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


Zalando's profit is slightly below expectations

17/01/2018

German fashion web shop Zalando has grown nearly a quarter in the past fiscal year and its company profit also nearly grew 5 %, although the latter was slightly below its own expectations.

Record turnover for Yoox Net-a-Porter in 2017

16/01/2018

Online retailer Yoox Net-a-Porter (YNAP) achieved a record turnover in 2017, surpassing two billion euro. That is a growth of more than 10 % compared to the year before, when it just missed that milestone.

Hugo Boss reaches growth targets for 2017

16/01/2018

German fashion brand Hugo Boss has managed to reach its targets for 2017, partially thanks to strong fourth quarter growth. For its full fiscal year, turnover grew 3 % (excluding exchange rate fluctuations).

C&A owners consider sale to Chinese investors

15/01/2018

The Dutch Brenninkmeijer family is considering to sell clothing chain C&A according to German magazine Der Spiegel. One option is to sell to Chinese buyers.

Gucci opens restaurant and museum in Florence

12/01/2018

Fashion brand Gucci has opened a museum and a restaurant for fifty people in Florence. Three-star chef Massimo Bottura will serve high-quality meals there. A dish will cost between 20 and 30 euro.

Kering hands over control of Puma

12/01/2018

French luxury group Kering will get rid of 70 % of German sports brand Puma’s shares and wants to turn its attention to its luxury brands. Puma does not fit into that category.

Back to top