KFC hit by chicken chem food scare
Drop in profits after animals excessively pumped with antibiotics
Scandal ... KFC parent company Yum Brands is hit by drop in profits following China food scare
By JACK LOSH
Published:
05th
February 2013
KFC has taken a pounding after an investigation found suppliers in China had provided chickens pumped full of excessive levels of antibiotics.
Parent company Yum Brands – which also owns Pizza Hut and Taco Bell – has been hit with a drop in profits in the wake of the food safety scare.And last month, local media reported that one of China's largest suppliers to McDonald's and KFC had bought sick chicken from farms then sold them to the food outlets.
With 5,300 restaurants in China, the Far Eastern country is one of Yum's biggest markets, accounting for more than half its sales.
KFC China's profits plunged following reports in December that two of its
suppliers had purchased battery chickens from farmers using excessive levels
of antibiotics on their animals.
Government food safety agencies then began probing the supply chain of the scandal-plagued company.
The fast food giant now fears “adverse publicity” over chemical residue found in its chicken may cause profits to plummet by 25 per cent in 2013, following a 6 per cent dip to £214m in the fourth quarter of last year.
Analyst Jack Russo said: “This is going to take all the experts they have in public relations to stem the tide.
“I don’t think anyone saw this coming.”
Yum chief executive David Novak yesterday said: “As a result of adverse publicity from the poultry supply situation in mid-December, China KFC sales experienced a sharp decline.
Government food safety agencies then began probing the supply chain of the scandal-plagued company.
The fast food giant now fears “adverse publicity” over chemical residue found in its chicken may cause profits to plummet by 25 per cent in 2013, following a 6 per cent dip to £214m in the fourth quarter of last year.
Analyst Jack Russo said: “This is going to take all the experts they have in public relations to stem the tide.
“I don’t think anyone saw this coming.”
Yum chief executive David Novak yesterday said: “As a result of adverse publicity from the poultry supply situation in mid-December, China KFC sales experienced a sharp decline.
"Due to continued negative same-store sales and our assumption that it
will take time to recover consumer confidence, we no longer expect to
achieve earning per share (EPS) growth in 2013."
Following the food scare, Yum stopped using one of the suppliers and cut purchases from a problematic plant used by the other.
Although not fined by Chinese food safety authorities, the company has suffered a widespread backlash in mainstream news and social media.
Following the food scare, Yum stopped using one of the suppliers and cut purchases from a problematic plant used by the other.
Although not fined by Chinese food safety authorities, the company has suffered a widespread backlash in mainstream news and social media.
Last month, Yum apologized to customers in China over the food scare and
yesterday said it would begin an aggressive marketing campaign after Chinese
New Year to restore KFC’s brand image.
The fast food firm – which has pledged to open 700 new stores in the country in 2013 – had been widely regarded as a model for how a foreign company can do business in the complex Chinese market, which is persistently rocked by serious food safety scandals.
Yum, based in Louisville in Kentucky, US, reported an overall net profit of $1.6billion (£1.02bn) in 2012, up from $1.3billion (£830m) a year earlier.
The fast food firm – which has pledged to open 700 new stores in the country in 2013 – had been widely regarded as a model for how a foreign company can do business in the complex Chinese market, which is persistently rocked by serious food safety scandals.
Yum, based in Louisville in Kentucky, US, reported an overall net profit of $1.6billion (£1.02bn) in 2012, up from $1.3billion (£830m) a year earlier.
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