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Yum Brands Says It’s Cooperating With China’s Review of Chicken

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Dec. 21 (Bloomberg) -- Yum! Brands Inc., owner of the KFC and Pizza Hut chains, said it’s cooperating with the Chinese government’s review of its chicken suppliers and doesn’t anticipate a shortage of product.

“We’re cooperating fully with the Chinese government’s review of two poultry suppliers who provided chicken with unapproved levels of antibiotics to KFC,” the Louisville, Kentucky-based company said in a filing with the U.S. Securities and Exchange Commission. “These suppliers represent an extremely small percentage of product to KFC. As such, we do not anticipate a shortage of product supply.”

Yum is undergoing investigations by the Shanghai Food and Drug Administration, which said tests conducted by a third-party agency from 2010 to 2011 found eight batches of chicken supplied by Liuhe Group Co. had levels of antibiotics that didn’t meet prescribed standards. Yum, which got 44 percent of its revenue from China last year, was made aware of these results, the agency said on its website yesterday.

The agency has said it plans to investigate if Yum properly dealt with the test results. Yum stopped buying from Liuhe in August, it said in its KFC microblog.

Yum fell 3.9 percent to $63.88 at the close in New York. The shares have gained 8.3 percent this year.

The fast-food company also said in the filing that recent publicity has had a “moderate sales impact the past few days.”

Yum, which also owns Taco Bell, has more than 4,900 locations in China.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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