Yum! Brands to Lose Sales to Bird Flu Outbreak

Michael Teague |

KFC ChinaYum! Brands Inc (YUM), the parent company of Kentucky Fried Chicken, Pizza Hut, and Taco Bell fast food chains announced on Wednesday that it expected to take a sizeable hit as a result of China’s recent bid flu scare.

This most recent outbreak of bird-flu, or H7N9 avian influenza, has killed at least ten people in China over the past two months alone, and left many others sick.

This most recent outbreak of avian flu is not believed to spread from person to person, but is rather carried in infected poultry. Either way, it cannot be acquired from properly cooked chicken, but this has not prevented Yum!, who have approximately 5,300 locations in world’s most populous country, from reporting on Wednesday that same-store sales at Chinese KFC outlets were down 16 percent in March, as a result of the scare.

The announcement came during late trading, causing the company’s shares to lose almost 2 percent, to $65.50.

The profit-loss resulting from this most recent outbreak is likely to end the company’s 11 year-long double-digit growth spurt. While this will be to some extent reflected in Yum’s March sales figures, the bigger drop is expected when April sales figures for China come out next month.

The Louisville, Kentucky-based company was already in some measure of trouble with Chinese consumers over reports that the company’s chicken suppliers had been feeding their stock unregulated or unapproved levels of antibiotics. Yum has subsequently cleaned up the supply chain, removing over 1,000 small chicken producers and tightening oversight.

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Companies

Symbol Name Price Change % Volume
STN:CA Stantec Inc. 35.45 -0.15 -0.42 360,966
YUM Yum! Brands Inc. 64.44 0.98 1.54 2,645,778

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