McDonald’s, Yum! Brands Stop Using Chinese Meat Supplier Over Food Safety Issues

Two U.S. fast food chains, McDonald’s Corporation (NYSE:MCD) and Yum! Brands Inc. (NYSE:YUM), apologized to Chinese consumers Monday, stating that they will suspend meat purchases from a Shanghai-based supplier while authorities investigate allegations that the company sold expired chicken and beef.

McDonald’s took to its official Chinese microblog on Sunday and said that it had asked all its outlets in China to stop using meat from Shanghai Husi Food, a Chinese branch of Illinois-based OSI Group, amid concerns about the quality of food supplied by the company. Yum also said, in a separate statement, Sunday that it has suspended meat orders from Shanghai Husi for its KFC and Pizza Hut chains across China.

“Food safety is the most important thing for McDonald's, and we always strictly abide by national laws and regulations and related standards to ensure consumers can enjoy our products at ease,” McDonald's said in the statement.

According to China’s official Xinhua news agency, the Chinese government suspended operations of Shanghai Husi after local media reported Monday that the company was selling meat beyond the expiration date. A representative of OSI Group also confirmed that the company is under investigation, the Wall Street Journal reported.

The incident is considered a fresh setback for both McDonald’s and Yum after the companies were hit by a food-safety scandal in China about 18 months ago.

In December 2012, Shanghai authorities said that tests conducted from 2010 to 2011 by a third-party agency found high levels of antibiotics in eight batches of chicken supplied to Yum, China’s biggest fast-food chain, by Liuhe Group, which also supplied meat to McDonald’s in China at the time.

“I think this is going to be really challenging for both these firms, and especially for Yum,” Benjamin Cavender, a Shanghai-based principal at China Market Research Group, told Reuters. “Yum had just started rebuilding credibility and had some decent sales news which just came out for the second quarter. I think this is going to really set them back.”