KFC owner Yum! Brands says same-store sales declined six per cent in China in the fourth quarter to December 29.

The company blamed negative same-store sales on adverse publicity from a poultry supply controversy.

“KFC sales in the last two weeks of the fourth quarter were significantly impacted by the intense media attention surrounding an investigation by the Shanghai FDA (SFDA) into poultry supply management at Yum! China,” says the company.

The investigation was prompted by a report broadcast on China’s national television (CCTV), which aired on December 18. The report showed that a small number of poultry farmers were ignoring laws and regulations on excessive use of antibiotics in chicken.

Some of this chicken from two suppliers was purchased by KFC. The investigation attracted further media attention, including social media commentary, and this negatively affected consumer perceptions of poultry safety, and KFC in particular.

Yum! said the past seven weeks of media attention had been “intense and negative” towards the KFC brand’s image. However the company is more committed than ever to continue to strengthen efforts, restore the confidence of customers and win back brand loyalty.

“The China team will soon be launching a brand reputation quality campaign to re-assure consumers of our high quality food, along with aggressive marketing plans,” it said.

Yum! Brands chairman and CEO David Novak said the company remains on course on its target to develop at least 700 new outlets in China in 2013.

“Our growth strategies are unchanged, in China, Yum! Restaurants International, India and the US,” said Novak.

The company opened a total of 889 new restaurants in China last year and 138 in India where it posted a system sales increase of 24 per cent in the fourth quarter.

GB