Yum sees sales drop 11% on food scandal
Print Edition
YUM Brands Inc, owner of fast food chains KFC and Pizza Hut, said on Wednesday that sales at restaurants in its biggest market — China — fell 11 percent , hit by a food scandal at its Chinese supplier last July.
The drop in its China division sales for the fourth quarter ended December 27 occurred even as an 8-percent unit growth was eroded by a 16-percent same-store sales decline, its earnings report said. The company blamed the sales drop to its former supplier Shanghai Husi Food Co using expired meat during production.
“The overall results in 2014 were disappointing as the Chinese supplier incident in July offset our strong first half of the year,” Greg Creed, Yum’s CEO, said in a statement.
“Our top priority is to recover sales in China,” Creed said, adding that he anticipates “a strong second half of 2015 as the turnaround gains momentum.”
On August 1, Yum announced a cut in business ties with Shanghai Husi and the latter’s parent company, US meat supplier OSI Group LLC.
In the third quarter ended September 6, the company’s same-restaurant sales in China fell 14 percent. The sales rose 15 percent in the second quarter, which ended about a month before the exposure of the scandal on July 20.
Yum posted a fourth-quarter net loss of US$86 million globally, compared with its net profit of US$321 million a year earlier.
The company, who has 6,715 restaurants in China by the end of the fourth quarter,will open at least 700 new stores in the world’s No. 2 economy this year, the statement said.
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