Yum Brands Inc (NYSE: YUM) continued to be hit by China's bird flu scare as its same-store sales (SSS) dropped 19% from a year earlier in May. However, the decline was much better than the 29% decline seen in April.
The fast food giant's SSS in China has never bucked the downward trend after the contaminated chicken supply scandal that first surfaced late last year. KFC restaurants in China were found to use chickens fed with excess antibiotics that would shorten their growth period.
Yum Brands' SSS in China dropped 20% year on year in January and February combined, with SSS at KFC falling 24% and SSS at Pizza Hut slightly down 2%.
Its SSS tumbled 29% year on year in April when a new strain of bird flu was detected in China. SSS at KFC plummeted 36% in the month, while Pizza Hut benefited from the trade-off, registering a 5% SSS growth.
In May, SSS decline at KFC was subdued to 25%, and SSS at Pizza Hut rose 12%.
In its latest filing to the New York Stock Exchange, Yum Brands said it expected the bird flu scare to affect its business in China for just a short period of time as it did in the past and forecast an SSS growth in the fourth quarter.
Yum Brands' revenue from China amounted to $6.9 billion in 2012, representing 50.6% of its total revenue. It opened 889 restaurants in China last year, taking the total count to over 4,200, and plans to open at least 700 this year, according to a Yum Brands statement in the fourth quarter of 2012.
Separately, McDonald's Corp (NYSE: MCD) said earlier this week that its global SSS was up 2.6% in May but the growth in the Asia Pacific, Middle East and Africa regions was tepid at 0.9%. Although it didn't break out data for China, McDonald's blamed the bird flu for the slowdown.
McDonald's has begun selling its first rice product at dinner time in China as a new source of profits taking on KFC that started localizing food in the country more than a decade ago.
The Golden Arches authorized franchises in China in August 2011. It currently operates 1,700 restaurants in China and plans to increase the number to 2,000 by the end of this year, where about 10% are franchises.
You are currently reading
total words in this article.
To continue reading this article, you must be a subscriber. Log in now..