KFC onslaught of negative media attention
Feb 5, 2013
Since an investigation aired on national Chinese television on Dec. 18, Yum has been dealing with an "onslaught of negative media attention" over its chicken suppliers, spokesman Jonathan Blum said. The TV station had reported that Yum's suppliers were ignoring regulations and giving chickens unapproved levels of antibiotics.
KFCA government investigation into the issue was concluded on Jan. 25 and Yum has agreed to adopt measures to strengthen its oversight of suppliers. But the company says it will take time to recover.
"Our primary emphasis now is to rebuild consumer confidence and sales in China," Blum said, noting that the company plans to mount a "brand reputation" campaign in coming weeks.
Even though Yum has far more locations in the U.S., its restaurants in China are far more profitable because the cost of doing business there is lower and there's much more room for growth. Already, Yum is the biggest Western fast-food chain in the country with KFC accounting for most of its 5,300 locations. The nation's economic growth had until now been a boon for Yum, helping it register a streak of growth for more than a decade.
Although the investigation into chicken suppliers didn't focus solely on KFC, Blum said that the chain was hit especially hard because it's the biggest chicken chain in the country. He noted that the negative media attention had been slowing, but that the earnings results could stir up more bad publicity.
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