Yum! Brands China division was negatively affected by the adverse publicity surrounding poultry supply probe and Avian flu, reporting a same-store sales decline of 20 per cent for the first quarter to March.

The US restaurant operator says same-store sales at KFC China fell 24 per cent while Pizza Hut same-store sales slightly decreased by two per cent.

“As anticipated, intense media attention surrounding poultry supply in China significantly impacted KFC sales and profit. Earnings per share declined eight per cent versus prior year, as our China division operating profit fell 41 per cent,” says Yum! Brands chairman and CEO David Novak.

“With news of Avian flu, there will obviously be more volatility with our China sales recovery,” said the CEO.

While expecting a challenging year, Yum! says it will stay on course with its plans to develop at least 700 new units in China this year.

Meanwhile, system sales at India division increased 16 per cent while same-store sales declined three per cent.

Worldwide system sales grew by just one per cent while operating profit decreased 14 per cent.

During the period, Yum! opened 380 new restaurants, taking the total count to 5480, including 4387 KFC.