p.89-107) shows that over 30 companies
face crisis annually and each company uses a different strategy to manage its crisis situation. A
Crisis is experienced in various forms such as allegations of misconduct, product recalls, layoffs
and strikes. Although some crisis is termed as “small”, every crisis has the potential of damaging
an organizational reputation as well as its market share. Several companies have lately faced
crisis including united airline (customer care failure crisis) Equifax (data breach crisis) and
Kentucky Fried Chicken (KFC, Chicken shortage crisis.). Therefore, the paper seeks to examine
the key issues faced by KFC Company and how it managed to respond to the crisis.
Overview of KFC’s Crisis
KFC, short form for Kentucky Fried kitchen, is the second largest fast food franchise
restaurants after Macdonald Company. Colonel Sanders founded the company in 1952 and it
spread to various countries globally including United Kingdom (UK), Malaysia, China and
others. Despite its success in the industry for a couple of years, the company has faced many
crisis with UK’s food Chicken crisis being the latest. In 2018, KFC closed more than 300 stores
(half of its 900stores) in the United Kingdom after the company that literally have “chicken” in
its name ran out of chicken (Baryannis, Dani, Validi and Antoniou, 2019 p.53). The crisis
erupted in mainstreams and social media who enjoyed the irony of the shop as some termed it as
“a chicken shop without any chicken”. The shortage of the chicken arouses form delivery
problem after the KFC’s supply chain switched its contract to DHL Company that uses software

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developed by the firm Quick Service Logistics (QSL). Furthermore, DHL Company had
previously experienced “administration problem” and therefore a number of deliveries were
delayed and others canceled. The crisis favored MacDonald Company (main competitor of
KFC’) that gained competitive advantage and fully benefited from the crisis as loyal customers
and new customers vented on Twitter and later moved to McDonald. After the crisis, KFC’s ran
an apology advertisement to its customers for the inconvenience it caused. In the apology
advertisement, KFC Company advertised using a brand’s core young consumers while taking the
ownership of the problem as a way of emphasizing it was a short-term problem to be resolved as
soon as possible. Later on, media and customers applauded the company after it restored the
crisis within the shortest time possible and it became an example of how other companies should
handle a similar crisis in the future.
Key issues faced by the company
Poor planning was an issue that was associated with crisis eruption. If the KFC had a
good plan on its supply chain, the problem could not be experienced to that extent. The impact of
the situation could be minimal and could not affect organizational reputation to that extent.
According to Allen, McLees, Richardson and Waterford (2015 p.1) “failing to plan is planning to
fail” and therefore KFC could have planned for a better supplier or laydown alternative supply
chain in case DHL fails. Furthermore, the plan of management to switch supplier was the poor
decision management made with the consideration that DHL has had a bad reputation in the past.
For example in November 2018, DHL Company engaged in a contract with QSL (a food service
company) and after a short time the company posted on its website, “we are regretting the
interruption of supply chain and we are working to rectify the situation as soon as possible”. The
statement clearly indicates that DHL Company has spoiled the supply chain integrity that was

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smoothly running before it was disrupted. Although the main reasons that inspired KFC to
engage DHL in its supply chain, scholars have suggested that corruption, poor decisions and
poor planning by strategic management inspired the organization to switch its main suppliers
resulting to the crisis.
Contemporary management was the main problem the Company faced at the time of
crisis. The inability of the company to have an effective contingency plan for handling this type
of risks worsen the scenario. Furthermore, if the Company had effective crisis management and
advanced contingency plan, the breakdown of DHL delivery systems could not have affected the
company to the extent of losing millions of money within a week. With the United Kingdom
producing 2.5 million chicken every day (Viva, 2019), it means the Chicken is enough to cater
for every company operating under the food industry. Therefore, KFC running out of chicken on
its chain should be blamed on vulnerabilities of management to strategize on the “business
continuity” in case different types of crisis arises in the company.
Vulnerability in supply chain and policies of the company was also a key issue faced by
the company. If the company’s policies and procedures allowed the company to have a two-
supply chain at one time, it could not experience the delivery problem. For example, if Bidvest
Group (a specialist food distribution group that was supplying chicken to KFC before DHL) was
maintained to deliver a particular portion of Chicken and DHL to deliver the remaining portion,
there could be balanced chain and ,therefore, the failure of one supply chain could not affect the
entire company’s operations. Furthermore, before the management switched contracts it did not
have an effective comparison between the two deliveries (Bidvest and DHL). For example,
KFC’s company could have assessed the negative consequences the company was likely to face
with the fact that DHL had one centralized warehouse as compared to Bidvest’s six warehouses.

