Kenya: KFC spud shortage sparks hot-potato over sourcing

By Morris Kiruga
Posted on Thursday, 6 January 2022 08:31

KFC in Westlands, Nairobi, Kenya © Wikimedia Commons CC Nairobi123

Fast food chain KFC has announced plans to localise its potato supply chain in Kenya, after it ran out of imported potatoes as a result of global supply chain disruptions.

On a 3 January Twitter post, the chain announced that it had run out of potato chips after the busy December holiday season. It instead offered its customers alternatives, such as extra chicken, buns, coleslaw, and ugali – a Kenyan staple.

The news had unintended consequences. It triggered a backlash from Kenyans on Twitter and other social-media sites, who questioned the franchise’s sourcing of potatoes from Egypt over locally grown ones. For much of Monday 3 January, the hashtag #BoycottKFC was trending on Twitter.

The news even attracted the attention of a county governor…

…and KFC’s competitors in Kenya also jumped on the bandwagon.

Sending spuds

KFC, as well as several other major fast food chains in Kenya and the region, import their potatoes from Egypt and South Africa. The East African franchise of the multinational fast food chain, which is operated by Kuku Foods, began operations in Kenya in August 2011. Since then, it has opened branches in Uganda and Rwanda. It has more than 35 outlets, most of them located in Kenya.

In October 2019, Dough Works, which owns the Pizza Hut franchise in Tanzania, acquired the KFC franchise in the country from Kuku Foods.

The Kenyan market alone does between 20,000 and 30,000 deliveries a month, which means the franchise has had a brisk business and a sizable demand for potatoes, chicken and other products.

Standards and supply chains

In 2012, the East African franchise holder’s first CEO, Gavin Bell, said KFC had faced challenges in the supply chain. “A lot of businesses here [in Kenya] have various certifications, but are not at the level where they can…supply KFC,” he told online publication How We Made it in Africa.

He disclosed that the food chain was instead shipping in “processed, pre-blanched, blast-frozen potato chips from Egypt, because it has total traceability”. The entire process of importing the potato chips is a “huge expense”, Bell said, meaning that the company was looking for local suppliers who could meet the global standards as well as the parent company’s strict quality controls.

Nearly a decade later, the Covid-19 pandemic has strained global supply chains, leading to shortages and delays in shipping. Egyptian potatoes are renowned for their quality and lengthy shelf life, but the country has also made significant strides in meeting stringent global standards on quality and traceability.

Egypt’s exports

In addition to being the biggest supplier of potatoes to the European Union, Egyptian farmers have also found new and growing markets with international fast food chains on the continent. The supply chain disruptions led to the saturation of Egypt’s local potato market, leading to low prices. By August 2020, the North African country’s potato exports had fallen by 25%.

In Kenya, direct and indirect costs have led to an increase in imports of potato chips from Egypt and Tanzania, which are at times cheaper than locally sourced ones. The East African region has also sought to protect its domestic production from the flood of cheaper potatoes. In the 2021/2022 budget reading, Kenya’s treasury cabinet secretary announced a one-year 30% duty on potatoes imported from outside the East African common market.

Will the boycott be followed?

Although it is still unclear if the calls for a boycott of the fast food chain will actually lead to lower demand for KFC’s food, the public-relations crisis triggered by the news is likely to push the fast-food chain and others to source from Kenya’s local market.

“We don’t mind meeting their standards,” Wachira Kaguongo, CEO of the National Potato Council of Kenya, told local dailies on Tuesday. “I think now we are likely to have a meeting.”

According to Kuku Foods CEO Jacques Theunissen, KFC in Kenya began restocking imported chips on 2 January. He also says the company sources many of its inputs such as poultry, bread buns, packaging and vegetables locally.

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