27 June 2019
KFC China has been reeling from food safety issues over the past two years. Photo: Bloomberg
KFC China has been reeling from food safety issues over the past two years. Photo: Bloomberg

KFC China goes local in bid to improve sales

Yum Brands plans to revamp its KFC chain in China as it seeks to bolster its business amid food supplier issues, the Wall Street Journal reported.

Joey Wat, Yum’s new president of KFC China, said the brand will allow local units to have more autonomy in offering food products and setting prices, noting that consumers in major urban centers have more income and different food preferences than those in smaller cities, the newspaper said.

The restaurant chain’s China business has been reeling from food safety issues for the past two years. In late 2012, it had to fend off media allegations that one of its major suppliers had been using growth hormones and antibiotics to help chickens grow faster. 

Despite KFC’s denials and defense of its safety practices, the allegations spread rapidly and consumers stayed away from its restaurants.

Sales improved in the first half of the year following an advertising campaign on its food safety operations and the introduction of new menu items.

But in July, sales were again under pressure after local media reported that a Shanghai supplier intentionally sold expired meat to Yum and other fast-food chains in the country.

Yum on Tuesday said same-store sales in China are expected to fall in the mid-single digits, dragging down per-share earnings growth for the whole company to the mid-single digits.

In October, the chain had cut its per-share earnings growth forecast to between 6 and 10 percent from a previous estimate of at least 20 percent increase.

On Thursday, Yum said November same-store sales in China are likely to see a 15 percent drop, although December will show an improvement from the previous month’s sales.

As part of its revamp, the company will offer new menu items such as premium coffee, use Chinese celebrities in its ads more often, provide free Wi-Fi at its outlets, and improve its children’s menu, the report said.

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