Expenses involved

There are two key elements addressed within the financial summary

• The capital expenditure (to enable delivery from a store)

• The ongoing P&L impact (how much variable profit each Delivery sales $ brings)

These are financial guides and indicators which may vary from market to market, so significant & rigorous thought and common-sense testing should be applied to both elements during the forecasting and planning of delivery as a channel. The aim is to provide a consideration framework rather than apply a definitive $ figure to costs.

Capital Outlay

Directly associated with delivery

• In restaurant
• Additional phone line/s (if outside call center will not be used)
• Additional POS (to manually enter orders received)
• Hot Hold pouches/bags and racking
• Approx. 10sqm for dispatch area
• Desks/maps/uniforms
• Outside restaurant
• Vehicles (typically motor bikes)
• External uniform and helmets
• Legislative driver training
• Dedicated parking area for delivery vehicles

Expenses involved

• Centrally

• Call Centre (if store order takers not used)
• LSM production (may be local)
• Delivery management (Human Resource)
• I.T. infrastructure upgrades (if needed)
• Online and mobile interface development

P&L Ongoing Costs

Delivery is a more expensive channel to maintain that a standard in restaurant offering due to the following reasons:

• Labour cost – drivers and a dedicated dispatcher (and perhaps packer) need to be deployed
• Ongoing maintenance of vehicle (fuels, repairs, etc.)
• Upkeep of delivery boxes/bags, helmets, etc.
• Upkeep of I.T infrastructure and hardware
• Enhanced packaging cost – in case markets use enhanced packaging to support the delivery of perfect product

Financial Model

Disclaimer: The information, including any financial models, presented in this communication is indicative only, and is not binding on Yum! Brands, Inc. or any of its affiliates or employees. No warranties are made or implied regarding the accuracy, completeness, availability or reliability of the information. Any liability that may arise from the use or reliance on the information is expressly disclaimed.

To assist you in assessing viability of delivery, a simple break-even calculator is embedded below. <> Also, you can find a more complex DCF financial model, along with benchmarks of key metrics from various KFC markets. Please use the attached materials only as a general guide to help develop a financial model that is more relevant to your market.

• Delivery Financial Model & Benchmark Delivery Financial Model & Benchmark
• How to use the Delivery Financial Model How to use the Delivery Financial Model

Best Practices

• Leverage motor bikes / scooters instead of automobiles
• Consider a dedicated delivery dispatcher/coordinator during peak hours/days
• Include a fixed $ delivery fee to offset the incremental OPEX required to fulfill delivery orders
• Consider only accepting delivery orders via mobile/web (to avoid costs of call center, or in-store labor for receiving orders)

Delivery has potential to increase a store’s sales by 10 – 20%