Even KFC's Chicken Isn't Safe From China
Last year, as KFC's China operations reeled from allegations in late 2012 that some its chickens contained high levels of antibiotics, Yum! Brands Inc. -- the restaurant chain's parent company -- did its best to highlight measures being taken to address any health and safety issues with its products. At least some KFC outlets introduced a paper placemat that explained the steps employed to ensure the integrity of its chicken. (I snapped a photo of one at a Shanghai-area KFC on May 13, 2013.) "Chicken that can be eaten with peace of mind -- scientifically raised, free of growth hormones," promised bright red characters printed next to the familiar, smiling image of Colonel Sanders.
From there, the chain showed the winding path from animal to KFC truck, including a stop in "automated" processing facilities where the chicken was "carefully inspected."
It was a reassurance intended not only to emphasize KFC's quality, but also to remind Chinese consumers that compared with local restaurants lacking such transparent supply chains, KFC was a safer choice. That's a smart and powerful message in a country where food-safety scandals are a constant presence in traditional and social media. Many can name the lowlights: "lamb" made from rat meat, dead pigs floating down the Huangpu River in Shanghai and baby formula laced with a plasticizer, among others.
However, thanks to an undercover Chinese television investigation into a supplier of chicken and other meat to KFC, McDonald's and various international fast-food brands, that safety message is starting to look like a regrettable exaggeration, at best. The segment, broadcast Sunday by state-owned Dragon TV, took viewers inside Shanghai Husi Food Co., a U.S.-owned meat supplier. It showed employees handling meat with bare hands, placing meat that fell onto the floor back into processing lines, and -- most seriously -- repackaging expired meat mixed with fresh meat at the direction of management (a practice, the report indicated, that had been going on for a few years).
Understandably, Shanghai's Food and Drug Administration has launched an investigation into Shanghai Husi (at which it has stopped work). Shanghai Husi's U.S. owner, the OSI Group, issued a statement saying that it believes that this is an "isolated event." (All OSI food-production activities in China are also under investigation.) Meanwhile, KFC, Pizza Hut, McDonald's, Burger King, Starbucks and Papa John's have all stopped using Husi-supplied meat.
Even if OSI's claim turns out to be true, the damage done to the reputations of KFC and other fast-food chains in China will probably be long-term. The chains have long enjoyed advantageous reputations as providers of comparatively safe food, even as they survived episodes such as the antibiotics incident. But unlike past scandals, this one came with in-factory visuals that narrowed the considerable distance that KFC and others had placed between themselves and more local options.
In response to the scandal, Yum issued a statement claiming that, "We will not tolerate any violations of government laws and regulations from our suppliers." But if the Dragon TV segment is correct -- and no one seems to be questioning it -- it has tolerated such violations for years. No doubt, KFC and its competitors will scramble to blame others, including an aggressive Chinese news media that tends to target foreign companies. But though there's plenty of blame to be shared, responsibility ultimately rests on the shoulders of KFC, McDonald's and other fast-food operators that simply haven't lived up to the standards that the Chinese public have come to expect from them.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Adam Minter at email@example.com
To contact the editor on this story:
Zara Kessler at firstname.lastname@example.org