Controversy in KFC

1. Food crisis in 2012

KFCs China sales plummeted after CCTV reported in December that one of its suppliers
was selling chicken that had been given unapproved antibiotics and hormones. Then bird flu
broke out in March. By mid- year, KFCs declines were slowing and Chief Executive Officer
David Novak expressed confidence that sales would turn positive in the fourth quarter. The
trend is in the right direction, a spokesman told Bloomberg Businessweek in July. But
losses have remained steady.
KFC also faces heightened competition from fast food chains such as Dicos and Hua Lai Shi ,
but Novak said in a statement: KFC is unquestionably the category leader in China and we
remain confident sales will fully recover from the adverse publicity surrounding the
December poultry supply incident.

Corrective measure"Operation Thunder" and a chicken-themed poetry contest, fast feeder

KFC appears to be recovering from a food safety crisis in its most important market.
Parent company Yum Brands announced this week that same-restaurant sales in China were
down 20% in January and February 2013, better than the 25% plunge previously forecasted.
KFC China sales were flat in February, after sliding 41% in January. The news sent its stock
price soaring. Trouble started in November and December 2012, when Chinese media
reported that a few KFC suppliers provided chickens pumped full of hormones and
antibiotics. Consumers were horrified to learn of birds raised to maturity in just 45 days.
At the time, Yum said it was cooperating with investigators and that its products were safe. It
pointed out 45-day-old chickens are the industry norm. But Sam Su, Yum's China ChairmanCEO, didn't issue an apology until January, as consumers were widely turning away from the
American chain that they expected should have better quality products than local eateries. It
was a major crisis for Yum Brands, which earns about half its overall revenue in China.
In recent weeks, KFC has begun unfolding a campaign to reinforce its food safety bona fides.
Dubbed "Operation Thunder," it includes a mini site detailing steps the company will take to
ensure the safety of its chicken, including working with only the best suppliers and stepping
up coordination with regulators. It also pledged to better inform consumers about product
safety issues. Meanwhile, KFC kicked off a poetry contest on social media. The company
asked fans to pen poems that include the phrase, "The chickens are innocent," laying the
blame on illicit drug use at the farms. Best poem wins an iPad mini.
"After a slow start in reacting to the crisis late last year, KFC has taken on a more active
approach to social media to face the issue directly. They have increased activity on their own
Weibo and RenRen accounts, including responding to many of the comments about the crisis
and by engaging media key opinion leaders. They will share news articles about the crisis on
their Weibo account which in turn creates more buzz," said Sam Flemming, founder and
chairman of
Shanghai-based social-media research and consulting firm CIC.
Though crisis communication plans typically call for striking hard and fast, Yum CEO David
Novak said in early February there was no need to rush into a marketing campaign. "We
could be wasting a lot of money right now doing marketing," he said. "We need to give it
time."

2. Bacteria in the ice used for soft drinks

According to the South China Morning Post , more bacteria found in Beijing fast-food ice
cubes than toilet water. Ice cubes served in soft drinks can be dirtier than toilet water, an
investigation by Chinas national television revealed on Saturday.
The report prompted the nations largest fast-food chain KFC to apologize for serving ice
cubes at a Beijing branch with a bacterial count 13 times higher than toilet water and 18 times
higher than the national standard.
The company said in its apology that following the report, it had cleaned and disinfected its
ice cube maker at the Chongwenmen branch.
Ice cubes at a local McDonalds branch tested cleaner than toilet water, but still did not meet
national hygiene standards.
The two fast-food chains have also apologised as the topic became the most widely discussed
issue on Chinese microblogs at the weekend, with more than 100,000 people wading into the
debate.
Yum Brands, owner of KFC and other restaurant chains, said it would release water tests
from its other chains in China, including Little Sheep hotpot, East Dawning and Pizza Hut.
Contaminated ice cubes are not a solely Chinese phenomenon. A test of restaurant chains in
Britain in May revealed that six out of 10 restaurants offered cleaner water in their toilets
than in their drinks.
3. Expired meat used by KFC
Chinese police on Wednesday detained five people from a unit of US food supplier OSI
Group, a statement said, in a case involving expired meat sold to fast food giants
including McDonald's and KFC. The Shanghai Public Security Bureau said the five
included the company officials responsible. It said a quality manager was among them
but did not name the five. Shanghai authorities on Sunday shut an OSI plant for mixing
out-of-date meat with fresh product, re-labelling expired goods and other quality
problems, following an investigative report by a local television station.
Police acting "according to the law" detained the five from the Shanghai Husi Food Co.,
the statement said, referring to the OSI subsidiary which operated the factory.
The case has sparked calls for stronger regulation in a country which has seen repeated
scandals over food and product safety.
The factory's other customers in China included restaurant operator Yum's Pizza Hut
brand, coffee chain Starbucks, Burger King, 7-Eleven convenience stores and Papa
John's Pizza, according to separate statements from the companies.
Outside mainland China, McDonald's Japan has confirmed it sourced about 20 percent
of its McNuggets from the Shanghai factory.

Japan's huge Family Mart convenience store chain has also stopped selling chicken
nuggets made at the plant, and its president apologised to customers on Wednesday for
the "extremely regrettable" incident.
Japan's chief cabinet secretary Yoshihide Suga, the government's top spokesman, said
Tokyo had banned "any food imports that were processed by the company in question".
In 2008 10 people in Japan suffered pesticide poisoning after eating dumplings imported
from China, and earlier this year a Chinese factory worker was jailed for life for the
crime.
Chinese media reports have previously said police were questioning "several"
employees of the Shanghai plant. Shanghai television has shown a man described as
the quality manager and another manager in meetings with government officials in the
days after the closure.
China's official Xinhua news agency said police suspected Husi of taking "organised"
action to carry out illegal production.
Police and Shanghai's food and drug agency had found out-of-date meat was used to
make chicken nuggets and beef patties, as well as expired and mouldy beef for ministeaks, it said.
OSI said on Monday that it was "appalled" by the allegations and announced it had
formed its own team to investigate.
OSI's Shanghai factory, set up in 1996, had more than 500 workers with five production
lines for items including pork, beef and chicken, according to the group's website.
The US company is a long-time supplier to McDonald's in China, starting from 1992, it
said.
McDonald's chief executive Don Thompson said Tuesday that his company was
cooperating with Chinese authorities who are investigating OSI.
"In this case, we do feel we were a bit deceived with respect to one of these plants," he
said, as the company announced second-quarter results.
China's national-level food and drug administration has ordered an investigation of OSI's
factories, which includes facilities in at least five provinces.

In the wake of the latest controversy state-run media have taken aim at foreign brands,
accusing them of double standards.
"Famous international brands have not adopted a dedicated attitude toward Chinese
consumers," the Global Times newspaper said Tuesday.