Dallas, Texas 08/01/2014 (FINANCIALSTRENDS) – Yum! Brands, Inc. (NYSE:YUM) the common parent company of food retail-chains Pizza Hut and KFC restaurants has reported a sudden drop in financial performance in the previous quarter. The decline is to the tune of 5%, with shares reaching earnings of $69.20 per share. The cause of the woeful financial statement was due to the scandal the companies had to face in China over the past two weeks. Yum! Brands declared that it had now snapped all relations with the meat supplier, OSI Group LLC, who was the cause of all the recent scandal.
As news of chicken supplied by OSI where older than mentioned expiry dates made the headlines, YUM! As well as its brand find them in big trouble. The company in a statement noted that the scandal had not only “shaken consumer confidence” but had also created an “impact on the brand usage.” Yum! Brands have since cut its relationship with meat supplier OSI Group LLC.
Yum! Brands, Inc. (NYSE:YUM) in a statement also noted that “a significant, negative impact to same-store sales at both KFC and Pizza Hut in China over the past 10 days.” This is the second such issue that Yum is struggling with in its Chinese market, in as many years.
The previous year too, Yum had not been able to make many inroads into Chinese markets due to the break-out of avian flu alert. The company has thus far expressed caution on when and how the sales in this region will show a return in performance.
Yum! Brands, Inc. (NYSE:YUM) debacle on this issue has definitely placed other retailers who work with Chinese meat supplies, notably McDonald, under tremendous pressure. McDonalds has since stopped importing from Chinese suppliers and continued to source from its Thailand suppliers, who supported had until now provided 62% of McDonald’s chicken requirements.