Yum, McDonald's ensnared in another China food safety scandal

Yum Brands (NYSE:YUM) and McDonald's (NYSE:MCD) face a new food safety scare in China, having suspended orders from a Shanghai meat supplier while Chinese authorities investigate allegations that the company sold expired chicken and beef products.

YUM and MCD apologized to customers following a TV report that showed workers picking up meat from a factory floor, as well as mixing meat beyond its expiration date with fresh meat.

YUM has just begun to bounce back from the 2012 scare in its no. 1 market, while MCD says it may now face a product shortfall in its third-biggest market by store numbers.

YUM -1.8% premarket; MCD -1%.

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Comments (23)
  • amgine75
    , contributor
    Comments (3) | Send Message
    We should feed the expired meat to the executives of these companies and see if they take these things more seriously.


    Eat your own dogfood!
    21 Jul 2014, 09:09 AM Reply Like
  • JD in NJ
    , contributor
    Comments (1634) | Send Message
    I presume you mean melamine-tainted dogfood.
    21 Jul 2014, 09:22 AM Reply Like
  • chopchop0
    , contributor
    Comments (5271) | Send Message


    "the program showed workers saying that if clients knew what they were doing, the firm would lose its contracts."


    Sounds like MCD and YUM were NOT condoning this. It was the management of these shady suppliers.
    21 Jul 2014, 11:30 AM Reply Like
  • SoCalNative+(RIP)
    , contributor
    Comments (651) | Send Message
    You're on a roll today, JD ;-)
    21 Jul 2014, 03:54 PM Reply Like
  • cjrunner
    , contributor
    Comments (152) | Send Message
    MCD and YUM need to detail and explain how much of this tainted/expired meat was shipped to the United States and sold to US customers. FDA and US Department of Agriculture need to the follow-up and confirm the MCD and YUM explanations. Of course, for political and diplomatic reasons, I that these US agencies will remain mum.
    21 Jul 2014, 09:10 AM Reply Like
  • AchaninUSA
    , contributor
    Comments (45) | Send Message
    Why isn't MCD-China importing meat from USofA rather than sourcing them from PRC-Chinese companies when both MCD and YUM know full well that PRC-Chinese companies cannot be relied on to do the right thing?


    I think SYSCO can help out there with exporting clean, unadulterated meat products from USofA.
    21 Jul 2014, 11:39 AM Reply Like
  • DGI_Dan
    , contributor
    Comments (88) | Send Message
    It's cheaper to source meat from local sources than to import meat into china from US.
    21 Jul 2014, 12:41 PM Reply Like
  • ControlledRisk
    , contributor
    Comments (343) | Send Message
    SYSCO? The company that was leaving meat in trucks or sheds without refrigeration in California?
    21 Jul 2014, 06:23 PM Reply Like
  • nocnurzfred
    , contributor
    Comments (842) | Send Message
    Once China begins to import all the hogs & chickens from their recent buyout of Smithfield, the problem will be resolved. Of course their plan is to process those U.S. animals & send them back here as packaged products. Right...... Just switch the labels & send us their polluted stuff. Crafty people, yessirrie.
    21 Jul 2014, 07:44 PM Reply Like
  • AchaninUSA
    , contributor
    Comments (45) | Send Message
    Imports may be more expensive, but clean, unadulterated meat products is a good selling point and I believe many PRC-Chinese will go for it. Anecdotal evidence suggest many PRC-Chinese prefer imported food over local products.


    I think MCD should do a market study in China. Would you pay a few more yuan for a sandwich if the meat is imported from USofA?
    22 Jul 2014, 10:55 AM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
    McDonald's and KFCs typically source their own farms for consistency of flavour and texture.
    22 Jul 2014, 11:05 AM Reply Like
  • Blueskyflyer
    , contributor
    Comment (1) | Send Message
    maybe not even beef
    21 Jul 2014, 01:26 PM Reply Like
  • RM13
    , contributor
    Comments (1285) | Send Message
    Hey, anytime one of US companies in China do to well, wham!! new scandal will be unveiled. That way it evens the playing field for Chinese companies - who are likely guilty of the same thing:).
    21 Jul 2014, 03:47 PM Reply Like
  • AnAvgJoe
    , contributor
    Comments (555) | Send Message
    Just when I thought YUM was getting its mojo workin' again. Might be time for me to sell if they can't get out of their own way on these blunders.
    21 Jul 2014, 03:50 PM Reply Like
  • Grillo Capital Management
    , contributor
    Comments (17) | Send Message
    Rule of thumb...Don't eat at any food chain that has an advertisement. You will lose weight too!!
    21 Jul 2014, 03:58 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
    Uh oh. That's not good. People can eww... on the floor
    21 Jul 2014, 04:39 PM Reply Like
  • John Beresford Tipton
    , contributor
    Comments (30) | Send Message
    The Chinese government *tolerates* American companies doing business in China. It does not welcome them, and these recurring scandals are just a reminder of that reality.
    21 Jul 2014, 04:53 PM Reply Like
  • Daniel5150
    , contributor
    Comments (269) | Send Message
    Very correct John.Tolerates, is the key word here in reference to China and U.S. companies
    21 Jul 2014, 06:18 PM Reply Like
  • ComputerBlue
    , contributor
    Comments (1396) | Send Message
    You couldn't pay me to eat at either of them.
    21 Jul 2014, 09:04 PM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
    Its business took off after Ray Kroc tapped it in the 1950s to be a beef supplier for McDonald's. OSI grew alongside McDonald's as the hamburger chain expanded around the world, and even helped create the McRib.


    Aaccording to PrivCo, which researches privately-held companies, it had $6.13 billion in sales last year.


    Richard Adams, a former owner of McDonald's restaurants in Southern California who now runs a consulting firm for franchisees, said OSI closely oversees its production process in the U.S. and that he didn't know how the lapses in China occurred.


    "They wouldn't be a McDonald's vendor if they weren't producing quality products," Adams said.
    24 Jul 2014, 01:58 AM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
    "Other well-known names that made the list of the worst fast food restaurants include McDonald's, Burger King, Pizza Hut, and Taco Bell."


    In Shanghai there are a lot more worse faster food restaurants to choose from, considering food quality and cleanliness!
    24 Jul 2014, 02:52 AM Reply Like
  • AchaninUSA
    , contributor
    Comments (45) | Send Message
    I am sure both MCD and YUM want a far more sanitary environment, and so do the local Chinese governments which, hopefully, have learned their lesson with H1N5.


    But for the mainland Chinese, it's a steep learning curve, they need someone to be there, in situ, to tell them what to do and what not to do. It's a "cultural" thing. There is no empowered regulatory Health and Safety Department to speak of.


    I am aware that the OSI Group is owned by a USAnain company based in, I believe, Aurora, Ill.


    It is a huge market that MCD cannot ignore. Short term pain for long term gain.
    24 Jul 2014, 08:23 AM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
    Yesterday at the local Shanghai McDonald's, there were some items unavailable on the menu. Those were pulled because a lack of lettuce and not reacting towards the "news".


    Foreign MNCs are cautious and alert but not over-reacting as the State has been merited or not "attacking" first foreign MNCs before cleaning up its local brands.
    24 Jul 2014, 09:15 AM Reply Like
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