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Kentucky Fried… Cabbage? Food shortage hits chicken chain

A nationwide shortage of lettuce has forced KFC Australia to switch to a mixture of the leafy green vegetable and cabbage in its burgers and wraps.
A nationwide shortage of lettuce has forced KFC Australia to switch to a mixture of the leafy green vegetable and cabbage in its burgers and wraps. On Tuesday, visitors to KFC’s website were greeted with a pop-up message explaining that the floods that devastated parts of Australia’s east coast earlier in the year reduced the company’s lettuce supply, forcing them to introduce the new blend. Customers who don’t want cabbage on their meal are encouraged to ‘customise’ their order and remove lettuce from their chosen item’s recipe. The statement, included below, does not specify when lettuce heads will roll back into stores in volumes large enough to relegate cabbage back to its usual coleslaw duties.

Source: KFC Press Release

Lettuce prices have seen astronomical gains in the past few months with some retailers flogging the soggy leaves for as much as $10 to $12 after floods in Queensland and NSW wiped out most of Australia’s crops. But lettuce isn’t the only vegetable that has seen price gains this year – and not all of those that have experienced increased pricing were the result of the floods. Broader vegetable prices gained 6.6% in the first three months of the year, with fruit seeing similar (4.9%) gains during the same period. These inflationary pressures stem from several different factors, many of which relate back to the Russia-Ukraine war. The ongoing conflict between these two nations has forced up the price of diesel, the fuel used to power trucks that carry fresh produce from farms to retailers. Estimates by the US Department of Agriculture suggest the impact of diesel prices doubling would be consumers paying 20% to 30% more on their groceries, and while diesel prices have only increased around 60% in Australia, this increase is contributing to elevated produce pricing. That’s not the only way the Russo-Ukrainian war is walloping wallets right now. The conflict has led to a shortage of fertilisers used to grow a number of important crops.  Fertiliser prices account for roughly 10% of the price of produce, so this shortage – and the ensuing price hikes as demand outstrips supply – are adding to farmers’ input costs and flowing through to shoppers, and chicken restaurants. Fortunately for KFC, however, the company has experience managing shortages of key ingredients. In 2018, the global restaurant chain was forced to close more than 600 of the roughly 900 locations it operates in the UK after a mistake with its ordering contracts meant the franchise ran out of chicken.
“The chicken crossed the road, just not to our restaurants,” the company said on Twitter at the time.
The problem only persisted over the course of one weekend, with most of the stores able to reopen a few days after the initial error. Lettuce hope they sort out this new problem, too. Join us on Friday, 10th June, at 11am (AEST) for a live investor briefing where we will delve into a wholesale investment product with the potential to capitalise on the market value of soft commodities (agriculture) touted to drive the performance of this supercycle. Click here to register. Reach Markets are the advisors assisting with the management of this offer and may receive fees depending on whether an offer is taken up by investors.
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