US chains hit by Chinese food scandal

Tuesday 22 July 2014 09.39
The Chinese operations of Starbucks, Burger King, KFC and McDonald's have all been impacted by the meat scandal
The Chinese operations of Starbucks, Burger King, KFC and McDonald's have all been impacted by the meat scandal

The latest food scandal in China is spreading fast, dragging in US coffee chain Starbucks, Burger King and others, as well as McDonald's products as far away as Japan.

McDonald's and KFC's parent Yum Brands Inc apologised to Chinese customers yesterday after it emerged that Shanghai Husi Food Co, a unit of US-based OSI Group, had supplied expired meat to the two chains.

Today, Starbucks said some of its cafes previously sold products containing chicken originally sourced from Shanghai Husi, a firm that was shut down on Sunday by local regulators after a TV report showed staff using expired meat and picking up meat from the floor to add to the mix.

A Tokyo-based spokesman at McDonald's Holdings Co (Japan) said the company had sourced about a fifth of its Chicken McNuggets from Shanghai Husi and had halted sales of the product yesterday. 

Alternative supplies of chicken have been found in Thailand and China, he added. The company's shares briefly fell as much as 1.4% to a 15-month low before closing down 0.4%.

China's food watchdog said it ordered regional offices to carry out spot checks on all firms which had used Shanghai Husi products, and would inspect all of parent OSI's sites around China to see if enough has been done to ensure food safety. 

It said the case could be handed over to the police.

The regulator's Shanghai branch said in a statement it had demanded production, quality control and sales records from OSI. 

It added it already ordered McDonald's to seal over 4,500 boxes of suspected meat products and Yum's Pizza Hut to seal over 500 boxes of beef.

Fast-food chain Burger King and Dicos, China's third-ranked fast food chain owned by Ting Hsin International, said they would remove Shanghai Husi food products from their outlets.

Pizza chain Papa John's International said on its Weibo blog that it had taken down all meat products supplied by Shanghai Husi and cut ties with the supplier.

Food safety is one of the top issues for Chinese consumers after a scandal in 2008 where dairy products tainted with the industrial chemical melamine led to the deaths of six infants and made many thousands sick. 

Other food scandals have hit the meat and dairy industries in recent years, and many Chinese look to foreign brands as offering higher safety standards.

China is McDonald's third-biggest market by number of restaurants and Yum's top market by revenue. McDonald's is due to report quarterly earnings later today.

The scare has stirred local consumers and become one of the most discussed topics online among the country's influential 'netizens', with some users spreading long lists of firms thought to be tarnished.

The incident highlights the difficulty in ensuring quality and safety along the supply chain in China. 

Wal-Mart Stores came under the spotlight early this year after a supplier's donkey meat product was found to contain fox meat. It also came under fire for selling expired duck meat in 2011.

Starbucks said on its Chinese microblog site that it had no direct business relationship with Shanghai Husi, but that some of its chicken acquired from another supplier had originally come from Husi for its "Chicken Apple Sauce Panini" products.

This had been sold in 13 different provinces and major cities. The company added that all the products had already been removed from its shelves.

Burger King said in a Weibo statement posted late yesterday that it had taken off its shelves all meat products supplied by Shanghai Husi Food and had launched an investigation.

Dicos said it pulled all ham products supplied by Shanghai Husi, and would stop serving its ham sandwich product for breakfast. 

"We will continue to carry out a probe into Shanghai Husi Food and its related firms, to understand whether or not it followed national regulations," Dicos said in a statement.

Swedish furniture firm IKEA, which has in-store food outlets, said on Weibo that Shanghai Husi had previously been a supplier, but had not provided the firm with products since September last year. 

Domino's Pizza and Doctor's Associates’ Subway brand, which were named in online reports as being supplied meat from Shanghai Husi, said their outlets in China did not use meat products from the firm.

Yoshinoya-parent Hop Hing Group Holdings, Japanese convenience store Family Mart and Chinese chain Wallace urged diners not to worry, and said they did not currently use any products from Shanghai Husi.