By Reuters – Global Times Source:Agencies Published: 2013-2-25 23:48:01
Yum Brands Inc will tighten monitoring of suppliers and improve testing of poultry as it aims to reverse a steep drop in business at its KFC restaurants in China after a chicken safety scare.
In a statement ahead of a media briefing in Beijing on Monday, the company also said it would look to improve its communications with the Chinese people and government in the wake of the scare.
The effort is critical for Yum, which draws more than half of its overall sales from China, the world's fastest-growing major economy.
Diners began avoiding Yum's nearly 5,300 restaurants - most of which are KFCs - in December after news reports and government investigations in China drew focus on chemical residues found in a small portion of its chicken supply.
The company was not fined by China food safety authorities, and says it will lay out plans to bring back diners.
Earlier this month, Yum reported a 6 percent decline in fourth-quarter 2012 sales at established restaurants in China. It also forecast a surprisingly steep 25 percent drop in China same-restaurant sales for the first quarter, which includes only the months of January and February.
Yum warned that it expected a "mid-single digit" percentage decline in earnings per share for 2013, versus its previous call for growth of at least 10 percent.
Based on the trajectory of prior food safety scares in China, Yum expects KFC same-store sales in China to rise by the fourth quarter.