Yum! Brands suffering from Chinese food scandals

Yum! Brands suffering from Chinese food scandals

Yum Brands! – parent company of Pizza Hut, Taco Bell and KFC – is suffering from the food scandals in China. The discovery that some competing restaurants made Chinese fondue from recycled leftovers of earlier customers and the fact that lso-called lamb meat contained meat from chickens, ducks, rats and dogs, are causing troubles at other companies from the sector as well.

Fraud at competitors

The American restaurant group Yum Brands! bought Little Sheep, the biggest chain for hotpot (Chinese fondue), in 2011. However, the takeover cannot be called a success so far: sales and profit contribution dropped last year and the first quarter of 2013 did not show any signs of improvement.

 

In a conference with analysts CEO David Novak admitted Yum Brands! is suffering from the several Chinese food scandals. Despite the fact the chain buys its lamb at two verified suppliers and that there have been no indications of fraud, the market leader in hotpot is still suffering from the commotion when it was discovered some suppliers mixed meat from rats, chickens, ducks and dogs in their lamb. At least 11 tons of that meat was sold to chains such as Dai Mei, Tan and Macao Doulao.

 

Higher prices also unsuccessful

There is a second reason why Little Sheep is not faring well: Yum Brands! increased the price of the chain from 70 to 90 yuan (from 9 to 11 euro), in an attempt to change the image of the chain, towards a higher segment of the market.

 

Not only Little Sheep is having troubles, KFC is also having its issues. The chain was accused of administering antibiotics to chickens to increase their growth. The bird flu also hasn’t helped, causing sales to drop by a quarter to a third in the past few months.

Questions or comments? Please feel free to contact the editors


Arket Brussels opens: discover H&M's latest concept

14/09/2017

On Friday 15 September, H&M Group’s new store formula opens its doors on the Guldenvlieslaan in Brussels. The press got a sneak preview and discovered a surprising mixture of fashion, interior design and food. 

Nordstrom opens store without storage

13/09/2017

American fashion chain Nordstrom is to trial a new store formula in Los Angeles next month, in which customers will only be able to get advice and try out clothing. Purchases can be picked up at the store at a later date.

Primark benefits from weaker British economy

12/09/2017

Irish fashion chain Primark takes full advantage of the weak British economy, which prompted its parent company AB Foods to adjust its full-year forecast. The chain will also continue its expansion plans.

Participatiemaatschappij Vlaanderen invests in FNG

11/09/2017

Government investment fund Participatiemaatschappij Vlaanderen (PMV) will invest 15 million euro in fashion group FNG in return for 5 % of its shares. The money will go towards international expansion.

Gap Inc will focus on Old Navy and Athleta

08/09/2017

American fashion company Gap will alter its internal strategy and turn its attention to Old Navy and Athleta. Gap and Banana Republic, which both received the most attention up until now, will have to step aside.

Global Fashion Group cuts losses

08/09/2017

Global Fashion Group, the fashion group founded by investment group Kinnevik and Rocket Internet, managed to lower its losses even more in the second quarter. On top of that, turnover grew more than 25 %.

Back to top