KFC to continue China expansion, despite sales drop
Parent company for KFC, Yum Brands, still plans to open at least 700 new stores in China this year, despite a big drop in sales last month after a food safety scare.
Sales at Yum’s KFC stores in China dropped declined 41 per cent last month following the reports of food safety issues in December. This followed a trend that appeared in the company’s sales in the last quarter of 2012, when sales decreased by 8 per cent.
Authorities in China are investigating claims that KFC bought raw chicken with higher-than-permitted levels of antibiotics from poultry suppliers.
In an effort to prevent food safety problems, Yum China would be cutting ties with suppliers that used small and difficult to regulate farms.
According to the company, the problem of food safety is complicated in China, a result of an inherently risky supply system that relies on small-scale farms.
A statement on the company’s website assures consumers that food bought at its stores is perfectly safe to eat and that “KFC in China has very strict food handling and quality control standards that meet or exceed all government regulations”. It says that Yum will continue to work with Shanghai’s food safety authorities to improve these processes in order to prevent future problems.
“Although we cannot predict how long it will take to restore sales, we are steadfast in our belief that the power and popularity of the KFC brand in China will ultimately drive a full sales recovery,” said Chairman and CEO David C. Novak. “Having weathered other storms in the past, we know that our brands are resilient.”