By Yining Su
Image credit: @powerplantop
Yum! Brands, the company behind KFC and Pizza Hut is having a rather bad time in China lately. Late last year a food safety scandal involving excessive antibiotics in chickens rocked the company. Now Yum have revealed that sales in its restaurants in China fell 13 percent in March. And with fears of bird flu on Chinese consumers’ minds, sales of chicken will likely remain low.
There was a time when Yum’s dealings in China were considered a great success. At one point the company was opening at least one new branch a day in China, which is a rate that is both astounding and not-that-surprising to anyone who has walked around any Chinese city.
Yum’s current troubles in China are a big problem for the company, as it makes over 40 percent of its revenue in China.
In fact, during the time Yum was achieving great successes in China, it appears to have neglected its business back home in the US. According to Businessweek last year, many American KFC franchise owners are unhappy with the company’s decisions in the US and the way CEO David Novak has managed the brand there. One restaurant industry watcher said that Novak had “gotten a free pass because of China”.
Now that Yum’s China business is no longer quite the stratospheric success it was before, Novak better hope that he can turn it around soon, otherwise he might not be enjoying that “free pass” for much longer.