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Sat 5th Oct 2019 - Exclusive: KFC UK reports full-year like-for-likes down 6.8% as it feels impact of delivery saga
Exclusive – KFC UK reports full-year like-for-likes down 6.8% as it feels impact of delivery saga that shuttered 750 restaurants: KFC has reported its UK business saw like-for-like sales fall 6.8% for the year ending 23 December 2018 in a year where it encountered severe supply problems when it changed its third-party distribution that forced it to shut more than two thirds of its restaurants. Turnover fell to £207.4m, compared with £445.8m the year before as the company continued its refranchising push. The company also suffered a fall in sales as a result of 750 of its circa 900 sites being closed in February 2018 due to a mass chicken shortage. Some restaurants were shut for weeks and then operated with a limited menu as a result of “teething problems” with a new delivery partner – DHL in partnership with QSL – and KFC eventually went back to previous supplier Bidvest Logistics for about a third of its restaurants. KFC said sales steadily recovered during the year and returned to growth by the year end. Operating profit fell to £137.4m, compared with £188.0m the previous year while pre-tax profit was down to £138.4m, compared with £186.2m the year before, according to accounts filed at Companies House. KFC refranchised 91 restaurants and recorded net franchising gains of £98.7m. By the year-end, franchises were running 95.6% of all KFC sites, up from 87.1% in 2017. In their report accompanying the accounts, the directors stated: “2018 started with strong like-for-like sales growth performance in the weeks leading up to the distribution crisis. Closure of stores and operating on a limited menu during the height of the distribution crisis resulted in an overall sales decline for the year with like-for-like sales down 6.8% (2017: increase of 3.8%). The company steadily recovered transactions through the remainder of the year returning to positive sales growth by year end. Operating profit margin of 66.3% has increased when compared to that of the prior year (2017: 42.2%). This includes refranchising gains of £98.7m (2017: £112.8m). After excluding refranchising gains, operating profit margin increased from 16.9% in 2017 to 18.7% in the current period. This is due to an increase in cost saving initiatives implemented across the business. The refranchising activity in the equity business resulted in a decrease in the total average number of employees by 56.3% during the year.” Company store sales were £131.7m, compared with £379.6m the year before, while franchise royalties and fees were £75.7m, compared with £66.1m the previous year. UK sales were £179.8m, compared with £423.8m the year before, while European sales were £27.6m, compared with £22.0m the previous year.


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