Yum! Brands begins post AI recovery in China
KFC's parent company Yum! Brands has reported a further profit drop in its second quarter results but sales trends are improving in its critical China division, which suffered from the avian influenza scare earlier this year.
The company, which also owns Pizza Hut and Taco Bell, said sales in China were down 10% which is an improvement on the 19% drop reported in the first quarter results. Worldwide system sales grew 1%, prior to foreign currency translation, including 6% at Yum! Restaurants International (YRI) and 2% in the US.
In addition to the bird flu scare, Yum! is still recovering from controversy over its chicken supply. Last December Chinese TV report revealed that some suppliers were giving chickens unapproved levels of antibiotics.
David C. Novak, Chairman and CEO, said, “Second-quarter EPS declined 16%, which was generally in line with our expectations. KFC sales and profits in China were significantly impacted by intense media surrounding Avian flu, as well as the residual effect of the December poultry supply incident. The good news is that China sales are recovering as expected. The extensive media surrounding Avian flu in China has subsided and same-store sales at KFC are clearly improving.”
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