Another Food Safety Scandal Shakes Yum! Brands, Inc. (YUM) and McDonald’s Corporation (MCD) In China

Two years from the last Chinese food safety scandal that hit Yum! Brands, Inc. (NYSE:YUM) and McDonald’s Corporation (NYSE:MCD), the two companies find themselves surrounded by another scandal, once again. The two companies came under fire after an investigative report from the Chinese State TV highlighted that both the food joints are taking supplies from Shanghai Husi Food, a unit of OSI Group, which is operating in an unhealthy environment. CNBC disclosed the details from a published report in which an undercover reporter mentioned that the supplier was operating in a highly unhygienic conditions and supplied expired meat and chicken to both Yum! Brands, Inc. (NYSE:YUM) and McDonald’s Corporation (NYSE:MCD).

McDonald's Corporation (NYSE:MCD)

The incident has sent shock waves to the Chinese consumers, who are outraged over the carelessness of the two companies. Moreover, the report has now put both Yum! Brands, Inc. (NYSE:YUM) and McDonald’s Corporation (NYSE:MCD) into the back seat, hurting their ambitions to dominate the segment in the world’s largest market space as well as their efforts to recoup the losses that they have from decreased sales in the United States. China serves as one of the biggest markets for Yum! Brands, Inc. (NYSE:YUM) and is among the fastest growing space for McDonald’s Corporation (NYSE:MCD). As recent as last week, Yum! Brands, Inc. (NYSE:YUM) had reported improved same stores number for the second quarter in China, which grew by 50%, but Monday’s event has changed the sentiment severely.

In response to the report and to curtail the damages, both Yum! Brands, Inc. (NYSE:YUM) and McDonald’s Corporation (NYSE:MCD) have issued statements that they have immediately stopped using the Shanghai unit of OSI group.”We will not tolerate any violations of government laws and regulations from our suppliers,” said Yum China.

While Reuters cited McDonald’s: “If proven, the practices outlined in the reports are completely unacceptable to McDonald’s anywhere in the world.”

In addition to this,  the two companies confirmed that they have taken the supplier’s meat off their shelves and are conducting a thorough investigation into the matter while extending their full co-operation to Chinese regulators. In the meanwhile, both the company have sincerely apologized to Chinese consumers.

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!