Yum! Brands (NYSE:YUM) is promising to punish any poultry suppliers caught violating food safety laws in China.
The company is cooperating with food safety regulators in the wake of a report on state-run CCTV that said that one of its poultry suppliers used growth hormones and antivirual drugs on chickens that were sold to KFC after slaughter, Reuters noted.
According to CCTV, the chickens were also sold KFC’s fast food rival McDonald’s (NYSE:MCD). Other Chinese meda sources indicated that the Shanghai Food and Drug Administration was testing poultry sent to a Yum! Brands distribution center in Shanghai.
KFC quickly posted a statement on its corporate blog indicating that it took the report seriously and would work with government regulators to uncover any wrongdoing by its suppliers.
McDonald’s said on its own blog that it used independent laboratories to evaluate its chicken supplies and that its products were in compliance with Chinese law. It assured potential customers that they should not worry about eating its chicken menu items.
Last month, Yum! Brand rejected as “untrue” media reports that one of its poultry suppliers in China was feeding its chickens harmful additives. KFC operates 4,000 restaurants in China, but saw its sales drop 4% during the second quarter, and expects a similar decline in the current quarter.
Shares of Yum! Brands fell 1% in Wednesday midday trading, while McDonald’s slipped fractionally.