May 10 KFC parent Yum Brands Inc
reported on Friday an estimated 29 percent drop in April sales
at established restaurants in China, where a bird flu outbreak
is pummeling sales that were recovering from an earlier food
The result from China, where the fast-food restaurant
operator reaps more than half of its overall sales, was roughly
in-line with expectations.
In late April, Yum said China sales could be down about 30
percent for the month. Five analysts polled by Consensus Metrix
expected them to fall 27 percent.
Yum shares, which closed at a five-week high of $70.36
before the China sales report dropped, slipped 1.2 percent to
$69.50 in after-hours trading.
Demand for poultry products - including fried chicken sold
by KFC - took a big hit in early April as news of the novel bird
flu strain, the H7N9 virus, made headlines. Currently, that flu
has killed more than 30 people.
Most of Yum's nearly 5,300 restaurants in China are KFCs.
The bird flu outbreak has hobbled the company's effort to
revive sales in China, where restaurant sales tumbled after a
highly publicized report in mid-December highlighted excessive
levels of antibiotics in chicken from two of Yum's suppliers.
Yum was not fined by food safety authorities, but it suffered a
widespread backlash in the mainstream media and on Weibo, the
China equivalent of popular U.S. social media site Twitter.
The company, which is tightening up its supply chain and
bolstering its social media presence in China, saw sales at
established restaurants there fall 20 percent during the first
Separately, Yum's roughly 450 Little Sheep hot pot
restaurants in China were caught up in a recent official report
on fake mutton. Yum said the mutton allegations were untrue and
the Shanghai Municipal Food Safety Committee said on Thursday
that, while investigations were ongoing, there was currently no
evidence Yum's Little Sheep hotpot chain had used fake mutton.
Kentucky-based Yum bought a controlling interest in Little
Sheep in February 2012 and now owns 93 percent of the chain.