by Christopher Freeburn | February 25, 2013 11:54 am
In the wake of widely-reported problems with its chicken suppliers, Yum! Brands (NYSE:YUM) is moving to repair the image of its KFC brand in China.
The company has announced a program to boost inspection of its poultry suppliers, including enhanced testing and technology upgrades. A company officials said there would now be a “zero tolerance” policy when it came to food safety, the Associated Press notes.
Its Chinese poultry suppliers obtain the meat from more than 1,000 small chicken farmers. Suppliers who were judged to have inadequate facilities would be dropped.
KFC’s action comes after China state television uncovered food safety violations by the company’s chicken suppliers, who were found to be using banned drugs to increase the physical development of chickens whose meat was sold the KFC.
The resulting media outcry is blamed for a 37% drop in KFC sales in China last month. Sales during the current quarter are forecast to fall by 25% compared to last year as the popular chain — which has 4,000 restaurants in China — tries to recover from the scandal.
Shares of Yum! Brands rose fractionally in Monday morning trading.
Source URL: http://investorplace.com/2013/02/how-kfc-plans-to-win-back-china-after-chicken-scandal/
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