KFC sees China sales drop slowing
Associated Press in New York
Yum Brands, owner of KFC and Pizza Hut, said a key sales figure for the mainland dropped 19 per cent last month, as it began to see signs of recovery from the double-whammy of a bird flu scare and an earlier controversy over its chicken supply.
The drop is an improvement from the 29 per cent fall seen in April. The company said the latest figure reflected a 25 per cent fall at KFC and 12 per cent growth at Pizza Hut.
On Monday, McDonald's also blamed fears over bird flu for a decline in mainland sales for the month.
Yum said it expected sales at established restaurants to continue recovering over the course of the year and to turn positive in the fourth quarter.
Although publicity around the bird flu continued to have a "significant, negative impact" last month, it said the impact of past cases of bird flu had been short-lived.
"Based on current trends, we believe this will again be the case," the company said.
China is a critical region for Yum, which has benefited greatly from the mainland's rapid economic expansion in recent years. The company is the biggest Western fast-food operator in the country, with 5,300 locations, most of them KFC restaurants.
Last year, Yum raked in more than half its total sales from China. But late last year, a Chinese television report said some of the company's suppliers were giving chicken unapproved levels of antibiotics. Yum was slow to adequately address the concerns and sales plummeted.
It later took a more aggressive stance and said it was eliminating more than 1,000 small producers from its chicken supplier network and launched a marketing campaign to assure customers of the safety of its food.