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Having a distributed supply chain in context to the “KFC crisis” context means Bidvest’s supply
chain was fast and convenient in supplying chain because a delay in one warehouse could not
affect deliveries of products to other regions unlike DHL where centralized warehouse delayed
the deliveries with Lorries queuing for several hours. Therefore, lack of revising policies
governing supply chain to accommodate diverse suppliers in the supply chain significantly
facilitated to the crisis.
According to research conducted by Zhou and Xu 2012 (p.672-692), making a change to
a contract where frequently is only individual workforce and current suppliers who understand
the process of the supply chain, it poses a huge risk to the company as it can create loopholes in
the organizational supply chain. Therefore, operational issues were also issues associated with
the company as the KFC failed to honor Bidvest Company after they had worked since 2001.
Obviously, it was hard for DHL Company to cope with the new environment and deliver
effective operations with the consideration that the company had little knowledge of the UK’s
chicken market. On his interview, GBM union officer Mick Rix emphasized that the
management was to blame themselves because they “switched contract from a "very well
respected, specialized logistics provider that deals with multi-temperature shipments of frozen
food" to "a provider who's not got a track record in this area" (Smith, 2019 p.1). Furthermore,
just after 4 days of the contract switch, managers started complaining about the delay in
deliveries which clearly shown that internal operations had some conflicts of the supply chain
and some were against the “switching” deal while others supported the deal. Furthermore, GBM
union officer Mick Rix also claimed he warned the management about the problem when they
switch the suppliers as they were aware of the DHL Company lacking competent staff, enough
number of drivers and the large multi-temperature depot.

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How KFC’s company managed to handle the crisis issues
The first step of crisis management involves acknowledgment of the crisis in order to
design an effective communication method or channel of addressing the issue to concerns
internal and external stakeholders. KFC Management acknowledged there have greatly hit by
crisis as they advertised on the internet and other media outlets. The advert read that “chicken
restaurant without chicken” was meant to enlighten the public as well as attracting the attention
of customers about the shortages of chicken. Furthermore, KFC tweeted “Yes, a chicken
restaurant without chicken is not ideal” as a way of recognizing the crisis and showing they were
working on the situation. Research conducted by Jaques (2010 p.9) shows that rapid recognition
of crisis, whether unfolding and impeding is important as it assists the company to convey a
sense of corporate responsibility, capture authority and reassurance of the key internal and
external stakeholders affected. For example, when the United States Airlines was hit by crisis
concerning failures in the customer service, the company recognized the crisis as a “threat” to the
customer safeness and negotiated with authorities including policies to take action against the
airline staff. The recognitions emphasized the company conveyed social responsibility it was
only a mistake by one of their staff. Furthermore, the company significantly loosed its popularity
as videos of a passenger with a bloodied face, who paid for his seat being forced out of the aisle.
The CEO recognized the crisis describing it as “re-accommodating the customer and sent an
apology to the public” reassuring them the issue is being addressed. The same case applied to
KFC they recognize the crisis first as having negative impacts to the customers hence paving a
way to the crisis management who looked deep into the issue and contributing their ideas of
handling the problem and restoring back the operation of the company.

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KFC management managed the crisis by identifying vulnerabilities that existed in the
supply chain and re-engaging Bidvest in its supply chain before DHL resolves its supply chain
crisis. The re-engagement of Bidvest Company assisted in the restoration of the business
operations with 97% out of 900 restaurants beginning its operations although there well-limited
menus before DHL assisted the company to get its business as usual (Priday, 2019 p.1).
Furthermore, with the company reverting back 350 of the restaurant to Bidvest and QSL and
DHL operating the remaining restaurants were a short-term and long-term strategy of dealing
with the problem.
The Company managed the crisis by providing effective communication with its partners
and customers. The company strategy of using the social media as a channel for proactive
communication allowed the KFC to deal with both media and consumers concerns and wrest
back the control perception over the situation it had no control over it. On the tweet “we’ve got
the chicken, we’ve got the restaurants, but we’ve just had issues getting them together.” was a
way of negotiating with loyal customers of the company to remain positive while the Company
resolves its problem. Furthermore, the communication ensured customers that all operations
would resume it is only a matter of time and management.
The communication team also applied a sense of humor in the advertisement that
captioned attentions of loyal customers and further encouraged them to remain loyalty at the time
of crisis. KFC communication team tweeted “Not having chicken is troublesome but it’s not life-
threatening” to emphasize that at the moment they had nothing they could do to change the
situation although they were significantly working hard to resolve the crisis. In order to maintain
brand identity and gain the attention of its consumers, the company changed the brand’s logo and
pinned the human face in KFC chicken. Research conducted by Sheehan and Morrison, (2009

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p.40-43) shows that many advertisements fail to gain consumers attention because of constantly
changing of creativity. Therefore, changing of creativity by KFC was a way of regaining
customer’s confidence.
The goodwill the company build from its social media strategies provided the partners with
confidence and platform that introduced “FCK” bucket. The rearrangement of the name “KFC”
to “FCK” was a way of showing sorry in a human and bold manner. Furthermore, it signified the
public that the company was true to its brand. Therefore, the social media strategies apology was
a master class in PR crisis management.
Conclusion
KFC’s authentic, clever and borderline response indicated that the company clearly
understood brands core consumers and key stakeholders and therefore it was likely to change
their mind after the brand faced the crisis. Furthermore, KFC knew its audiences reactions and
therefore it followed the crisis with language and tone that was consistent hence regaining
customer’s confidence.

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References
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Artificial Intelligence in Supply Chain Risk Management. In Revisiting Supply Chain Risk (pp.
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Jaques, T., 2010. Reshaping crisis management: The challenge for organizational design.
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