Influence of investor according to market situation

Influence of investor according to market situation

The company, based in Louisville, gave the grim forecast after its profit in the fourth quarter fell 5 percent, with a key sales figure in China dropping (Fairchild, 2013). The loss of customer cause China same store sales fell by 6 percent year-on-year in the fourth quarter, compared with a previous estimate for a decline of 4 percent (China Daily, 2013). This is the first decline in China since 2009(Fairchild, 2013). The company expects sales at restaurants open at least a year in China to plummet 25 percent.

For competitors, this KFC instant chicken scandal cause two main influence for them. On the one hand many customers move from KFC to other fast food chain like McDonald's, and Burger King etc. or other restaurant which are domestic chains, like Dicos, Kungfu restaurant (national fast food chain), Da Niang Dumpling and Yonghe Bean Milk (Taiwan fast food chain), have been cannibalizing existing KFC stores. KFC scandal makes these fast food chain increase more customers. On the other hand this event also to other fast food chain sounds the warning bell, remind them must pay much more attention to food safety. These losses will impact on investors’ confidence and may cause investors no longer insist on investment in the company. However, the decline of share price may attract some potential investors who have confidence for KFC future development.

Fairchild,C (2013) Yum Brands Expects Profits To Fall Due To Chicken Scare In China

 Resource: http://www.huffingtonpost.com/2013/02/04/yum-brands-kfc-chicken_n_2618677.html 

China Daily (2013) KFC sales in China hit by instant chicken scandal, 

Resource: http://english.sina.com/business/2013/0108/546371.html