Yum! Brands says same store sales in China dropped 10 per cent in August.

Sales through its KFC chain declined 12 per cent, but sales grew five per cent in its Pizza Hut arm.

The decline was lower than the July decrease of 13 per cent but higher than the projected 7.7 per cent drop.

Yum is said to be facing intense rivalry from local restaurant chains like Dicos and Hua Lai Shi.

KFC sales were also negatively impacted by the residual effects of adverse publicity surrounding December’s poultry supply controversy.

However, the Louisville, Kentucky-based company expects China division same-store sales growth to be positive for the quarter.

For the third quarter which includes months of June, July and August, same-store sales declined 11 per cent in China; 14 per cent at KFC with four per cent growth at Pizza Hut.