Food Scandal Drives Yum Brands' China Sales Sharply Down

Since the food safety investigations began in July, Yum's same store sales fell 13%. China typically accounts for 40% of Yum's global sales.

Author:: Julia Sun
Publish date:: Sep 4, 2014 2:57 PM EDT

The ongoing food scandal in China is hurting Yum big time. Local customers abandoned some of their favorite fast food chains under the Yum umbrella like KFC and Pizza Hut after the public learned that Yum's former supplier passed off expired meat as fresh. Since the food safety investigations began in July, Yum's same store sales fell 13%. China typically accounts for 40% of Yum's global sales. Therefore, this is major setback. Yum is not setting high expectations for the future because nobody knows how long the health and safety worries will linger on the customers minds. Yum's Vice President David Russell said, "While sales [in China] are beginning to rebound, they continue to be negative. Our brands have proven resilient over time and we expect this to be the case with this situation as well." Yum plans to file a lawsuit against the former food supplier, OSI Group, to recover some of damages.