Bird flu adds to KFC's China woes

Can Colonel Sanders win back Chinese diners? Yum Brand reported that same-store sales on the mainland plunged 29 per cent last month as concerns about the safety of its chicken and the spread of bird flu prompted customers to stay away from its KFC restaurants.

While the company said the publicity fuelling the sales collapse would be "relatively short-lived", the perceived safety of KFC food is only one of the challenges tripping up Yum in its biggest overseas market.

KFC became the largest fast-food chain on the mainland because locals loved its fried chicken for the taste and the foreign cachet. Now, a drive to offer such local dishes as chilli black fungus is undermining KFC's American identity even as local fast-food chains selling Chinese and Western dishes proliferate.

Yum has not kept pace with a rapidly changing China, said Mary Bergstrom, the founder of Bergstrom Group, a Shanghai-based consulting firm. "The decor hasn't changed, and they haven't brought out what 'aspiration' looks like in China today," she said. "While the menu has become more traditional, it hasn't evolved with how consumers want to eat."

Yum has also yet to recover from revelations in December that locally sourced chicken contained unacceptably high levels of antibiotics.

Last month, the firm reiterated a forecast for a "mid-single-digit" profit decline for this year excluding certain items. Net income rose 21 per cent to US$1.6 billion last year.