SHANGHAI/LOS ANGELES - Yum Brands Inc YUM.N and McDonald's Corp MCD.N are facing a new food safety scare in China, denting the fast-food companies' efforts to shore up reputations and businesses that were hurt by a 2012 safety scandal in one of their biggest markets.
McDonald's and KFC parent Yum apologised to customers on Monday after Chinese regulators shut a local meat supplier 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.
The companies said they immediately stopped using the supplier, Shanghai Husi Food Co Ltd, a unit of Aurora, Illinois-based OSI Group, and had switched to alternatives. They added that the factory served restaurants in the Shanghai area.
The report on China's Dragon TV brought Yum and McDonald's back into the firing line following the sales-battering 2012 scandal that involved chicken pumped with excessive amounts of antibiotics.
"We will not tolerate any violations of government laws and regulations from our suppliers," said Yum China, which required all of its KFC and Pizza Hut restaurants to seal up and stop using all meat materials supplied by the Husi factory.
The division, Yum's No. 1 business unit, had just seen its KFC restaurants bounce back from the double whammy of the food safety scare and a bird flu outbreak.
"If proven, the practices outlined in the reports are completely unacceptable to McDonald's anywhere in the world," a China-based spokeswoman for McDonald's told Reuters.
Husi provided McDonald's with chicken, beef and lettuce, a McDonald's US spokeswoman said.
China is McDonald's third-biggest market as measured in number of restaurants.
"I think this is going to be really challenging for both these firms," said Benjamin Cavender, Shanghai-based principal at China Market Research Group.